Statewide paid family and medical leave (PFML) programs are designed to be self-sustaining, funded through small payroll contributions from workers, employers, or both. Although states may allocate general revenue to cover initial start-up costs, these programs are built to operate without ongoing state funding.
How a state finances its PFML program plays a critical role in its overall success. Policymakers considering the implementation of a new program can benefit from examining how other states have financed their existing programs.
This policy brief outlines the key financing decisions that states must make to ensure the long-term viability of their PFML programs. Topics include whether to provide start-up funding, who should contribute to premiums and to what extent, how premium rates should be determined, and which wages should be subject to the premium.
©January 2025, Prenatal-to-3 Policy Impact Center, All Rights Reserved. The Prenatal-to-3 Policy Impact Center at Peabody College of Education and Human Development, Vanderbilt University translates research on the best public investments into state policy actions that produce results for young children and society.
