A bill adopting the recommendations of the Paid Family & Medical Leave (PFML) Insurance Premiums Task Force intended to fix the program’s persistent solvency issues is scheduled for a hearing in the Senate Labor & Commerce Committee this week.

SB 5286 is sponsored by Sen. June Robinson (D–Everett) and includes a bi-partisan list of co-sponsors. The bill changes the way that PFML premium rates are calculated each year by replacing the current method with a specified rate formula. The new formula would require the Employment Security Department (ESD) to:

• Calculate an amount that equals 140% of the prior fiscal year's program expenses (including the total amount of benefits paid plus administrative costs).
• Subtract the Account balance as of September 30 from the amount determined above.
• Divide the difference above by the prior fiscal year's taxable wages.

The 140% of the prior year’s expenses is partially intended to help the new rates account for maintaining a three-month reserve fund to guard against cash shortfalls. The current rate setting system does not allow a reserve fund. The bill also requires ESD to determine if the new total premium rate calculated is more than necessary to maintain a three-month reserve, and if so, it requires ESD to lower the rate to the minimum necessary to maintain the reserve throughout the year.

In addition to changing the way premiums are calculated, SB 5286 also raises the current total premium rate cap from 0.8% to 1.2%.

We last wrote about the Task Force after it formally adopted its recommendations here. You can read the final report from the Task Force here. As readers may be familiar, the PFML program has seen regular cash shortfalls each quarter for much of the past year, as benefits payments during each quarter have outpaced the premiums deposited into the account at the beginning of each quarter.

Dates to remember

SB 5286 is scheduled for a public hearing in the Senate Labor & Commerce Committee on Monday, January 16 at 10:30 am.