Minnesota Sold This Paid-Leave Program at 0.7 Percent. It Opened at 0.88 — and Its Own Actuaries Say It Needs 0.92.
Minnesota’s Paid Family and Medical Leave program opened for business on January 1, 2026. Six months later, the state had approved about 75,000 claimants — roughly 2.5 percent of the entire state workforce — and paid out about $600 million in benefits.
The number that matters more is the one on the funding side. The Legislature sold this program at a 0.7 percent payroll tax. It opened at 0.88 percent. And the program’s own actuarial analysis puts the break-even rate at 0.92 percent — higher than the rate it actually launched with.
The program was signed into law by Governor Tim Walz (D-MN) on May 25, 2023, passed by a Democratic-Farmer-Labor trifecta that controlled the House, Senate, and governor’s office.
- 0.88% the launch payroll tax rate — 25% higher than the 0.7% the Legislature advertised when it passed the bill in 2023 — MinnPost
- 0.92% the rate the program's own actuarial analysis says it needs just to break even — above the rate it launched with — Washington Examiner
- $114M the loss actuaries project for the program's inaugural year, followed by $158 million in 2027 — Washington Examiner
- $668M general-fund seed money appropriated in 2023, plus $128 million more for start-up costs — Minnesota Reformer
When the DFL majority passed the paid-leave statute in 2023, the number attached to it was 0.7 percent of wages, split between employers and employees. That was the figure legislators defended on the floor and the figure businesses budgeted against.
By the time the program actually opened in January 2026, the Department of Employment and Economic Development had set the rate at 0.88 percent — a 25 percent increase over the advertised number, before a single claim had been paid. Most workers pay half of it, about 44 cents for every $100 in taxable wages.
The more revealing number is the one underneath: the actuarial break-even rate is 0.92 percent. The program launched priced below what its own actuaries said it needed. The statute caps the rate at 1.1 percent, which is the ceiling the fund is now moving toward rather than away from.
DEED’s planning model assumed 361 approvals a day and about 131,868 beneficiaries in a full year. Actual daily approvals ran roughly 16 percent above that forecast. On the revenue side, the payroll tax brought in about $344 million in the first quarter of 2026 — a quarterly figure, not a six-month one, and the only collection number the state has published so far.
The benefit itself is among the most generous in the country: up to 12 weeks of family leave and 12 weeks of medical leave, capped at 20 weeks combined in a single year. Two-thirds of claimants worked for companies with 200 or more employees; only about 13 percent worked for small businesses — a distribution that undercuts the argument the program was primarily built to help workers at firms too small to offer leave on their own.
“The program could lose $114 million in its inaugural year and another $158 million in 2027.”
Actuarial analysis of the Minnesota Paid Leave program
Tim Walz says it’s “disrespectful” to assume that the new Medical and Family Leave program will be targeted by scammers in Minnesota.
Defenders of the program point to a real fact: DEED’s program director has said publicly that Paid Leave is running roughly $70 million under its administrative budget. That is true, and it is not the same claim as the one the actuarial analysis makes.
Administrative budget measures what it costs to run the office — staff, systems, processing. The actuarial projection measures the benefit fund itself: premiums collected against benefits paid. A program can be efficient at writing checks and still be writing more of them than it takes in. Both things are happening at once, and only one of them threatens the fund.
Gov. Tim Walz (D-MN) — signed the Paid Family and Medical Leave Act into law on May 25, 2023.
The 2023 DFL trifecta — Democratic-Farmer-Labor majorities in both chambers passed the bill with the 0.7% rate that did not survive contact with the actuaries.
Minnesota DEED — the agency that set the launch rate at 0.88% and administers claims.
State Rep. Kristin Robbins (R) — chairs the Minnesota House fraud prevention committee and has pressed for oversight of the program’s claims process.
No way. I am shocked - shocked! If only someone had warned the MN Democrat trifecta that creating an expensive, cumbersome, bureaucratic system might go badly (when the vast majority of businesses already offered paid leave without a mandate).
Minnesota has said premiums will not rise next year despite the projected shortfall. That decision does not make the gap disappear; it moves it. The seed appropriation absorbs the difference until it doesn’t, and the only levers left after that are the rate ceiling, the benefit structure, or another appropriation from the general fund.
The honest version of this story is not that the program is a scandal. It is that a Democratic trifecta sold a 0.7 percent program, opened a 0.88 percent program, and built it on a fund its own actuaries priced at 0.92 percent. Every one of those numbers was available before the first claim was filed.
A Democratic trifecta sold Minnesotans a 0.7 percent program, opened it at 0.88 percent, and priced it below the 0.92 percent its own actuaries said it needed. Demand then came in 16 percent above forecast. Actuaries put the first-year loss at $114 million and 2027 at $158 million. The seed appropriation covers that for now. Seed money runs out.
