Sweeney Bill Would Reduce Contribution Rates To Fund Paid Family Leave

Program has surplus so far this year

TRENTON – A bill sponsored by Senate Majority Leader Stephen Sweeney to make annual adjustments to the employee contribution rate to fund paid family leaves has been approved 5-1 by the Senate Labor Committee.

The bill (S3065) would require the state Commissioner of Labor and Workforce Development, beginning in 2011, to set the annual rate of contribution to be paid by workers into the “Family Temporary Disability Leave Account.”

“We want to make sure the family leave account is adequately funded,” Sen. Sweeney (D-Gloucester, Cumberland and Salem) said. “But we also want to make sure we’re not taking too much from workers’ paychecks. In the current calendar year, the account has been substantially overfunded. Rather than continue to collect at the current rate, the prudent thing to do is reassess what rate of contribution is necessary to keep the account funded at the appropriate level.”

Sen. Sweeney’s bill would require the commissioner to make a determination by July 31 of the preceding year. The rate would be determined by calculating 125 percent of the benefits estimated to be payable for family disability leave benefits during the calendar year plus the total amount needed to administer the benefits, minus the surplus assets from the preceding year.

“We want to maintain a fiscally prudent approach to keeping this program funded,” Sen. Sweeney said. “Too often, state benefits accounts that have accumulated large surpluses, like the state disability benefits fund, have been raided. Their funds have been diverted to the state’s general fund. We should be collecting from employees only as much as we need to make sure the paid family benefits can be paid.”

Sen. Sweeney sponsored the Paid Family Leave Act, which was signed into law by Gov. Jon S. Corzine on May 2, 2008. It permits workers to apply for up to six weeks paid leave to care for a newborn or newly adopted child, or a sick parent, spouse or child. Recipients can collect up to two-thirds of their pay, to a maximum of $524 a week. Family leave benefits are funded by an employee payroll tax.

During calendar year 2009, total contributions have substantially exceeded total benefits.

The bill was approved by the Senate Labor Committee on Monday and now goes to the full Senate for consideration.

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