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Senate hears bill to shift paid family and medical leave premium setting to actuarial approach amid debate over 1.2% cap
Summary
Senate Bill 5292 would direct the Employment Security Department’s Office of Actuarial Services to set paid family and medical leave rates using a forward‑looking (actuarial) approach and require a three‑month reserve; business groups opposed removal of the current 1.2% statutory cap.
The committee considered Senate Bill 5292, which would change how the state’s Paid Family and Medical Leave (PFML) premiums are set by authorizing ESD’s actuarial office to set rates using forward‑looking actuarial estimates rather than the current retrospective statutory formula. The bill would also add a requirement to close a rate collection year with a three‑month reserve and would eliminate the current statutory 1.2% premium cap.
Why it matters: JLARC and ESD both recommended moving to an actuarial rate‑setting approach to improve solvency and reduce volatility. Business groups cautioned that removing the 1.2% cap could lead to steep premium increases and urged the Legislature to retain a cap or require legislative review for large increases.
Staff and sponsor framing Committee staff summarized the background: the PFML program’s retrospective calculation has produced rate volatility and in 2023 required a $200 million cash infusion to resolve an account deficit. Senator (sponsor) said the bill implements JLARC’s recommendation for forward‑looking actuarial rate setting and a solvency reserve and noted the program’s bipartisan origins.
Support and opposition The Washington State Labor Council supported the bill, arguing actuarial rate setting would create predictable, solvent financing for a major social program. Labor witnesses called for stability and predictable premiums. Business groups—including the Washington Hospitality Association, Association of Washington Business and Washington Retail Association—said they support actuarial rate setting in principle but opposed removing the 1.2% cap. They argued that rates have already risen rapidly (noting a large increase from 2024 to 2025) and that a firm cap or legislative review is needed to protect employers, especially small businesses.
JLARC and technical input JLARC staff told the committee its recommendation was limited to adopting a forward‑looking actuarial method and that JLARC did not itself recommend removal of the 1.2% cap. JLARC staff explained that an actuarial approach can incorporate current data to estimate future revenues and costs but that a cap remains a policy choice for the Legislature.
Committee exchanges Members discussed alternatives including retaining the cap, requiring legislative approval for larger increases, and investing the three‑month reserve with the State Investment Board to stabilize returns. No vote was taken; sponsors said they were open to additional conversations about caps and reserve investment mechanisms.
