The Paid Family & Medical Leave (PFML) program provides benefits to qualifying workers who take leave for specified family and medical purposes.  PFML is funded by both employer and employee contributions.

The total premium rate for each calendar year must be based on the Family and Medical Leave Insurance Account (FMLIA) balance ratio as of September 30th of the previous year.  The balance ratio is calculated by dividing the FMLIA balance by total gross covered wages.  The premium rate is based on this balance ratio.  For example, the balance ratio was 0.09 percent on September 30, 2021, which established a premium rate of 0.60 percent for calendar year 2022.

In addition to the premium rate described above, if the balance ratio is below 0.05 percent, there will also be a solvency surcharge between 0.1 and 0.6 percent.  The Employment Security Department (ESD) must assess a solvency surcharge at the lowest rate necessary to provide revenue to pay for PFML administrative and benefit costs for the calendar year. 

The Office of the State Actuary is required to provide actuarial assistance to ESD related to the PFML program.  By December 2023 and biennially thereafter through 2028, followed by a five-year reporting frequency, the State Actuary must report findings as to whether rates are sufficient to maintain financial stability, program solvency, and an adequate reserve balance.  The State Actuary is directed to make recommendations to the PFML Advisory Committee, which may include options to modify the rate setting methodology.  The PFML Advisory Committee may request more frequent analysis.

In Fiscal Year (FY) 2022, $125,000,000 is appropriated to Federal Coronavirus State Fiscal Recovery funds into the FMLIA.

On October 1st in FY 2023 thru 2028, 25 percent of the Dedicated Marijuana Account funds will be transferred into the FMLIA.  During this time period, dedicated funding allocated to the State Basic Health Plan Trust Account is reduced from 50 to 25 percent.

ESD is directed to use Dedicated Marijuana Account funds to eliminate the solvency surcharge, or if the appropriation is insufficient, to further reduce the solvency surcharge to the lowest rate possible within the amount appropriated.  By January 31st each year, ESD is directed to deposit into the State Basic Health Plan Trust Account all unused Dedicated Marijuana Account funds that exceed the amount required to eliminate the solvency surcharge.

PRO:  This bill addresses program insolvency and we support components that can be combined with SSB 5649.  The actuary component is necessary due to the PFML financial situation provided with short notice.