The final version of a bill to help address solvency issues with the state’s Paid Family & Medical Leave (PFML) program passed the Legislature. An infusion of $350 million in general fund dollars to the PFML program is included in the final
budget to cover current shortfalls and serve as a reserve fund to prevent insolvency in the short term while the bill’s many actuarial, analytical, and policy recommendations are implemented.
We first wrote about the recent solvency issues facing the PFML program here. The program’s possible insolvency was raised by surprising
reports during the legislative session, with the alarming report that the program could have a cash shortfall by late March or early April if the Legislature did not act. SB 5649 started out as a bill making several minor, agreed-to changes to the PFML program, but quickly became a vehicle for sweeping new actuarial analysis, program transparency, and developing recommendations for future adjustments to PFML premiums calculation
and collection.
The final version of SB 5649 makes several changes to the PFML program in addition to the focus on solvency of the program. The final bill includes:
- Temporary continuation of benefits following a child’s death: Allows new parents to continue receiving benefits for pre-planned leave for up to seven days if the new child the employee was taking leave to care for dies.
- Automatic medical leave for postnatal mothers: For employees that take leave after giving birth, the first six weeks of leave are automatically categorized as medical leave, unless the employee elects to use family leave. Certification
of Serious Health Condition is also no longer required for benefits covering the postnatal period.
- Data collection requirements: Tracking the impact of the COVID-19 pandemic on program solvency.
- New actuarial services and reports:
- The Office of Financial Management is required to contract for actuarial services for the PFML Program. The actuarial analysis must report to the Legislature by October 1, 2022 on the financial condition of the program, recommendations for
modifying the premium provisions of the PFML statute to improve solvency and comparing Washington’s PFML premium collection to other states’ paid leave laws.
- Establishes an Office of Actuarial Services within ESD, which must annually report (starting November 2023) to the PFML Advisory Committee on the financial condition and lowest premium rates necessary to maintain solvency of the PFML program.
- Creates Legislative Task Force on PFML premiums: The group will report to the Legislature by January 4, 2023 on needed legislative changes to ensure the lowest premium rates necessary to keep the program solvent.
- JLARC performance audit of the PFML program: The audit will focus on ESD’s implementation of the PFML program, examine current program practices for efficiency and financial management, examine PFML program solvency, and make
recommendations for program improvements to improve efficiency.
SB 5649 passed both chambers with strong bipartisan support, with a 96-2 final vote in the House and a 42-7 vote in the Senate on March 7. It now goes to the Governor for signature.