Paid Family and Medical Leave program now faces $1 billion-plus potential deficit

The financial challenges facing Washington’s Paid Family and Medical Leave program continue to worsen, according to figures released late last month and analyzed by the Washington Research Council.

The Employment Security Department revised upward estimates of its looming cash deficit. Gov. Inslee’s proposed budget had allocated $82 million to cover the shortfall. Now ESD estimates that they’ll need between $125 million (the optimistic estimate) and $405 million (the pessimistic estimate) to cover the cash gap.

On top of that ESD has projected that it will need to institute a solvency surcharge for next year, which would increase the premium rate to 0.8%. To avoid the surcharge and keep the levy at the current 0.6%, ESD says the fund would need another $397 million in 2023.

Finally, ESD estimates it would need between $231 million and $511 million to create a one-month reserve for the program. It would need between $442 million and $722 million to create a three-month reserve.

Taken together, the state-run program could need a billion-dollar cash infusion or more.

Credit: Association of Washington Businesses