Actuarial report: CT Paid Leave Authority shows $641M incurred fund balance, warns of modest decline over three years

At a CT Paid Leave Authority meeting, a Spring consulting actuary reported an incurred fund balance of $641 million for the fiscal year ending June 2025 and projected a modest decline of roughly 3% over the next three years under baseline assumptions.

The presenter, identified later in the record as Harendra of Spring, said the fiscal-year beginning balance was $628.7 million and that net activity for the year totaled $12.3 million. He attributed the quarter-to-quarter shortfall versus the prior estimate (about $1.8 million lower) mainly to higher incurred claims and an increase in the reserve estimate, partially offset by slightly higher contributions and investment income.

Why it matters: rising claims and reserves, not contributions, were the principal drivers of the change. The authority’s financial metrics remain within target ranges, but staff emphasized the numbers’ sensitivity to assumptions such as incidence, duration and average weekly benefit amount.

Harendra told members the three-year baseline projection (2026–2028) shows positive net activity in the first year and negative net activity in years two and three, producing the roughly 3% projected decline in fund balance. He stressed that small percentage changes in large claim assumptions can materially change net-activity projections over multiple years and that the actuary provides sensitivity scenarios to guide long-term rate-setting decisions.

Committee members asked for the assumptions appendix (salary growth, incidence rates, duration, benefit levels and bond schedules) and whether the model had considered unionized state workers (SBACK) joining the program. Staff said they have not yet modeled that scenario but agreed to work with Spring and OPM salary data to estimate the potential fiscal impact if unions bring state employees into coverage; the authority will try to produce that analysis before the August meeting if feasible.

The presenter also described incidence-rate expectations: current incidence is about 4.8% (just under 5%), projected to increase roughly 2% per year over the near term and to stabilize around 2028 absent external shocks. Members pressed for sensitivity analyses (e.g., a 1–2 percentage-point change in incurred claims) and were told the authority runs a series of scenarios and revisits projections quarterly as the program matures.

The authority noted a recent operational metric that underscores the trend: staff reported a weekly run rate for benefit payments near $9 million and a record week of $9.5 million in July, which is being monitored as a principal risk driver for the fund.

The authority will continue to refine assumptions and provide sensitivity runs, including a requested scenario estimating the fiscal effect of onboarding unionized state employees.