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Committee hears DEED explain actuarial work, timing and costs tied to paid family medical leave implementation
Summary
Department of Employment and Economic Development staff explained to the House committee why paid family and medical leave analyses rely on contracted actuarial work, described contract costs and timelines, and answered lawmakers' questions about late-arriving estimates and local impacts.
Department of Employment and Economic Development officials briefed the House Workforce, Labor and Economic Development Finance and Policy Committee on the department’s use of third-party actuaries to model Minnesota’s Paid Family Medical Leave program, the timing of updated estimates and the program’s potential fiscal effects.
Evan Roe, deputy commissioner at the Department of Employment and Economic Development, said the department contracts with a qualified independent actuarial consultant as required by statute and that work takes lead time. “We contract with a third party actuarial analyses which again is required under the law,” Roe told the committee, noting the modeling requires data collection and coordination between DEED, the actuarial firm and the Legislative Budget Office.
Roe said DEED used a micro-simulation model—originally developed by the Institute for Women’s Policy Research and updated by the U.S. Department of Labor—for 2023 analyses, but the Paid Family Medical Leave law required an October 2023 actuarial report. The department contracted with Milliman, a national actuarial firm, and Roe said the overall contract value over two years is about $119,000, which included the initial October 2023 study and room for supplemental analyses linked to fiscal-note requests.
Committee members raised concerns about timing and access. Representative Baker, the committee chair, and Representative Mecklen described instances in which members requested fiscal analyses and did not receive timely answers. Roe acknowledged capacity limits and said agencies prioritize official fiscal-note requests and that supplemental actuarial work has an explicit cost. “We want to work in partnership… to the extent that we can consolidate requests that kind of helps hold the cost down,” Roe said.
Members also discussed a substantive modeling question that affected estimates last session: whether the program’s first seven qualifying days are paid. Representative Frazier, who led legislative efforts on the law, and others said actuarial model runs that included or excluded payment for the initial seven days changed premium estimates. Roe said the department’s actuarial work captured runs with both assumptions and that subsequent law changes and clarifications informed the final public rate estimates.
Roe told the committee the LBO-referenced fiscal note process and DEED’s actuarial work are separate inputs: fiscal notes focus on direct state-cost and FTE impacts, revenue estimates are produced by the Department of Revenue, and local impact notes take longer and are produced with LBO oversight. He said DEED expects to have baseline actuarial assumptions in place and to be able to respond faster to fiscal-note requests this session, but he did not provide a firm public date for a final premium rate announcement.
On costs, Roe said earlier actuarial work delivered in 2023 and supplemental analysis has a budgeted allowance. Committee members asked who pays for the contracted actuarial work; Roe said the contract is funded from implementation appropriations established in the 2023 law and placed in the family and medical benefit insurance account, which the department said was funded from the general fund appropriation set in 2023.
Representative Baker said local governments and school districts are beginning to see potential local impacts and described the program as likely to represent a substantial new revenue stream for the state and new payroll contributions for employers and employees. He said the committee will consider a bill the next day that would delay implementation for a year to allow more time for analysis; he said the committee’s priority is to “look under the hood” and ensure actuarial and fiscal assumptions are clear before the program launches.
Ending: DEED committed to continued communication with the committee about actuarial assumptions and fiscal-note priorities; members signaled they will use upcoming hearings to press for clearer, earlier estimates on premiums and local impacts.
