As I wrote yesterday, there are serious concerns about the solvency of Washington’s paid family and medical leave (PFML) program. A Senate committee approved a bill on Wednesday that would add some actuarial requirements to the program.

Today, Sen. Lynda Wilson introduced SB 5959. In the short term, the bill would appropriate $125 million from the state’s share of the coronavirus state and local fiscal recovery fund (SLFRF) to the family and medical leave insurance (FMLI) account in fiscal year 2022. This would address the worry that the FMLI account will be in cash deficit in the next few months. (Gov. Inslee proposed appropriating $82 million from the general fund–state for this purpose, but the Employment Security Department has expressed uncertainty as to whether $82 million would be enough.)

The state has about $1.3 billion left of its share of the SLFRF. Would using it to shore up the FMLI account be an allowable use of the fund? States can use the SLFRF generally for purposes related to the pandemic. According to the final rule for the SLFRF, one category of allowable uses is “for programs, services, or capital expenditures that respond to the public health and negative economic impacts of the pandemic.” For assistance to households, one specific allowable use is for “paid sick, medical, and family leave programs.” (Certain contributions to unemployment insurance trust funds are also allowed.) So, it’s plausible that using the SLFRF to backfill the FMLI account would be allowed by the federal government. However, as I noted yesterday, the Employment Security Department is not convinced that the solvency problem is related to the pandemic.

In the medium term, SB 5959 would use a portion of marijuana tax revenues to alleviate any PFML solvency surcharges. Currently, marijuana tax revenues are deposited in the dedicated marijuana account. After making various expenditures from the account, 50% goes to the basic health plan trust account and the rest is split among several health-related purposes and the state general fund. Under SB 5959, for FY 2023 through FY 2028, the basic health plan trust account’s share would be reduced to 25% and the other 25% would go to the FMLI account. If a PFML solvency surcharge is required, the marijuana revenue transferred to the FMLI account would be used to eliminate or reduce the surcharge. (If no solvency surcharge is required, the marijuana revenues would be transferred to the basic health plan trust account.) The enacted 2021–23 operating budget transferred $255 million from the dedicated marijuana account to the basic health plan account for FY 2022; given that, about $130 million a year could be available to offset potential PFML surcharges.

Finally, SB 5959 would require the Office of the State Actuary to review the PFML premium rate formula “to determine if the rates are sufficient to maintain financial stability and program solvency, and to establish a program reserve in the family and medical leave insurance account.”