The board of directors for Connecticut’s Paid Leave Authority voted overwhelmingly Thursday to maintain its worker contribution rate at .5% following an hour-long debate over reducing the rate to .475%.
The program, enacted by the legislature in 2019, provides up to 12 weeks of paid leave for Connecticut workers forced to take time off due to illness or caring for a sick family member. The program began collecting contributions in January of 2021 and started paying out claims a year later.
During the last fiscal year, the program collected about $100 million more in contributions and investment income than it incurred in claims and other expenses and had a fund balance of around $557 million.
Those excess funds prompted a debate between board member John Scott, who urged a reduction in the contribution rate, and the rest of the board, which favored a more cautious approach to managing the nascent program amid an expectation that worker claims will increase in the coming years.
“If the incident rate increases by just .25%, you are looking at expenses exceeding income in the next coming years and, of course, incident rates going up faster puts that into jeopardy sooner,” Erin Choquette, the program’s CEO, said. “That’s the real concern that we have: actuarial estimates are simply estimates and they’re based on a year’s worth of claims data and historical information from other states.”
Scott, who serves as the board’s secretary and was appointed to the body by House Minority Leader Vincent Candelora, argued that actuarial projections expected the reduction to have only a minor impact on the program’s finances.
Estimates by the board suggest that reducing the mandatory contribution rate would amount to an annual savings of around $7.50 for someone earning $30,000 a year and around $40.05 for someone earning $160,000.
Scott said those expenses compounded other taxes imposed by the state.
“It gets expensive to live here in the state of Connecticut and there’s any opportunity for any aspect of our government… to lower something, even if it’s a nominal quarter point, I think we should really have that discussion,” Scott said. “It’s really darn expensive to live here.”
When Scott proposed to reduce the contribution rate, no one on the board seconded the motion. Moments later, every member aside from Scott voted to keep the rate at its current amount.
Proponents of keeping the rate steady made a number of arguments including the authority’s limited ability to course correct if claims increased. The program was designed to be self-sufficient and received no supplemental funding from the state budget.
Meanwhile, other states with comparable programs have seen their claims rates increase in recent years, according to statistics presented by Choquette. Several members said it was too early in Connecticut’s program to reduce the rates.
“Fundamentally, the state of Connecticut made a promise to workers to say, ‘when you need them, these benefits are going to be there’… and we’re charged with fulfilling that promise,” board member Molly Weston Williamson said. “I am really concerned that if we lower rates at this juncture, one day or another — maybe it’s next year or maybe it’s in a couple years — we won’t be able to keep that promise.”
In a statement Wednesday, Candelora called on the board to take the step of reducing the rate.
“This program built on a payroll tax has amassed a surplus on the backs of Connecticut workers who could really use a bit of relief right now given the fact that their cost of living has skyrocketed since its inception,” he said. “The current excess fund balance is approaching $600 million, which would cover more than one and a half years of benefits before the program would need to collect a cent more from workers.”