The joint legislative task force set up to figure out how to administer and pay for the state's new paid family leave mandate met yesterday, and took in testimony from the Employment Security Department and the Department of Labor & Industries on the cost of administration. Brad Shannon covers it for the Olympian here, and Paul Nyhan for the P-I here.
Our Richard Davis nicely framed the problem confronting the task force in the P-I article:
Essentially, lawmakers created a goal -- paid family leave for new parents -- without establishing how to reach that goal, said Richard Davis, vice president for communications at the Association of Washington Business.
"As in any major new benefit, the details matter greatly," Davis said.
One worry is that if the program is created incorrectly, some workers could wind up with worse leave benefits than they had before the law, Davis added, emphasizing that employers should have flexibility to create leave programs that fit their business and employees.
The detail that mattered the most yesterday was the shocking cost estimates for administering the program. Brad Shannon's story reports:
A paid family leave program on the drawing boards for Washington state workers might eat up 25 percent of its cost in overhead in its early years, a task force learned Wednesday.
If the state Department of Labor and Industries runs the program, administrative costs could be more than six times the 3.6 percent overhead rate that California recently saw for a similar program started in 2004.
The 25% overhead figure actually understates the matter. L&I's administrative costs in the start-up years were more like 35% trending on down to 25% after the program is running for a few years -- and that estimate did not include the cost of collecting money to fund the benefit, nor did it include any amortized costs of initial hardware, software, and programming to set up the program.
ESD gave its own tentative cost estimate, coming in under L&I on some items, more on others. But ESD representatives stressed the preliminary nature of their figures.
The fact that bureaucratic overhead alone could eat up almost half the overall cost of administering a social welfare program is indeed shocking, and one of the facts that killed a much more expansive version of the bill in the 2007 session.
Confronted with no clear cost-effective option for administering this version, some task force members went off in an odd direction:
The task force is trying to decide how to administer the program and by which agency; Democratic Rep. Steve Conway of Tacoma said he thinks a multi-agency approach might work best.
I spent the balance of my public testimony before the task force yesterday trying to explain why that is the wrong approach given that the task force just heard that neither leading contender could administer the program efficiently.
Giving different chunks of it to both agencies is not going to help. It would be like cutting a worm in half, only to see the halves grow into two new worms.
Although the administration decision was left indeterminate, the next big issue confronting the task force is how to fund the program. Kudos to Senator Keiser for this sentiment:
. . . . [P]aid family leave doesn't have to rely on new taxes, said state Sen. Karen Keiser, D-Kent, co-chairwoman of the task force. The state benefit could be financed with annual budget revenue, though nothing has been decided, she said.
No new taxes -- makes a lot of sense. Hopefully the question of funding won't be as much of a circus as the question of administration.
And lastly, speaking of clowning around, the meeting took on a bit of a big-top flavor (pictured in the P-I) as representatives of "MomsRising.org," one of the movers behind the bill, interrupted proceedings to hand out little potted cyprus trees to task force members, either as a kind of "thank you" gift for pushing Washington toward this precipice, or to test the ire of the legislative and executive ethics boards.
This move left me satisfied that I called it several months ago, writing in Washington Business Magazine that "family leave advocates planted the seed," and that "[p]aid family leave is the acorn that, in time, will grow into a mighty oak." I guess I was only wrong about the species of the tree.
