RE: Public comments regarding the recommendations surrounding establishing a Paid Leave Insurance Program within the state of Colorado.

September 25, 2019

Dear FAMLI Task Force Members,

The REMI Partnership is a group of public and private organizations who collaborate to provide Colorado lawmakers, policymakers, business leaders, and citizens, with greater insight into the economic impacts of public policy decisions that face Colorado. The parties involved include the Colorado Association of REALTORS®, the Colorado Bankers Association, Colorado Concern, Common Sense Policy Roundtable and Denver South Economic Development Partnership. This consortium meets monthly to discuss pressing economic issues impacting the state and to prioritize and manage its independent research efforts.

Over the last few decades, employers nationwide have made advancements in providing additional non-wage benefits desired by employees. As you are aware, SB 188 proposed a bold intervention to establish a state paid leave insurance program, substantially changing the current framework Colorado companies would use when considering what benefits to offer their employees. In April of this year the REMI Partnership released an analysis of the original version of Senate Bill 188, which can be found here www.remipartnership.org/senate-bill-188/.

This report studied the factors that would impact the overall feasibility and long-term sustainability of the proposed program. SB-188 widened the eligibility criteria and proposed substantially higher wage replacement rates compared to similar policies in other states. The REMI Partnership study highlighted the risks stemming from the uncertainty in future utilization rates.

We are hopeful that one outcome from the completion of this task force is a better understanding of those potential risks:

  • Program financial risk
  • Operational disruption risk to employers
  • Financial risk to Colorado businesses and Colorado economy

The following are specific areas of concern that we are hopeful a complete actuarial analysis can address:

  • If employers would benefit from a paid leave program, from higher retention and labor productivity alongside lower turnover costs, what is currently limiting the private market from offering similarly priced paid leave insurance options at the rate at which the state payroll tax suggests?• What is the likely utilization rate in Colorado given the previously proposed progressive wage replacement rate, and how would it evolve over the years as the program gains popularity?
  • Are there cyclical or other factors that would cause the utilization to significantly fluctuate from the projected average?
  • Is it possible to design a state managed paid leave program where the benefits adjust based on revenue availability rather than perpetually requiring additional revenue to fund any potential future shortfalls? Would an adjustment mechanism on the benefit structure ensure greater feasibility and sustainability of the program?
  • What are the foreseeable economic impacts on employment, income and GDP under both low and high utilization rates? Do these vary substantially by industry, time of employment (part-time, full-time, hourly, seasonal, etc.) and other characteristics of employer/employee?

Thank you for convening on this important issue and we hope some of these questions are helpful for your deliberations.

The REMI Partnership