Last month Gov. Inslee signed SSB 5286, which makes changes to the paid family and medical leave (PFML) program rate structure. Beginning with calendar year 2024, the PFML rate will be set to maintain a three-month reserve for the program. (See here for more about the bill.)

The family and medical leave insurance (FMLI) account has gone into deficit several times in the past year, in part because the premium rate was initially set too low. Establishing a reserve for the program should help to keep the program out of deficit. (We described the problem in this brief.)

The 2022 supplemental operating budget appropriated $350 million from the general fund–state (GFS) to the FMLI account, but the appropriation was only to be used to the extent that the FMLI account was in deficit at the end of the 2021–23 biennium. (At the April 26 meeting of the PFML advisory committee, the Employment Security Department reported that the account will indeed be in deficit at the end of the biennium. The account balance at the end of March was -$97.8 million.)

The 2023 supplemental, as passed by the Legislature, reduces the $350 million to $200 million and converts it to a direct appropriation. This means that the $200 million will be used to seed the PFML reserve (after covering the account deficit at the end of the biennium). Consequently, according to estimates the Employment Security Department provided on April 7, the PFML premium rate is forecasted to increase to 0.83% in 2024.