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September 30, 2020

Report: CT paid-leave program can withstand impacts of COVID-19

HBJ Photo | Steve Laschever Andrea Barton Reeves, CEO of the Connecticut Paid Family and Medical Leave Insurance Authority.
By Matt Pilon

A new analysis of the state’s pending paid family and medical leave program says it can remain solvent, even if COVID-19’s economic impacts are prolonged.

The Paid Family and Medical Leave program will begin taking an 0.5% payroll contribution in January from the majority of Connecticut workers to fund the program.

COVID-19 has caused a significant increase in unemployment, which will impact the amount of revenue deposited into a related trust fund in the near term, but by exactly how much remains to be seen.

The Paid Family and Medical Leave Authority commissioned WildFig Partners and the Institute for Women’s Policy Research to model how various potential scenarios could impact the program’s finances.

That analysis, presented late last week to the authority’s finance subcommittee, found that even in the most severe of scenarios -- one in which unemployment remains significantly heightened over multiple years and major overruns in costs to stand up the new program -- the paid leave trust fund would remain in the black over the first five years, fluctuating from $72.5 million in fiscal year 2021 to $65.8 million in fiscal year 2025.

The baseline scenario in the report is a far financially healthier situation, and assumes that high unemployment subsides and the economy strengthens in 2021.

In that scenario, the report says the paid leave trust fund will reach a high of $446 million in the fifth year of operation.

Payroll contributions would also be significantly higher in the baseline scenario, compared to the most severe case, totaling $1.93 billion over the five-year period compared to $1.6 billion in the pessimistic scenario. First-year payroll collections would be $208.1 million in the baseline case versus $89.8 million in the pessimistic case.

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