1. Implementing Paid Family and Medical Leave Insurance: Connecticut PRESENTATION BY: SARAH JANE GLYNN, CENTER FOR AMERICAN PROGRESS AND JEFFREY HAYES, INSTITUTE FOR WOMEN’S POLICY RESEARCH ADDITIONAL RESEARCH SUPPORT BY: GAYLE GOLDIN, CONSULTANT SARAH FLEISCH FINK, NATIONAL PARTNERSHIP FOR WOMEN AND FAMILIES SHERRY LEIWANT, A BETTER BALANCE AND VICKI SHABO, NATIONAL PARTNERSHIP FOR WOMEN AND FAMILIES

2. What is Paid Family and Medical Leave? Paid family and medical leave insurance provides wage replacement when workers need time off to: Care for a new baby Care for a seriously ill family member Address their own serious health condition

3. The United States versus the rest of the world The United States: ◦Only advanced economy without paid maternity leave ◦One of a handful without paid paternity leave or temporary disability leave ◦Only high wealth country without any form of paid leave at all 5 states currently offer Temporary Disability Insurance: California, New Jersey, Rhode Island, New York, and Hawaii ◦3 states also cover family caregiving: California, New Jersey, and Rhode Island More than a dozen states and the District of Columbia introduced paid family and medical leave insurance bills in 2015

4. Why Paid Family Leave Insurance? Economic benefits to workers and economy ◦Increased likelihood of labor force participation Health care benefits ◦Breastfeeding, vaccinations, child well-being ◦Reduced stress Anti-poverty measure, reducing the risk of: ◦Bankruptcy, ◦Job loss, ◦Having to rely on benefits like SNAP and TANF What do people currently do in CT when they have a health crisis or new baby? ◦74%of Connecticut children – 550,398 children – live in households where all parents work ◦Nearly 777,000 people above the age of 60 live in Connecticut

5. Simulation Model  Developed in early 2000s by IWPR and economists at UMass-Boston, Albelda and Clayton-Matthews  2000 FMLA Survey from Department of Labor  Current Population Survey Annual Social and Economic Supplements  Updated in 2014-2015 with funding from the Department of Labor (WB & OASP)  2012 FMLA Survey collected for DOL by Abt Associates  American Community Survey  FMLA Survey used to estimate worker leave taking decisions when a qualifying event occurs  ACS used as source of local labor market information

6. Simulating Use of Paid Leave Program and Employer Paid Leave

7. Policy Scenarios for Cost Modeling ModelSummaryBenefit LevelEligibility 1Task Force Proposal Connecticut FMLI Taskforce report for up to 6 weeks of FMLI. Two-thirds of average weekly earnings up to a maximum benefit of $1,000 per week. A worker must have earned at least $9,300 in the base period. 2Legislation Introduced Based on Connecticut 2015 H.B. 6932 for up to 12 weeks of FMLI. 100 percent of average weekly earnings up to a maximum benefit of $1,000 per week. A worker must have earned at least $9,300 in the base period for an employer with 2+ employees. 3Sliding Scale Benefits Sliding scale benefit formula to provide 12 weeks of FMLI. 100 percent of first $385 per week in average earnings, 80 percent of amount over $385 up to $769 per week, and 66 percent of higher weekly earnings. A worker must have earned at least $5,050 (500 hours at $10.10/hour) in the base period for an employer with two or more employees. 4 MA Benefit Calculation 6 Weeks Sliding scale benefit similar Massachusetts S. 1008 for 6 weeks of FMLI. 95 percent of first $231 per week in average earnings, 90 percent of amount over $231 up to $385 per week, 80 percent of amount over $385 up to $615 per week; and 66 percent of higher weekly earnings over $615 per week up to a maximum weekly benefit of $1,000. Worker eligibility based on 1,000 hours in the base period. 5 MA Benefit Calculation 12 Weeks Sliding scale benefit similar Massachusetts S. 1008 for 12 weeks of FMLI. Same as Model 4.

8. Total Number of Leaves Taken Annually Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model. Current Policy Task Force Proposal Legislation Introduced Siding Scale Benefits MA Benefit Calculation 6 Weeks MA Benefit Calculation 12 Weeks (Baseline)(Model 1)(Model 2)(Model 3)(Model 4)(Model 5) Own Health 170,928 180,470 182,544 181,608 181,939 177,073 Maternity & Bonding 45,152 44,367 45,955 44,025 44,521 46,356 Family Care 71,882 71,624 72,522 73,223 73,038 69,728 Total 287,962 296,461 301,021 298,856 299,498 293,157 Change-- 8,499 13,059 10,894 11,536 5,195 Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.

9. Annual Number of Leaves Claiming Benefits Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model. Task Force Proposal Legislation Introduced Sliding Scale Benefits MA Benefit Calculation 6 Weeks MA Benefit Calculation 12 Weeks (Model 1)(Model 2)(Model 3)(Model 4)(Model 5) Own Health 73,248 74,97378,20975,41870,924 Maternity & Bonding 20,692 22,72722,59020,32821,197 Family Care 3,781 3,9314,4383,7993,394 Total 97,721 101,631105,23799,54595,515

10. Cost of Benefits Task Force Proposal Legislation Introduced Sliding Scale Benefits MA Benefit Calculation 6 Weeks MA Benefit Calculation 12 Weeks (Model 1)(Model 2)(Model 3)(Model 4)(Model 5) Own Health ($M)$192.0$354.7$334.1$225.4$292.7 Maternity & Bonding ($M)$38.8$80.0$77.1$42.5$68.7 Family Care ($M)$3.8$5.7$6.4$4.1$4.8 Total Benefit Cost ($M)$234.6$440.3$417.6$272.0$366.3 Administrative (5 percent, $M)$11.7$22.0$20.9$13.6$18.3 Total Cost ($M)$246.3$462.4$438.5$285.6$384.6 Cost, Percent of Total Earnings0.29%0.54%0.51%0.34%0.45% Cost, Percent of Sliding Scale31%58%55%36%48% Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.

11. Two Sources of Administrative Cost Estimates 1) ESTIMATED BENEFIT COSTS FOR WASHINGTON HB 1273 (2015) AND CALCULATED ADMINISTRATIVE COSTS FROM FISCAL NOTE AS A PERCENTAGE OF BENEFIT COSTS 2) PROJECT TEAM OBTAINED ADMINISTRATIVE COSTS AS A PERCENTAGE OF BENEFITS PAID FROM RHODE ISLAND DEPARTMENT OF LABOR AND TRAINING 2014 (Year 1 for TDI & TCI) 5.3 percent 2005-2014 Average 4.6 percent

12. Flat and Sliding Scale Contribution Rates Based on a request from the working group, two methods were used to calculate the amount of income to self-fund FMLI on a sustainable basis.  Flat rate based on TOTAL EARNINGS  Sliding Scale Contributions Based on Workers Annual Earnings  0.0 percent on annual earnings below $20,000  0.6 percent on annual earnings of $20,000 - $39,999  0.8 percent on annual earnings of $40,000 - $74,999  1.0 percent on annual earnings of $75,000 or more

13. Program Income ANNUAL PROGRAM INCOME FROM SLIDING SCALE (IN MILLIONS 2017 $s) Annual Income Quarterly Income Private Wage & Salary$684.3$171.1 State/Local government$98.3$24.6 Self-employed$51.0$12.7 Total$833.6$208.4 Source: IWPR Analysis of 2014 American Community Survey. Notes: Includes individuals employed in Connecticut. Earnings were adjusted for inflation of 1.5 percent per year between 2014 and 2017. BASED ON TOTAL ANNUAL EARNINGS (IN MILLIONS 2017 $s) Total Earnings Annual Income (0.54 percent) Quarterly Income Private Wage & Salary$79,603.9$429.9$107.5 State/Local government$11,324.4$61.2$15.3 Self-employed$6,008.8$32.4$8.1 Total$96,937.1$523.5$130.9 Source: IWPR Analysis of 2014 American Community Survey. Notes: Includes individuals employed in Connecticut. Earnings were adjusted for inflation of 1.5 percent per year between 2014 and 2017.

14. Percent of Leaves Receiving NO COMPENSATION Current Policy Task Force Proposal Legislation Introduced Sliding Scale Benefits MA Benefit Calculation 6 Weeks MA Benefit Calculation 12 Weeks (Baseline)(Model 1)(Model 2)(Model 3)(Model 4)(Model 5) Overall24.6%16.2%16.4%16.1%16.4%17.1% Main Reason for Leave Own Health25.1%15.7%16.1%15.6%15.7%16.6% Maternity & Bonding23.6%7.7%7.4%5.7%9.0%7.9% Family Care24.3%22.9%22.8%23.7%22.7%24.7% Source: IWPR estimates based on IWPR-ACM FML2 Simulation Model.

15. Ongoing Administrative Costs Roughly 120 employees are likely to be needed when the program is fully operational. It is important to consider that staffing will not start at 120 employees, but rather be a gradual increase over time as claims increase. When fully staffed, the annual costs for salaries and benefits will be $18,528,207.

16. One Time Startup Costs Each of the cost simulation models outlined in this report includes an additional 5 percent of benefit payments to cover administrative overhead. However, regardless of the model selected, the fund will have one-time start-up costs in addition to the ongoing administrative expenses.  In total we estimate the initial startup costs at approximately $13.6 million.  The estimated start-up costs include:  Initial technology development including hardware, software and programing  estimated at $7,725,099  Salaries and benefits for additional employees involved in the initial planning and training  estimated at $4,729,174  Overhead and capital needs including office space, phone lines, and computers for staff  estimated at $776,700  Initial outreach and education efforts to raise awareness of the program  estimated at $340,000

17. Important Consideration for Policy Eligibility ◦Low eligibility threshold to ensure most vulnerable workers are covered Inclusiveness ◦Should cover all workers in the state Length of Time ◦No less than 12 weeks Benefit level ◦Wage replacement should be high enough to allow for program participation Contributions ◦Employer, employee, or both Administration ◦State run program is preferable