Legislators work out details of bills that would create a paid family and medical leave program in Minnesota

Sen. Alice Mann says she knew her No. 1 priority for the 2023 session was going to take up a lot of her time. Senate File 2 would create an insurance program for paid family and medical leave that would put Minnesota in league with 11 other states that have pioneered the coverage.

Mann said she purposefully introduced fewer bills and took on fewer other issues to give herself time because of what she said she knew would be a “heavy lift.”

She underestimated.

“I have anywhere from one meeting to four or five in one day regarding this bill,” the Edina DFLer said. “If I’m not meeting about the bill, I’m rewriting language, meeting with Senate Counsel, meeting with the fiscal staff to get the language right.”

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SF2 has been before eight Senate committees with one still to go — the vital Finance Committee that will consider how much the program will cost, how high the employer-employee shared premiums will be and which employers might be exempted from paying the fees.

Is it worth it? In an interview last week, the emergency room physician said yes.

“This issue encompasses so many other issues, right?” she said. “We know that when people have paid time off, whether it’s when a new baby comes or when they’re ill, or when a family member’s ill, that paid time off keeps families economically stable, people stay on their feet,” Mann said. In the states that have already adopted coverage, there is less reliance on government services.

“The health benefits are incredible,” Mann said. We’re seeing kids with less ear infections, less (gastrointestinal) infections, less pneumonia, less clinic visits, less hospitalizations. We’re seeing moms do better during prenatal care and postpartum, both mentally and physically.”

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Other health benefits are longer breastfeeding of infants, less use of nursing homes and less dependence on childcare.

“This program touches all of those things. That’s why it’s important for me,” she said. Mann, usually accompanied by a file box filled with information about the issue and her bill, often starts her testimony the same way.

“Out of almost 200 countries, the U.S. is one of seven that does not offer such a paid leave program,” she told the Senate Jobs and Economic Development Committee. “The U.S. is certainly the only industrialized country without such a policy in place.”

It is important to the DFL majorities in the House and Senate, as indicated by the bill numbers assigned — Senate File 2 and House File 2. Only the bill codifying abortion rights received a lower number.

Walz, too, has made this a top item on his agenda.

“We know that when we do this, it is not only morally the right thing to do, economically it is the right thing to do,” Walz told a packed rally in the rotunda last month. And he reminded the attendees of the reason this bill has a chance this session when it didn’t in the past — the DFL trifecta produced by the 2022 election.

“You might have noticed things are getting done around here,” Walz said. “We kind of became accustomed to, you would come here, and you’d have a list of things that were well thought out and would improve people’s lives, and they would treat it like a wish list. ‘Isn’t that nice. Isn’t that cute.’

“Those days are over,” he said. “That list is a to-do list and we’re checking it off.”

Because it will take some time to set up the program and for premiums to collect enough to cover benefits, Walz and the DFL legislative leaders have agreed to draw $668 million from the surplus to front-load the program. Premiums will start being collected, and benefits will start being paid on July 1, 2025.

Separate bills would create a statewide sick leave requirement, allowing all workers to earn one hour of paid sick leave for every 30 hours worked. Up to 48 hours of paid sick leave could be accumulated, and it tracks local ordinances passed in St. Paul, Minneapolis, Duluth and Bloomington.

Bill back-and-forth

Mann served a single term in the House in 2019 and 2020 but did not seek a second term. She then ran for and won a seat in the Senate last November. In addition to a medical degree, she has a master’s in public health. She moved with her family at age 8 from Brazil to Richfield.

But the bulk of the pushback Mann has received is not about the benefits of the program but its cost. Mann cites both the family and medical leave act coverage and post-delivery leave laws were introduced as paid leave programs but were passed only after they became unpaid.

Mann said she wishes more time was spent talking about the positive impacts on women’s health than on costs.

“We have all these programs that are meant to help  families, financially and physically and emotionally and medically. And we don’t talk about those things,” she said. “And you can see, even in our hearings, the vast majority of the conversation is how will businesses do? And we miss the point of this program in the first place entirely,” she said.

“The rest of the world does this, the rest of the world. And so for us to say, this cannot be done, it’s just a false statement,” Mann said. “I understand the fear, but these fears are unfounded.”

“For the average Minnesotans, about a cup of coffee a week is what we’re asking,” Mann said of the premiums.

She also makes the argument that while many employers do offer some form of paid leave for pregnancy and to care for family members who are injured or become sick, they tend to be larger employers, and the benefits tend to be for workers who are in higher-wage positions. Making the program universal will allow small businesses to compete with large companies.

The bill does allow employers that offer paid leave, including via union contracts, to opt out of the state program. But they must have benefits equal to or greater than what would be provided under the state insurance plan.

Lauryn Schothorst manages workplace management and workforce development for the Minnesota Chamber of Commerce. She has been trying to make the case with the House and Senate that the paid leave bill is well-intentioned but unworkable. Despite some amendments regarding smaller businesses, caps on the payroll tax and the duration of benefits, she said it is “foundationally and fundamentally the same as it was at introduction.

“The big concerns that we’ve had along the way relate to expansiveness, expensiveness, solvency and the one-size-fits all nature of it. But also how it positions our state against other states in competitiveness,” Schothorst said. The chamber argues that other states with paid leave are less generous. And none are in the Midwest, she said, though Michigan, another state with a recent Democratic power trifecta, is considering it.

Schothorst also said she is concerned with the fiscal analysis of the bill — or lack of one. Fiscal notes are assessments by legislative staff of the costs of legislation. The fiscal note for SF2 was commissioned before some changes were made, including exempting some small businesses from the premiums, and creating a fund to help small businesses that have multiple workers on leave at the same time.

The fiscal note says that the payroll tax will still be 0.7%, divided between worker and employer. But the assumptions about the use of the program — how many will apply for benefits, what their weekly benefits might be and how many weeks they will draw benefits are — determine the required tax rate.

Schothorst said she thinks the Legislature will need to draw more from the surplus to get the program going, perhaps as much as $1 billion. She also said that an addendum to the fiscal note to determine how much the program will cost cities and counties, and in turn their taxpayers, is pending.

John Reynolds, the state director for the National Federation of Independent Business, said he too has questions about the fiscal note.

“The state’s estimates about program cost are opaque, but it seems really clear the program will cost a lot more than people are expecting,” Reynolds said. “If our experience is closer to those states, the program costs will explode. Small employers will face a much higher payroll tax – possibly closer to 1.2% or 1.4% instead of 0.7% – on top of significant workforce and administrative challenges.”

The chamber knows how important paid leave is to the DFL and has heard the promises of Walz and legislative leadership that it will pass.

“Very clearly from the start of session there was a commitment by the governor and House and Senate leadership that this was a priority and they were going to get it done,” she said. “But the details do matter. And as the legislative session has moved forward, a lot of issues have become more understood. Our concerns haven’t changed.”

The chamber prefers GOP bills, such as Senate File 463 by Sen. Julia Coleman of Waconia, that would create state tax credits to help employers purchase private family leave insurance policies. Those bills have not received Senate hearings.

The bills have broad support among unions as well as worker rights and social justice organizations. The Mainstreet Alliance, a progressive small business organization, also supports the bills.

The fiscal analysis is being revised due to changes made since it was first commissioned, but as of now, the new coverage will require a premium equal to 0.7% of wages, divided equally between the employer and the employee. Once fully up and running, the payroll tax is expected to collect $1.5 billion a year.

“The tax rate should stay where it is,” Mann said. She did agree to amend the bill to hire an independent actuary to assess the financial elements of the proposal — administrative costs, benefits and premiums – to assure that it will balance. But approval of the program will likely come this session, and adjustments made if necessary in subsequent sessions or even the next Legislature.

Like unemployment insurance, benefits would be paid weekly and be based on the employee’s pay (bill summary here). Benefits would last for 12 weeks for an employee’s own serious health condition, including pregnancy, and 12 weeks to care for a family member, including a new child. The bill has been amended to cap at 20 weeks the amount of leave someone could take using both. The experience in the other states is that most workers don’t take the entire leave allowed, partly because the benefits only partly reimburse for lost pay. Depending on the pay level of the worker, reimbursement could range from 90% to 55%, with lower-paid workers receiving the higher replacement rate.

Unlike employer-provided paid leave, the proposed program is portable. That is, it follows workers from job to job. And one of the design elements is to have as many people included in the pool as possible to share costs. The fiscal analysis estimates that about 200,000 employees might be using the benefit in any year.

The federal Bureau of Labor Statistics estimates that only about 25% of workers in the U.S. have access to paid family leave, and that number doesn’t change by the type of workplace — 24% for private sector employees, 25 percent for federal workers and 27% for state and local workers. A survey of Minnesota chamber members reported that 80% offer some type of paid medical and family leave.

Eleven other states have similar paid leave programs running. At least four others are considering legislation. The 71-page Minnesota bill is on its seventh engrossment, meaning it has undergone enough changes that it has been written through that many times — a number just one shy of an equally complex recreational marijuana bill. But while recreational marijuana has opponents, paid family and medical leave has weighty opponents — the Minnesota Chamber of Commerce, the National Federal of Independent Business and long-term-care providers who rely on state reimbursement payments to cover payroll costs. And it has some normally DFL-friendly groups asking hard questions about affordability, including the state’s local governments and school districts.

Mann said the 2023 Legislature is pushing for large increases in funding for schools.

“We’re making historic investments in education,” she said. That includes closing what is known as the special education cross-subsidy, which now has local districts making up for the shortage of funds from the state and local governments. The same is happening with money for the English language learners program. And the increases in the funding formula that provides the bulk of school funding could be in the 5% a year range. School districts should consider that when they decide whether to support the paid leave plan.

“It all comes as a package,” she said.

The Legislature is taking its Easter/Passover break and will return Tuesday. It moves then into the passage of budget bills in order to get them into House-Senate negotiations over any differences. Then, bills like paid family leave should reach the floors, sometime after mid-April. The regular session ends on May 15.

Is there a friendly competition between Mann and prime House sponsor, Rep. Ruth Richardson, DFL-Mendota Heights, to be first?

“It doesn’t matter to me whether we go first or not,” Mann said. “I will continue to do the work on my side like I’ve been doing, and it is what it is.”

Editor’s Note: Peter Callaghan wrote this story for MinnPost.com. It was originally published on MinnPost on April 6.

Callaghan covers the state government for MinnPost.

MinnPost is a nonprofit, nonpartisan media organization whose mission is to provide high-quality journalism for people who care about Minnesota.