Today the Employment Security Department (ESD) told the Paid Family and Medical Leave (PFML) advisory committee that the premium rate for the program might need to be 1% next year.

At the beginning of this year, the rate increased from 0.4% to 0.6%. Last month, ESD estimated that the premium rate for 2023 would need to be 0.8%–0.9% (including a solvency surcharge). Now, ESD estimates that the 2023 premium rate will need to be 0.9%–1.0% (including a solvency surcharge).

Additionally, ESD reported that the family and medical leave insurance (FMLI) account ending balance was $1.0 million in July. During July, the account had experienced 15 days in deficit. ESD currently projects that the account balance will fall below zero again in late September–early October. (By statute, the 2023 rate will be based partially on the account balance as of Sept. 30.)

(The charts below are screenshots I took during today’s meeting; the presentation will eventually be posted here under “Past meetings.”)

ESD also provided their current projections for premiums going out to FY 2027. With the increased premiums from the potential 1% rate next year, they project that the rate would drop to 0.6% (the maximum regular rate allowed by statute) in 2024 and 2025. Then it would jump up to 1.2% (the maximum regular rate plus the maximum solvency surcharge). Those are quite the swings. The legislative task force that was established this year will be making recommendations on any changes “to ensure the lowest future premium rates necessary to maintain solvency . . . while limiting fluctuation” in the rates.