Approvals are 24% above the forecast rate
A month ago, citing data over its first four weeks of operation, I noted that approvals for Minnesota’s Paid Family and Medical Leave (PFML) scheme were running 26% above forecast.
A couple of weeks ago, Program Director Greg Norfleet and Department of Employment and Economic Development Deputy Commissioner Evan Rowe testified before the Minnesota House Workforce, Labor, and Economic Development Finance and Policy Committee and reported that: “As of Feb. 15, nearly 48,000 applications had been submitted, with decisions made on about 31,000. More than 20,000 have been approved.” That works out at an approval rate of 435 each day (20,000 / 46). This is 24% above the rate of 352 approvals dailt forecast by DEED when the scheme launched (128,338 / 365).
Earlier in February, I noted that:
…the number is boosted in part by early applications for child bonding leave — something known in paid leave circles as a “baby bump.”
That initial bump is expected to even out over time.
“We’ve seen weekly applications start to trend down over time … in line with experience in other states,” DEED Deputy Commissioner Evan Rowe said in a call with reporters Monday.
But, I noted later, “the longer the approval rate is above that 352 forecast, the further it will need to fall later to meet it.” To match the forecast for the year, as of February 15, approvals would need to fall to 340 a day ((128,338 – 20,000 = 108,338) / (365 – 46 = 319) = 340), down from 343 two weeks earlier. Is this likely? Let us hope so.
Average leave is longer than forecast
As I have long noted, the assumptions behind this program were much more opaque when it was passed in 2023 than when it had been proposed previously. But, as I noted that April, “The assumed average length of leave taken seems to have been reduced from 6.6 weeks last year to 6.0 weeks this year. But, as I noted in February, this is still a favorable assumption.”
Last month, Director Norfleet and Deputy Commissioner Rowe told the House that “The average leave runs six to nine weeks, less than the maximum 12 weeks allowed by law.”
Trouble ahead?
As I’ve noted before, the key equation is:
1) Expected Benefit Payments = Expected Number of Claims x Expected Claim Duration x Assumed Average Weekly Benefit Amount
From two of these components – “Expected Number of Claims and “Expected Claim Duration,” the scheme appears to be running ahead of forecast.
At present, the scheme is funded by a 0.88% payroll tax split between employers and employees. As the Pioneer Press reported in February:
Asked Monday how long that rate would stand, DEED officials said that would depend on an actuarial analysis expected in the coming months.
The state will have to send employers updated premium rates by July 31, so there will need to be an official estimate before then, Rowe said.
The payroll tax which finances the scheme has already been hiked by 25% since it was enacted: Another hike might be on the way.
