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HRD-83-76 1 (1983-07-15)

handle is hein.gao/gaobabnat0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 HUMAN RouArC22 July 15, 1983 121941 The Honorable Orrin G. Hatch United States Senate Dear Senator Hatch: Subject: Railroad Employment Projections (GAO/HRD-83-76) In response to your May 20, 1983, request, we reviewed the Railroad Retirement Board's (RRB's) rail employment projections and the assumptions RRB used in making such projections from 1981 through 1983. Inaccurate estimates of future rail employment can seri- ously weaken the financial condition of the $6 billion railroad retirement program because such estimates are used to determine the amount of payroll tax revenues available to pay benefits. Therefore, we sought to determine (1) what methodology RRB fol- lowed in preparing the projections, (2) what other organizations made rail employment projections and what they forecasted, (3) what is the potential for RRB making more accurate future esti- mates, and (4) how RRB's current projections compare to those made by other organizations. We talked with RRB and other Fed- eral and nongovernmental officials who make rail projections and reviewed and compared their past and current forecasts. This report does not evaluate the methodologies and assumptions used in econometric forecasts. We are currently evaluating such forecasts to determine why only one econometric model produced accurate results. We will contact your office when this addi- tional work is completed. See enclosure I for a more detailed discussion of our work. Enclosures II through VI show past rail employment and projections by RRB and other organizations. The results iof our work are summarized below: --RRB does not use or consider all the data it might in developing estimates and does not use econometric models such as those used by some forecasting organizations. According to RRB officials, they base their employment projections on educated guesses which consider past industry trends and the economy. They believe that these are as accurate as more sophisticated systematic or econ- ometric forecasting methods. They described systematic estimating methods as a waste of money. (105215)

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