Opinion: New audit offers another reason lawmakers should leave the state’s paid-leave program behind

Elizabeth New (Hovde) critiques Washington's Paid Family and Medical Leave program, highlighting audit findings of double-dipping and program inefficiencies.

Elizabeth New (Hovde) says instead of spending more money administering a misguided program that harms workers, lawmakers should shut down PFML and let workers finance various life needs in ways they see fit

Elizabeth New (Hovde)
Washington Policy Center

Well, this doesn’t help me like Washington state’s Paid Family and Medical Leave (PFML) any better. A state audit published Nov. 14 found that more than 2,000 people who tapped a fund that benefits only some workers with up to 18 weeks off work with pay — while harming the paychecks of most other workers, including those with low incomes — violated state law by taking money from the state’s unemployment insurance (UI) program at the same time. They had their PFML and ate up UI benefits, too.

ESD, which administers both programs, did not have a system set up to catch the double-dipping, the audit found. The department also did not have processes to collect PFML benefit overpayments from workers who received both PFML and UI benefits concurrently. The clock is ticking to get misapplied money back from the double-dippers. The report states ESD has just two years after payments end to assess an overpayment. “The longer these overpayments remain, the less likely the Department is to collect them,“ the audit says.

Looking at PFML and UI data from fiscal year 2023, the State Auditor’s Office cross-matched claims ESD paid during the same benefit period for both programs. The auditors found 2,270 instances in which it appeared claimants received payments from PFML and UI, totaling $1.9 million.

Why was there no front-end cross-match by ESD? This should be a chapter in Public Benefit Payments 101.

The auditors then more closely examined 21 of the 2,270 crossmatches and found this: “In all 21 cases, we found claimants improperly received payments for PFML, totaling $21,077, because they were already receiving UI benefits,” the report said, adding, “Based on our review, it is likely that the Department improperly paid all $1.9 million in PFML benefits referenced above to claimants.”

ESD said of the audit that a better system is on the way, that the department needs more money and that the $1.9 million cited in the auditor’s finding amounts to only a small amount of the PFML claims the agency processed during the year.

As State Auditor Democrat Pat McCarthy wrote in the report to Cami Feek, commissioner of ESD, “Paid Family and Medical Leave is funded by working people and their employers. Any improperly paid benefits represent an unnecessary cost to them and a reduction in available funds for eligible people.” She continues, “Because it affects the program’s integrity in the eyes of the public, I want to underscore the urgency of resolving this issue.”

The program funded by Washington’s W2 workers already has an integrity problem. Many workers don’t benefit at all from this fund and are going without wages that could be used for other life needs, savings and investments.

PFML helps people with high incomes

My research has also shown PFML is no public safety net. Middle- and upper-income wage earners use the program more than those with lower incomes. In fact, people making $60 or more an hour used the fund nearly twice as much as the lowest wage-earners.

Low-income workers are forced to give money to those with higher incomes and no need for taxpayer dependency, and the hits to their paychecks keep rising. Read about that in my recent blog, “Up, up and away goes a tax on workers’ wages.” You can calculate how much you pay each year for other workers to take paid time off to bond with newborns or tend to medical needs for themselves or the people close to them on the program’s website.

Payouts for PFML are expected to outpace contributions by the end of the year. This isn’t the first time the fund has faced solvency concerns in its short lifespan. In addition to a more than doubling of the tax rate starting in 2025, PFML has already received a general fund bailout of $200 million. Short-term deficits in the PFML account beginning early in 2025 and continuing intermittently through 2026 could require another bailout.

This program is not paying its way, even with a minority of workers taking advantage.

As bad as the double-dipping and failure to recoup dollars, this stuck out to me in the report: PFML claims totaled $1.3 billion dollars in 2023. During this same period, the department paid about $1.2 billion in UI claims. As a group, paid-leave recipients received more money than workers who experienced job loss.

ESD is requesting more staffing and resources to prevent the misuse of funds and to better administer the program. Instead of spending more money administering a misguided program that harms workers, lawmakers should shut down PFML and let workers finance various life needs in ways they see fit.

Elizabeth New (Hovde) is a policy analyst and the director of the Centers for Health Care and Worker Rights at the Washington Policy Center. She is a Clark County resident.