 All right, we are returning to H107. Ron's gonna hook us up with a phone interview with Ray Pepin from Rhode Island, who is the temporary disability insurance administrator. We talked to him two years ago, I believe, in this committee. Rhode Island is one of the few states that has had an active temporary disability insurance program. They've had it since about, well, Ray will give us the information, but basically since the 1940s. Very quickly if we could just introduce people around the table. And I don't think we need to introduce ourselves individually to Ray, so if we could introduce ourselves here, and then I'd just like to also introduce, hear from folks who are here in the room as well. I'm Representative Tom Stevens from Waterbury. I'm Representative Deanna Gonzalez from Moinespe. Representative Matt Byron, Gradens, Randall Zod, Barnard. Representative Marianna Gamache from Swanson. John Kalaki from South Burlington. Tommy Walts from Berry City. Chip Troiao from Standard. And Representative Howard is having surgery today, or yesterday, she fell in hurt or arm. And we have a vacancy, and Representative Long may join us. She is the house majority Web, so she's in and out of committee. Who else is here for today? David Van Dusen from Union Rep for AFSCME. We're here because we very much support big family medical. Hi, I'm Julia Rogers. I am in the Snelling Center for Government's Vermont Leadership Institute class this year, and I'm also on the board of Main Street Alliance. I'm Dennis O'Bowney. I'm with the Vermont AFL-CIO. Charles Byron with the Vermont Chamber. I'm Ashley Moore with the Main Street Alliance. Tess Kennedy with Sheldice and Associates. On behalf of a variety of clients. Jill Rickard with the Department of Energy Regulation. Will Beacom with Downs Rockland, London. Holly Alt with the Vermont Early Childhood Advocacy Alliance. Ginger Irish also with the Snelling Center for Leadership. I'm Susan Betman from Torca Media. Great. So, as Ron's dialing, it just, we're picking up, we're gonna find out, this H107 has a proposal in it, where a portion of the 12 weeks can be used for personal disability, which is a concept that did not get included in last year's version of the bill in the end. This is a new, this would be a new idea for Vermont, but it's also something that I think what we'll hear from Rhode Island and perhaps other states is that they've been able to manage this bill or this concept. And we can ask the questions about bankruptcy, solvency, et cetera, and how the program has worked over the years. Good afternoon. Is this Ray Peppin? Yes, hello. Hi, this is Representative Tom Stevens, Chair of the House General, Housing and Military Affairs Committee. How are you? Good, good afternoon. Ray, we talked to you a couple of years ago on this very same issue. Vermont is considering a paid family leave program that considers adding this temporary disability insurance to our paid family leave program and Rhode Island has had it for quite some time and so we were gonna just sort of ask you what the experience has been for Rhode Island, how it's set up, how much it costs, and how it's managed to last since the 1940s. Okay, yeah, I'll do my best. I do recall testifying, I didn't know for last year from what you say it felt like it was it wasn't. It was two years ago about this time. Okay. So it's all yours, we've got a roomful of people and a committee here who may ask questions throughout the interview, but I'll try to manage that on this end. Okay, very good. Obviously I can tell you're on a speaker so I may have to have you repeat some things, particularly if there's some people further away, but we'll get through it. Thank you. So we're ready when you are. I'm ready anytime. Yeah, just so, what is Rhode Island's program? I'm sorry, what about Rhode Island's program? Exactly, what is, how does Rhode Island's program work for an employer and an employee? Okay, so Rhode Island's temporary disability insurance program, state and the country to have it, it started in 1942, since the taxes are on the employee there is no tax to the employer in the Rhode Island plan. It's employers happy obviously. So that's one of the big things. We've been doing it, it's a legacy since 1942. It provides a percentage of the wage replacement income for someone for their own illness. Then in 2014, the act, the temporary disability act was amended to create two more qualifying reasons to collect PEI. We added our bonding with a new child as reasons to collect temporary disability insurance aside from your own illness. And for those two new reasons, it's capped at four weeks. You can only receive four weeks of PEI for the TCI purposes. And that's not four weeks per event, that's four weeks total in Acclaimia for any and all TCI reasons. You guys have, it sounds like you're calling quality paid family leave or something like that. But if I say TCI, that would kind of be what you're talking about, you know, paid family leave for portion. And TCI, you're doing an album that is separate programs. When you qualify, you're given a maximum entitlement of TCI that you can receive in Acclaimia. And that's for any and all illnesses or filings for the TCI benefit. So it's a max four weeks, whether it's for an individual's personal health or care for an elder or a child? Right, right. In other words, say you were, and that's in Acclaimia, but that has nothing to do with your, you know, it comes out of your TCI balance, so to speak, because it's not a separate program, but it's not for event. You can't say care for your ill wife right now and a few months from now on with a new child, you would have probably already lost it your whole weeks here into your wife, if you know anything. And so what about the amount of TCI when you say it comes out of our account? Like, how many weeks of TCI can- Well, the maximum anyone could possibly get on TCI in Acclaimia would be 30. But the, I wish four of those, you could use for TCI purposes. Obviously, most people don't qualify for the maximum 30 weeks. That's all based on your earnings. And I don't want to get too insidious for all of you. That's all on our website on how we calculate things. But any individual filing that the average last year, I'm looking at 2017, we don't have the numbers in finalized for 2018 quite yet. But in 2017, the average TCI claim is about 13 weeks. And so what does it cost the employee? Okay, so the cost of the employee currently is 1.1% of the first $71,000 they earn. And is that where it stops? That's where it's, yes. The taxable wage base is a formula for that and how we get to that. But basically the way it is, that would be $71,000. That's the minimum amount somebody would have to earn to earn the maximum weekly rate that we have for the maximum duration of 30 weeks. If anyone earns more than 31,000, they still won't, that's all they'd be able to get. So that's where it ends. That's the minimum amount that you would need to qualify for the maximum rate for the maximum duration. And so that's recalculated every year. And what is the max weekly rate? Currently the max weekly rate is $852. So recalculated every year as well. There's always a, it's all obviously in the law, and again, I don't wanna get you bogged down on that. But it is all by statute, so it's self-regulating. Every spring our labor market information unit has to do the calculations. And our maximum benefit rate is adjusted every July. It could go, I've been here 29 years. It has never gone down. It's always remained the same or increased. But theoretically it could go down. It's based on the average weekly wage in Rhode Island for the prior calendar year. So theoretically I guess if you had a fluctuation situation or something and wages really went down and the benefit rate calculation maximum rate the next year could go down. Like I said, that has not happened in my career, but it's not that it's always the same and going up, it's just recalculated every July. And so this, so the fund that it's put into, has that ever come close to being insolvent like during- No, no, okay, that's another thing that's also in there. So that's not dependent on any legislative action. It's already in the GDI Act as to how it's calculated the rates and so nobody has to touch it if that's looked at every fall. And I don't want to get too complicated, like I said, but basically there's a formula where we're looking at the last six months expenditures in the GDI Fund versus the balance in the fund. And if our expenditures are more than what the fund balance has on hand, then the tax rate for the next calendar year is adjusted upwards. We're around the same and the tax rate stays the same and the balance of the trust fund is healthy and then the tax rate can go down. And that's what's happened in Rhode Island in recent years. We were at 1.2% for about six years and then it went down to the 1.1% that I just quoted you a year ago and it remained 1.1% for this year as well. And how many months do you have in the fund? How many months? The portion? Yes. Yeah, the calculation is, like I said, it's looking at a six month balance so basically it's looking to make sure that there's enough money in the fund to pay six months worth of benefits even if no more tax dollars came in. And if I receive, so if I receive, well, if I need to apply for this insurance, who do I apply to and how is the decision made? Okay, so you're applying, it's temporary disability insurance is part of the Rhode Island Department of Labor Training. That's another thing I didn't mention, I guess, before when I was saying I was at 100% employees but we're also 100% government run. Some of the other states that you may read about or investigate, they have where an employer is to maybe self-insure or third party insurers can provide policies to satisfy that. We don't do that here. We're 100% government run so it's run by the taxes that are withheld from the employee's pay remitted to the Department of, the Division of Taxation Employer Tax Unit and then the benefits are administered by temporary disability insurance here at the Department of Labor Training. So you would file a claim, Department of Labor Training, we're the ones who administrative and all the ways to apply around our website and we allow you to apply by paper or online. So if I make $40,000 a year, I mean, given your $852 cap, roughly, if I make roughly $40,000 a year, I can expect 100% wage replacement but if I make $80,000 a year, I'm gonna get roughly 50% wage. No, no, because all we were talking about there was the maximum entitlement. We weren't talking about the calculation. So how is that calculated then? Okay, so that's a percentage of the highest quarter of earnings in the base period for the claim. So we are, the laws around the temporary disability insurance program is very much mirrored and piggybacked on the employment security program in Rhode Island. So we use the same base periods as they do it on employment. And then we calculate benefits in a very similar way. It's a funny calculation, but it ends up, somebody's going to get roughly about 80% of their take home, typical take home is what they're gonna end up with in their TDI benefit. And is that then taxed or is it the way that it's set up, is it considered? No, the TDI program is not taxed. It's not considered taxable income. What about the TCI? The TCI component, the IRS has determined that it is taxable income. So that, we do 710.99, so as a matter of fact, we're getting a lot of people contacting us now asking where the 1099s are, they've already went out. So obviously, so people haven't gotten them yet, but that's something we have to do on the TCI end of it. So I'm gonna step back a little bit. So 13 weeks is the average usage of something that someone has access to for up to 30 weeks. Is that right? Right, right, right. The average claim last year was about 13 weeks, but the maximum I can collect in a 20 year would be 30 weeks. And that can be 13 weeks of I need two weeks to take care, well it's all personal stuff except for the TCI, so if I sprain my ankle and I need two weeks off I can apply. Right, and then a month later something else happens and you're out for another four weeks or you had a serious illness and you're out for nothing. Up to whatever the maximum we determine you're entitled to when you claim you're. By law that number cannot exceed 30, but it's a calculation and most claims don't qualify for 34 weeks. And what about enforcement, abuse enforcement? What kind of enforcement? Yeah, abuse. Oh, abuse, okay. Well the good part about that is the last time we had an audit I think they looked at over 40,000 claims and they came up with only 42 that they thought were possibly had an issue. And again that's not, they said those 42 didn't actually have an issue. They were saying that there was 42 that possibly might, so that's a really ministerial number. The good portion about it is because you have to get your doctor to sign the forms and we're verifying the last day work with the employer in order to have some sort of fraud or anything you're gonna have to get a whole lot of other people involved who have no reason to be involved. But we do have a fraud unit and they do investigate claims and it does happen. So the Department of Labor Training has an unemployment insurance, temporary disability insurance fraud unit and they're our investigative arm. And they don't want to go out and do things. And then based on what they come up with they'll either work with the Attorney General or if it's something involving doctors they'll get the Department of Health involved because the Department of Health is one of the licenses for the doctors. So Rural Islanders have other sources that they use that's not TCI in case they need to take care of children or their parents? No, no, there is no other program. There is a, the legislature did pass a year ago paid tick leave so somebody could do that if they had to take a day here or a day there but in terms of anything a week or more they would be having to file for TCI. And can you speak to why only four weeks of family care? Like politically, how did that number come up as, I mean that 30 weeks is very generous and four weeks is kind of not in- Right, well I can't speak honestly, I'm not a legislator, I don't know what their intent was. I can only guess the reason is it's not necessary, you know if somebody's having a long-term family situation the month or four with pay gives you time to come up with the plan so to speak to take care of that situation it isn't necessarily the plan. But that's just the congesture, I really don't know, I'm not the legislator, I don't like the laws, I just administer the ones that they write us. No, I appreciate that and it's always hard not to ask the administrators those questions but I appreciate it. Sure, sure, but again that's not my role. Yeah, they tell us that they write the laws and then we do our best to make it happen. And we can look this up certainly, but what do you consider for the TCI, what do you consider family? I think what they put in the bill off the top of my head without them looking up for you but it's, we can find it, that's- Yeah, it's a great analysis, I don't want to forget anybody but it's basic, it's who you would consider to be a family member, domestic partner on the road to the civil union so we sometimes get people trying to file and I don't understand the legal leading in Rhode Island for domestic partner as opposed to what they consider, what they think the interpretation of that is. And committee, any time you have a question please pipe up. So just to circle back on one of the things that you had brought up, say something, on your theoretical person, somebody who makes around $40,000 a year, that person's going to qualify in Rhode Island and will offer around $460 a week. Okay, but those are, and again if I apply, oh Ray, I broke my ankle, you're going to make a determination based on whatever the, whatever- Right, right, right. And again, because we're part of the Labor Training and the same division with unemployment insurance and how laws mirror each other, we take you back on a lot of the same data that they do, which is also something that makes it easier for the employers. They withhold the employees' contributions of TDI from the pay and they remit it quarterly, they remit the TDI taxes with their employment security taxes and the wages that they need to report to the wage record division of our division of taxation. So they're dealing with the division of taxation on that, you know, quarterly, all the same. So it's not like separate mechanisms or separate bureaucracy that they have to deal with. And so we're going to make our calculations based on the wages in the wage record system of the division of taxation reported by the employers. And again, for that $40,000 a year person, The theoretical one would end up, just based on our calculation, it's actually giving you an easy number to deal with because I could take $40,000 and divide it by four and come up with a quarterly number of $10,000 times the calculation we do. And so it's 30s from, I tell you, around $460 on that theoretical person. And that's equivalent, is that the same calculation that you'd make for unemployment insurance? No, they actually use a less generous calculation. Okay, and same for workers' comp? Yeah, and obviously there's reasons for that. I don't know what happened in Vermont a few years ago with the recession, but here the employment security trust fund had a problem and so they had to adjust the loans and make things a little less generous to try to replenish the fund and repay the money that they had borrowed from the USDOL. I don't know if that happened in Vermont or not, it happened in a number of states, though. Yeah, it did happen here. I think we just heard from our Department of Labor that they've just finally put the unemployment payments back on CPI anyway. But it took a while. Yeah, so as a result of that, there was a lot of changes in employment security law in Rhode Island and so taxes on the employers went up, but also benefits to the claimants went down as a way to try to replenish the fund so to speak and make it more sustainable. So their calculation is not as generous as ours, but it's similar. What is your administrative percentage, do you think, of the money that you take in as a government? Yes, yes. I always like talking about this because I know that people always try to consider the private options and things like that. But over the last 20 to 25 years, we've averaged 5% or less in administrative costs for the program. And is that a result of just having a really mature program? Well, I think that's probably part of it. I just think that you can't do the private component obviously they're going to have to make a profit so there's going to be other pressures there whereas we don't have any of that. We're just running the program as best we can trying to make sure that the tax rate doesn't go up but the benefits go up. And how many people pay into this program or what's your uptake? I guess both. What's your percentage uptake on this? Well, let's see if I can find that so quickly I don't have that laid available. I think, I want to say a year ago I want to say that the percentage is around a key percent uptake off the top of my head. How many folks, how many working Rhode Islanders are there? I'm covered by the program there's a little over 450,000. We have substantially less. Surprise, surprise. We're less than yours or more? You're less. I mean, I'm sorry, we're less. Vermont's less. Vermont's less. So that's what I thought. And that's a number of participating who are subject to TDI law. There are more than that working in Rhode Island but that's the number of people who are subject to TDI law and have taxes with health and decay. Representative Sot has a question. I was just curious if you had the average turnaround time between when a claim is initiated and that person receives the check. Yep, I can tell you that 100% of the claimants get a payment or a decision telling them why they're not getting paid in three weeks or less. Do you include independent contractors or just sole proprietors? No, they do not participate in the program. It's a W2 payroll employment for subject employers. Representative Byron. And that's a subject employer that's all private employment and then governmental entities who have elected to participate for different classes of of an employee. Who is that? Well, any governmental entity they're automatically exempt from participating unless they opt in and so a lot of them end up opting in to cover classes of worker based on bargaining agreements where the union workers want to participate and they kind of bargain in that they want to participate and so they cover that class whatever's in that. I'll give you a typical example would be school department and it would be it's not uncommon in Rhode Island for a school department for their 12 month employees to participate in GDI and their teachers not to. Okay, Representative Byron. Yeah, if there's a denial to a claim is there an appeal process or is the denial final? Yes, yes. Any decision is appealable again, as I've mentioned many times we were kind of a partner or a sister to our unemployment insurance program so they would appeal and we would obviously investigate if it's something that's on our end that's you know, fixable. If we are convinced that the claim should be denied and we will forward it to the border review for Rhode Island that here will employment security and temporary disability insurance claims and they'll have a year before a referee at the border review. Okay, thank you. Yeah. So what haven't we asked yet? I'm sorry. I mean without getting all I mean I know that you've been very good about about not like geeking out too deeply into it we are legislators after all but what am I missing or what are we missing in our question so far is there anything glaring in any of the questions that we've asked? So yeah, like I said I'm sorry sometimes when I'm trying to listen because I know you're on speaker. It's hard. So you're basically saying is there anything that I should tell you that you want to know that you should know that you haven't asked me? Yes. Okay, I'm trying to think. No, I mean the highlights in Rhode Island again is you have to figure out obviously what works for Vermont which is not necessarily what works for Rhode Island but I can tell you that we've been doing this since 1942 the trust fund's never gone bankrupt. We're paying people in three weeks or less we're doing this 5% overhead but we are the only game that's 100% government run so I would think that you really do need to consider that strongly when you're looking at a program because it does take that whole profit margin out of the equation so hopefully you're getting more for your tax dollars. Again, obviously I am a government employee so I'm proud of the program but I can tell you that it does work before I go to the administrator and I know work after I'm going to ask long after I'm gone, I'm sure. Any further questions for Ray? Ray, this has been very helpful. Thank you very much. Okay. If we have any follow-up questions we'll be sure to do that but this was really a nice session with you so thank you very much. Very good. Yeah, I guess his name was Ron Wilde he has all my contact information and somebody had a follow-up in the event we didn't touch on. I would advise you to go to our website there is a lot of information there and of course there's a link to all our laws and so that can give you a good head start to things to think about. Our legislative council is sitting in the room and I'm sure he just bookmarked it so thank you very much. Okay. All right, have a good afternoon. Yes, good afternoon. Good afternoon. Okay. Every state does it differently. Really? Yeah, it was interesting. So Damian, here you are. Good afternoon. For the record Damian Loner of the legislative council. Right about me. So where would you like me to begin? Do you want to ask questions? Do you want me to go through the administration in the bill? Well, what's our pleasure? I mean we heard their numbers I mean our numbers again are different because we have less employees we have a different number of taxation numbers that's lower than this. We have our guesstimates of usage are higher than this I believe is it 13% that what was the number that Joyce came up with do you remember? Don't remember. Okay. It's in our documents but this bill, I mean we heard this our H107 proposes essentially what Rhode Island has put into place with some pretty key exceptions but the idea that the government run insurance product and that their administration is at 5% which is maybe a little bit lower than we put in but we have to start up. Right, so we've our modeling was done on an estimate of 7.5% and the start-up costs that were quoted last year for a similar bill were above that for the initial years so we're looking at Joyce did some projection of kind of the sort of bump in expenses in the early years of setting up IT and adopting rules and so forth and then the expenses leveling out as time goes on and so that was available last year and that's something I can forward to Ron for him to post for the committee but that's something that's a difference between us and a more mature program is that our initial years will have some expenses it would potentially be if the data was available it would be interesting to look at Washington State Massachusetts and Washington D.C. none of which have a mature program and all of them are also starting from scratch but they would have some information too at this point on what their start-up costs are and it's with those three states just for comparison's sake we're seeing contribution rates in Washington State of 0.4% split between the employer and the employee 0.62 in Washington D.C. and 0.63 split between employer and employee in Massachusetts for their initial rates their benefits are a little bit different their max benefits are a little bit different and their coverage is a little bit different but those are sort of the rates that we're seeing in those states in the more established states you're seeing rates of 0.9% I'm sorry, 1% in California and I'm looking at the old one here I sent Ron an updated chart I believe 1.1 is Rhode Island right now and New York State is a little bit funky because there's the old TDI program in New York State where employees pay 0.5% up to a max of 60 cents per week and the employer covers the balance of the cost so this was but it's all part of the employer's workers comp policy so the pooling of those costs you're not on just an outside of work and then the benefit under that program was extremely small so you're again it's not an apples to apples comparison do we have any idea of how long startup costs might run out in years? you're looking at probably if I remember last year's testimony on that issue we're looking at probably 2 or 3 years so most of the modeling projects 2 years to build up IT and get the human infrastructure in place and adopt rules this bill and last year's bill are essentially looking at 12 months to get things in place to start collecting contributions in another 15 months after that to build up the fund going forward is that right? it's 2 years complete so it's one year to get things in place and then it's July 1 of 2020 through October 1 of 2021 to get to the point of 75% of 75% so that is 15 months to get to that sort of funding the reserve and having enough money in there so that if there's a rush on day 1 you're not going to be out of money or percentage much so looking at the figures that you have regarding the states do you have population working population figures I'm wondering since the states are different percentages are different has the workforce the numbers of people in the workforce has that had a bearing perhaps on the how they have formulated yeah is there you can't make a comparison I understand that but I'm wondering if there is some way of making a determination how they arrived at the model that they were using was it likely on numbers of people working and also this is a combination of employer and employee if I'm understanding this right words is all the employee right and it varies from state to state so the funding mechanism just pull up the so the funding mechanism in the states varies somewhat dramatically New Jersey splits between employer and employee New York splits between employer and employee for disability insurance family care is entirely covered by employees and Washington state splits between employer and employee as does Massachusetts Washington DC puts the entire cost on the employer and then Rhode Island puts and California both put the entire cost on the employee so there is there is that there is obviously with each of these statements there's differences in the population but the model that's used to develop this is based on demographic information from the state that it's modeling it for and then plugging in the parameters of the program so they look at American community surveys data that's prepared by the U.S. Census over a period of a couple of years it's a four year period and then they take that data model with certain parameters like their 7.5% assumed administrative cost and then the other requirements that might be in the program to get to their estimates for what you need as a contribution to actually support those and part of that is based on historical data over uptake in other states and then trying to extrapolate that onto the demographics of the state so it's an estimate there's no guarantee that it's perfectly accurate but they're basing it on some more established programs to try to get there and the splits are different percentage wise between employer and employee depending upon the state? Yes, so Massachusetts is creatively worded to get to what is essentially a 50-50 split so what they looked at when they were doing it is what is the sort of usage and cost associated with each thing and then they set the percentages even though the percentages don't read as 50-50 in the end they work out to 50-50 roughly although there will be a little fluctuation. Washington state is I'm just going to bulk up my head and say that looks closer to 60-40 but it's a 0.145 for the employer so 0.145% for the employer and 0.255% for the employee and Washington state is still in that pre-usage period where they're building up their fund so they're at their initial funding period and they're going to be effective on January 2020 so one year people will just be beginning to use the benefits there Washington DC it's 0.62% for employers and then in New Jersey it's 0.25% on the first 34,000 for employees but then it's based on experience for employers and employers in New Jersey have the option of purchasing a private leave insurance policy that at least meets the requirements of the state policy if they find that to be more cost-effective or a lot more desirable same in California if they can find a policy that meets the minimum terms of the state and it works better for them but in that case so in that case the employee still is paying 0.25% regardless of whether there are employers using the state run or the private run I think that they can't charge the employees anymore but they can charge them less and New Jersey's got some other sort of and it's been a while since I looked at their law but if I remember rightly there are employee consent provisions in there too and the employer wants to switch over either one way or the other the employees have a chance to say no and I cannot remember exactly how that works but that's something I could report back to the committee on if you wanted more information on that Representative Palaki can you help me understand places like the ski industry or the shelter and farms that have although they have more than 10 employees but then seasonally they build out but those build out employees that they be eligible for this and in the summertime if they're like at a shelter and farms in the wintertime if they're one of the skis potentially so under the H107 you're actually not required to be attached to an employer when you take the leave so there is the potential that I could be a seasonal employee and if I earn the minimal amount of earnings so I've paid contributions on roughly $11,200 of wages taxable wages that I have to pay contributions on and then I work for let's say smugglers notch and they cut me loose at the end of the ski season and I'm looking for a job when a family member is diagnosed with something and I have to stay home and care for them and I can no longer look for a job I could then take this benefit and then they would look back at my average weekly wage during the past year and calculate what my benefit would be and I could take the benefit there as long as I'd earn that amount and paid the amount into the program if on the other hand I was brought on by say a retailer for a month before Christmas you know let's say I was working an extra 15 hours a week and so you know maybe I had $2,000 in earnings or something like that over the whole holiday season but I hadn't gotten up to that $11,200 cutoff and I had no other earnings in the last 12 months in the state then I wouldn't be eligible for the program because I hadn't made enough contributions regardless of whether I was attached to an employer or not so that's kind of where our program is similar to some programs and different from others so we don't require attachment to the employer you just have to have worked enough in the state to get to a sort of point where we've said that seems reasonable where you've made enough contributions to the fund that you can now withdraw benefits from the fund and it prevents people from you know doing something like working in Vermont for two weeks and then taking family leave right away you know on the short term earnings but if you have people who we do have a lot of seasonal employees in the state and provided they're earning that minimum amount or people who work two or three jobs over the course of the year again provided they earn that minimum amount they're eligible for benefits whether they're between jobs or with an employer the big question if they are with an employer is whether they would qualify for job protection or not and that's something where your employer has to be large enough to be covered by our job protected unpaid leave law in order for you to get job protection under H107 a minute ago you talked about in some of the other states if you wanted to shift mechanisms from private public and it was an employee vote what percentage of that of the employees would have to vote to change over to a queen like 5149 two thirds I can't remember the specifics I think probably the best thing for me would be to pull up that language and just send the summary to the committee thank you Damien, does any of this leave qualify, I was asked earlier today does any of this leave qualify as bereavement leave I think last week you said we need to ask Joyce what represents 75% what represents the money to start the program we're talking about taking 25 months or 28 months almost to to start a program from scratch what represents the 75% and I'm not counting the start of costs or different number but what is a is that still a Joyce number for us to ask if you give me a second I'll pull up last year's bill and Joyce prepared a summary for last year I'll have this person for a moment but I'll pull that up and give you just kind of a summary from last year these numbers might change this year depending on testimony from the executive branch and how the bill ends up do you want another question while you're waiting sure, you can give me another question and I'll answer while I work we talked last year about this here a little bit about the notion of start of costs and that's starting with if this bill were to become law July 1st the account is zero we're starting from scratch and that there's an element of and I know it's DFRs but there's an element where the program can essentially have a credit card they can borrow against can you explain that this ostensibly would be the way that we would say well we need X amount of dollars to buy the computer system to monitor this program to administer this program where does it come from so under existing law related to special funds there is authorization for the commissioner finance and management to issue warrants against anticipated revenues typically that's done on a very short term basis in this instance because it was set out a year out the appropriations committee has explicitly put in that language to make it clear that they could issue warrants basically against anticipated revenues from year two the alternative approach would be to just appropriate the funds outright for the first year the and the reason you may want to consider that alternative is because when you're borrowing funds against anticipated revenues they need to be paid back with interest so it actually ends up being more expensive for the program in the long run to do it that way you're also in some way setting the precedent of large scale borrowing against the overall special funds balance and I'm not a finance person so I can't tell you on a given year how much certain special funds borrow against the overall balance of the accounts but it does happen I just don't know how much but that language was included last year just because the scale we were talking was millions of dollars with revenues not anticipated for 12 months at least so it's a significant upfront cost without an appropriation going with it so when you say it would set a precedent is that implying any is that implying that this is not a normal practice I'm not sure I'm the best person to answer that it's probably a Steve Klein question but it's not something that I I've come across in my four and a half years here but that may have been done for other programs in the past that's what made it into the bills last year this year new legislature you may want to try different language more specifically appropriate money so it's a different different budgetary year and so forth but that's really a policy decision for the legislature as to how they want to approach this going forward I know you have lots of things going on but any clarity around the foster care age and maybe not on the foster care so I have not had a chance to reach out to the contact at DCF my colleague Katie McClendon couldn't think of a reason why 16 would be the cutoff so that may be something that it's worth getting DCF and to testify on about whether that number should stay at 16 years of age and I am not aware of any particular historical reason but like I mentioned last week we're back almost 28 years ago now that that language was put into statute so that the circumstances may have been very different then in terms of what they were looking to protect there we go okay I've got the cash flow numbers from last year I apologize I took a little looking too while I was answering questions yeah I can do that do we have a hook up here is it down here great on the screen it'll just take a second if you've done this Howard is not here so we might have to be recruiting another iPad Meister to help witnesses yeah so the this I should again note is these were preliminary rough numbers for last year's bill so we're talking about different benefits very different contribution rate but this will give you a little bit of a sense of what we're looking at so just stand up here so these are your revenues from contributions up here so we're back a year on the fiscal year but the first year no revenues would come in because your IT system just wouldn't be set up to accept them then going out after that you're looking at about $18 million a year and this was on last year's I can't remember if this was the final version of the bill or not but it was 0.136 or 0.18 was the contribution rate that we were looking at then the revenues would be significantly higher under H107 because you're looking at 0.93% contribution rate roughly and that number may as Joyce mentioned last week will probably change after the new modeling is done so you could be looking at something closer to $800 million a year if the contribution rate stays up at this level so there are long moving parts the total cost though so this is the total number for benefits IT, administration, and reserves you'll notice in the first year we're looking at about $500,000 in change for IT development and then the admin number was bumped up to 8% so we're looking at $518,000 for the personnel costs in the administration and then $333,000 for IT and then about $550,000 for personnel and then another $164,000 for IT and then going out in the fiscal year 2021 you start to see benefits paid out and the IT costs dropped to 0 and then you'll notice the personnel costs go up significantly to $1.3 million and then $1.7 million and $1.8 million in out years part of the reason for this is lower cost is because you start with one quarter of the year already gone so it's only three quarters of a year and then the first full year would have been fiscal year 2022 with last year's bill all of these years would advance one year with H107 so what you're basically looking at you'll notice here is that when you're in the fully operating years there at the projections here in Joyce's model you're looking at actually the funds being slightly less than the output that could be adjusted for by the legislature by tweaking with the contribution rate so with the reserves here the reserve is building up and then it shows what the needed additions are to the reserves each year as we go forward so we're looking at an additional $13 million here's that negative interest I talked about so $17,000 of extra cost from borrowing that need to be paid back and then each year here the additions to the reserves go way down going into year two in these other years and the additions to the reserves in those years because we expect the benefits payments to be going up so the nine-month reserve has to go up along with benefits payments as they go up for both increased uptake and inflation and then so this looks like an allocation a start-up allocation of $518,000 at $17,000 in interest is that safe to say? yes it's actually 851 851 yeah okay so that was the start-up estimation again for last year's bill now the big caveat with us was that the IT development costs the estimates were all over the place and that could be the major cost driver for this so with the department of labor last year their IT development costs were over $10 million rather than the half a million projected here I believe tax had a much lower cost but I think it was still in the millions of dollars and part of the reason for this is because the I believe the original modeling was based on the idea that we could do like Rhode Island did and piggyback very tightly on our existing UI system for a variety of reasons the main one being that we're part of a consortium with two other states that's overhauling our UI IT system and neither of them have this program we're unable to piggyback on our UI IT system which leaves us either creating the system over a tax and then also creating a way for tax to talk to labor or creating a new system out of whole cloth which would be more expensive so that's why this bill has the dual administration but this was these were some of the numbers towards the end that were developed just to give you an idea of the cash flow I think with this bill we're talking about like I said larger income and probably higher IT costs ultimately but you're going to want to hear from the administration and Joyce and the model are a bit more on that right and those are the numbers that won't be available for a little while a couple weeks down there my question is actually kind of in that thread so the first two years 1920 you had the IT product development but then I don't see anything allocated for upkeep, maintenance integration there doesn't seem to be any kind of designated allocation so that is rolled into the admin costs okay so it's falling that's my understanding okay memory of this so it falls under that same admin IT benefits reserves yeah and actually you can see I mentioned that I wasn't sure what the payroll tax was it's at 0.15% it's listed on the the top line so again the ultimate payroll tax last year was lower and this bill it's much higher okay I was just kind of more curious about like if there was any like large projection as to what the backend maintenance for the IT systems you know how do you have to just constantly keep updates software development fixing bugs, tweaks I think most of that's rolled into admin I think one of the realities is that periodically you need a full overhaul which is what our UI system is going through right now and in our UI systems case it's particularly expensive because they their IT system dates back to the early 1990s so it's a little bit outdated at this point same numbers representatives so you mentioned I think when you were pointing to 2022 the discrepancy between the total cost and the revenue right and then you mentioned that the legislature didn't have to revisit and reset the rate but if I understood when Rhode Island was talking they don't have to revisit the issue it sounded like there was no active maintenance required they just didn't statute that allows it they just set a number and it goes so that is one option actually for this bill it's something that last biennium's Ways and Means Committee did not like they didn't like they didn't like doing a set it and forget it model they wanted more legislative oversight on the rate which is something we do with some other rates that are variable so and I think part of that was concerns about are we setting the reserve correctly and are the projected rates reasonable and folks wanted to be able to revisit it and possibly make larger tweaks if necessary to keep the rates at what they thought were reasonable going forward there is precedent for this model like I mentioned in the workers comp system for the administration fund our UI system is more of a set it and forget it model although that's based on a much you know bigger sort of model that's designed to kind of go up and down over time so your you fluctuate between rate schedules depending on the ratio of benefits paid to balance in the fund for the state and so when the balance of the fund dips you go up to a higher tax schedule then when the balance of the fund grows you drop down we're currently on a dropping down phase presumably when the next recession hits we'll go back to a climbing up phase and then go back down later once the fund stabilizes could you put in the bill a hybrid that says could you put it in statute that for the first 5, first 10 years we'll revisit it each year and then at a certain point we'll have enough data to determine that we can set it and forget it instead of relying on that decision being made down the road having it built in that the decision will be made down the road you could that you can never find a future legislature so they can always not withstand that and tweak the rates we could go with a slightly different rate setting model though going forward and I could model it on some of the other states that have followed more of their UI model which is more of a passive it sets the rate on a predetermined formula rather than requiring human input with approval by the tax setting committees every year Joyce is going to redo this is that yes so this was a preliminary projection for last biennium's bill before we have final numbers so the IT development cost was an estimate and future estimates came in higher and the payroll tax rate because of the the benefits were still in flux at that point actually ended up being higher than the tax rate that was ultimately set in that bill the what happened with that bill was it left this committee with one set of benefits those benefits were reduced in ways and means to make it less expensive and then they were reduced again in the senate to make it less expensive again so that's why we ended up with a significantly lower tax rate than other states that have this program have because we got rid of own care and then we limited family care outside of bonding leave because in year four and five what was that significant deficit those are and that was another thing that this assumed was a really flat contribution rate it assumed no adjustments so this was just kind of showing what would happen if we set it and forget it for the initial years and one of the things one of the other pieces that was going on if I remember right and I could be if I remember right was that the wage base was not growing as quickly as the usage during those first few years as people became more familiar with the program and started to use it more and wage growth was continuing and in our new model now we've limited the cap so there will actually be less taxable salaries so this pass bill also had that cap on the wage base and I can't remember if the inflation adjustment had been added to the wage base when this was drafted or not but I think it had but yeah, that was one of the issues is there's a discrepancy in the wage base versus the growth and use of benefits in early years at least again, Joyce can provide more color to this sort of picture does the modeling just go out five years in this kind of thing or could we see a different picture if it went out 10 years with the sustainability of this reserve? I'm sure we could see us somewhat I mean I'm sure we could model it out that far I don't know how accurate it would be one of the problems when you start modeling it out way down the road is now you're getting into a situation where you're almost certain to have a recession somewhere in there which will throw things for a loop and modeling demographics out 10 years, that's a lot of rejecting so I'm sure Joyce could put the numbers in there but I think the further out you get the shakier the numbers get but yeah, this is all stuff that is probably a good discussion with Joyce maybe a good thing to kind of let her know what the committee wants to see before this bill moves and then there will be some info from the modeling done by the Institute for Women's Policy Research when they come back with the new contribution rate and we can use some of that info going forward are there questions? Does anybody have questions about the administration? No I just using it's hard to comment more on the chart it's the 8% for instance there's a lot of different numbers popping along there let's just leave it at that for now I mean I think that if we were to use if I were to use this number I would say 0.15 we're going to have to 0.93 you're talking about 6 times that amount of money so you're talking about 75% would be roughly $100 million yeah you know it was so we don't have $100 million lying around to start the program tomorrow right you know but that the other thing to keep in mind is the the costs that were projected last year and this is again something to get more input from the administration and from Joyce on the projected last year a lot of those if I understand it correctly are fixed costs for developing the IT system and they would vary a little bit depending on what benefits you've got and so forth but if you're also talking about a higher contribution rate you may see some of that more room to absorb the those costs within the contribution rate you're still talking about needing either a loan against or receipts or an appropriation to get things started but that would be the reality with anything where the state's the administrator alright thank you alright and coming in I think I'm going to plow right on because we have our witness here and we are going to end right at 3 o'clock so that we can take a breather before our guard session tonight at 4 so let's let people come in and out and then Jessica name is Jessica Savage from Burlington Vermont we're going to do a quick intro because you missed us the first time representative Tom Stevens from Waterbury representative Deanna Gonzalez from Winnipeg representative Matt Irwin for Gens Mariana Gans from Swanton John Colacky South from Tommy Waltz from Berry City hi from Standard and one of our members is out on the disabled list and then we have the vacancy here so welcome you are from Burlington so please you want you expressly ask the time to buy and we love the your orchards story is great excellent I really appreciate this committee making an effort to hear from Vermonters like me to consider this bill it's really important legislation thank you for that so like many women my age with young families I work full-time as a program manager for the state of Vermont and I'm here in my personal time obviously many people assume that I get great benefits including paid family leave but that's not the case with both of my children I had to cobble together as much sick leave and annual leave as I had in order to take that time to bond with my children and this time I ended up working because that wasn't enough I didn't have enough because when you have young children you take sick leave a lot to take care of them so I ended up working from home which was great that my employer let me do that but starting when my son was four weeks old so that was a choice I felt I had to make and I hope that others don't in the future so my husband who works for a small private business in Burlington he gets no sick leave or any leave really it's a very small employer and so he is, sorry, paid parental leave he doesn't get any of that so with our son who was born home my husband caught the baby which was really exciting at 11.09pm and then he was back on the job the next day and that was our reality this time last time he took a week off so and just having had two kids and if any of you have had children you know that a baby when they're born they're essentially in the fourth trimester they're meant to be with their parents, with their primary caregivers, with whoever is meant to be bonding with them and caring with them for at least 12 weeks probably more honestly we don't have any family nearby to help fill some of the holes that I'm trying to tell you about here in our lives so the burden of care not that my husband doesn't try to help but a lot of the burden of care does fall to me with our two children because I have a better sick leave policy of my job and I love being a mom but the cost of becoming one is far too much to bear physically, mentally, emotionally and yes financially parenting in America has become nearly untenable women do the majority of caregiving still this is not what our four mothers imagined for us working full time and not having the ability to take time off with their baby when my mother was sick and dying in 2011 my sister and I took countless unpaid days and weeks to care for her I will never regret a second of that time but it left me thousands of dollars in debt the tragedy of my 56 year old mother dying was enough why did I also have to suffer financially we must do better Vermont can lead where others haven't as we have with many other important issues if we are serious about attracting families to live and work in Vermont then I guarantee that this insurance will underscore that commitment if people know that regardless of employer both parents can have 12 weeks of paid leave when a child is born that is a huge recruitment tool it's an economic investment I also think that this current bill reflects the bare minimum that Vermonters need I urge you to keep this bill as strong as possible in the end we need more than an insurance program we need wraparound services to make living in Vermont possible for all families including childcare, mental health services increased wages and paid family leave I'm sure you will hear from many people about how important this bill is and you might hear from some who think that there are other priorities or that this will somehow cost employees employers too dearly when America is one of only two countries in the world that doesn't offer paid family leave it's time to take a stand we all deserve better and we have the opportunity in Vermont to make that happen thank you for taking my testimony today and I'll take any questions how old are your babies now my son is about 5 months old next week he'll be 5 months and my daughter is going to be 5 years old so we're at 5'5 right now and I have 6,702 pictures of both but only 7 of them it's better the first time so did you have a hard question to do Naughtik thank you for sharing so what happens to you when you talk about the stresses I mean being a parent is stressful enough so how did you get through that decision making process and just like the next 8 weeks after you were working from home for however long you were working at home I mean that's did you keep up the baby's health stay up did your health stay up yeah I mean I think once you become a parent you just keep going like last night my husband said to me I don't know how you're still going I made dinner bathing with children and he had been home with the baby all day so I was trying to give him a break but I worked all day and that was kind of the same thing during what was supposed to be my leave time because it's not like life stopped and I think that's the thing I don't think most people expect life to stop but work should stop I think you need to be focused on your family there are certain moments in our life and everybody is having children but most people experience caring for someone who's sick in your life unexpectedly my mom was so young I mean life kept going but worked but I had to do that's just what I had to do this time in order to not have no money let's go throw it back to before you had your first baby did any of this come across your transom did you understand like any of this might happen Man I'd hit the golden ticket and then the reality of it was no you're actually you're still in probation you get no leave you have some sick leave and you can use it all up if you want but then you have no sick leave and you're not a crewing sick leave and oh by the way you're not going to get a paycheck so you have to pay for your health insurance that you know it's just the reality of you know I think I can't imagine an employer other than the state of Vermont where you might have seen it would be a little better and it is better that's the thing it's better than a lot of employers but gosh it's not even close to the bare minimum in my opinion I wonder with the administration's new announcement of allowing parents to bring their children to work will that ease this just accelerate the bad attention I mean I think everybody has different family experiences personally I would never want to bring my baby to my office I feel like it would be distracting to me there's germs everywhere everyone's always sick I can't imagine doing that at the same time we are so lucky to have an infant spot in our day care and not everybody does I can't imagine the relief that some women must be feeling right now and parents in general just like oh my gosh we don't have to think about that terrible stress for three more months if you take those 12 weeks and then you get three more months with that so I feel like it's one of those well-intentioned backwards policies that it's a band-aid over what you all are trying to really accomplish which is we need paid family leave so that people can cobble together family support that works for them and I don't know if the bill does this but I would assume that two parents if it's a two-parent household one could take 12 weeks and then the next could take 12 weeks that's six months of real child care not child care that you have to try to do your job during ad and office is that what you're asking that's how I feel about it does it make an impact on where you want to live or where you might life choices that you have moving forward I mean certainly I love Vermont, I love living here we've been here permanently since 2007 and I spent several summers here before that but I think that it is if I knew another state suddenly implemented a policy where I knew I was going to get paid family leave and I'm done having children by the way I wasn't done having children or if I knew that I had a sick family member that I was going to need to care for it would definitely be an additional enticement to me it's almost like the package you wish you had with an employer is already kind of semi-constructed and then if they offer good wages well that's great so I do I think Vermont's already a great place to get people to try to come live I recruited my sister from Massachusetts to move here and she's going to have kids and gosh I hope that this exists for her she has this option in a couple years when she makes that choice so Is 1% an outrageous price to pay to you and yourself? No, no I What does it represent? 1% of my salary represents I tried to do the math and I thought at one point $70 or something I don't know if it's before or after they take everything else out but it feels really it felt really doable at the last bill I remember doing the math someone would have to do the math for me now but 1% of I make about on paper I make $56,000 a year but so if it's off of that even that I feel like it's not completely a question for something that I'm probably going to definitely use even though I'm done having children I can imagine I'm 40 my husband's 48, his parents are aging these things are inevitable and I think it's a way that people can actually plan for it and be caught in those moments where you feel uncapped I really appreciate you coming in and like you said this is hearing from people who are actually in the workplace now we've all talked about the desire to have quote unquote younger people here in Vermont and the picture you draw of not being able to take the time to bond or to take care of the sandwich generation that's why we're looking at the bill I think that's really one of the realities of looking at this bill and trying to figure out what the best way forward is but thank you for sharing your share did you have that on electronic is that something you can share with us if that's something you can send to Ron or give us a copy of that we would appreciate that for our records alright thank you well I think we can go off the record