The 13-member task force created to sweat the details of the state’s new paid family leave law hasn’t had much fun lately. True, the activist group Moms Rising gave them tiny cypress trees as a symbolic thank-you for helping families grow stronger. But seedlings provide little cover — not nearly enough to overshadow the harsh news task-force members received from the two state agencies that may have to run the program.
Two facts stand out. No one really knows how many people will take advantage of paid leave. And the overhead costs are ridiculous.
Lawmakers knew that from the beginning. Fiscal notes — rough cost estimates provided by state agencies during the legislative session — showed that bureaucratic overhead could claim more than 40 percent of program spending in the first few years. Numbers like that led legislators to prune benefits and punt tough decisions to the task force that now must figure out who’s going to run the program and how to pay for it.
Given the complexity of the plan, the significant unknowns and the make-up of the task force — eight legislators (four from each party), three family leave advocates and two business representatives) — consensus is unlikely. (Disclosure: the two business representatives are AWB members.)
All we know for sure is that come Oct. 1, 2009, all workers are entitled to a maximum of $250 a week in paid time off for up to five weeks to care for a newborn or newly adopted child.
I’ve called such stuff “long fuse politics.” Gather everyone together for a bill-signing photo op with the governor and leave town before things blow up. Except, in this case, there’s no dodging ultimate responsibility: lawmakers must deal with the task force recommendations in 2008.
Either the Department of Labor and Industries (L&I) or the Employment Security Department (ESD) will end up running the program. Or they may share responsibilities. No one knows. Neither agency seems eager to step up, but both have said what they’ll need to do the job.
L&I, which runs the state workers’ compensation program, estimates it will take about $22 million to set up the program. ESD, which handles unemployment insurance, pegs its start-up cost at $7 million to $9 million. Both agencies think that, once things are up and running, ongoing costs will fall in the range of $6 million to $9 million a year.
As few as 25,000 people a year may claim benefits — or maybe twice that many. Similarly, the estimates of benefit costs range from $23 million to nearly $50 million. Assuming actual costs fall somewhere in the middle, we’re looking at about 25 percent in ongoing administrative overhead. Too high.
Program advocates appear both skeptical and dismissive of the costs. They point out that overhead is much lower for the complex workers’ compensation program. On the other hand, they say it’s just not that much money given the size of the state budget. (There’s an argument that should make everyone feel better.)
Even popular programs — and the idea of paid family leave is very popular — should not be launched cavalierly. There’s too much uncertainty surrounding the benefits and costs and the impact on employers. Equally troubling: The straitjacket state plan may end up supplanting more generous and flexible benefits offered by many businesses.
Later this month, the task force takes up the question of how to pay for the program. Last session, legislators considered a 2-cent-an-hour tax on employees. Now, it’s not clear. They might split the cost between employer and worker. Or, it’s been suggested that the program might find a home in the state budget. To kick things off, lawmakers borrowed $18 million from a workers’ compensation fund. It’s not an auspicious beginning.
California is the only other state that has adopted a paid family leave law. Look there for a glimpse of our future. About the time the Moms were delivering their tiny trees, California lawmakers sent Gov. Arnold Schwarzenegger legislation expanding that state’s program to include grandparents, in-laws and siblings.
Benefit schemes tend to grow unchecked. Task force members work in the dark, lacking critical information. I think the Moms missed the mark. Mushrooms would have been a more appropriate thank-you gift.
Richard S. Davis, vice president-communications of the Association of Washington Business, writes every other Wednesday. His columns do not necessarily reflect the views of AWB. Write Davis at richardd@awb.org or Association of Washington Business, P.O. Box 658, 1414 Cherry Street SE, Olympia, WA 98507-0658.
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