Bill to Provide Paid Family Leave for Feds Could Cost $20 Billion By 2027

The Congressional Budget Office last month announced that it estimates a bill that would provide federal employees with up to 12 weeks of paid family leave each year could cost as much as $20 billion over the next five years, angering Republicans already opposed to the measure as a frivolous “perk.”

In July, the House Oversight and Reform Committee voted along party lines to advance to the House floor the Comprehensive Paid Leave for Federal Employees Act (H.R. 564), introduced by Chairwoman Carolyn Maloney, D-N.Y. The bill would provide all federal workers, including U.S. Postal Service employees, with up to 12 weeks each year of paid leave to deal with a personal illness, to care for a family member suffering from illness, or in connection with a family member going on or returning from active duty.

The bill mirrors a recently enacted law providing federal employees with 12 weeks of paid parental leave per year, and it also provides paid leave following the loss of a pregnancy or a failed adoption and births as part of a surrogacy arrangement.

A matter of some consternation during the committee’s consideration of the bill was a preliminary cost estimate from CBO, which said the program could cost $53 million in direct spending over the next decade. That figure refers only to the bill’s mandatory spending effects.

Now that the bill has advanced out of committee, CBO conducted a full analysis, and found that between fiscal 2022 and fiscal 2027, the bill would cost an additional $16.3 billion in discretionary spending and off-budget direct spending, as well as $8.5 billion in costs to the U.S. Postal Service over the next 10 years. CBO based its estimates on current use of unpaid Family and Medical Leave Act leave and other similar programs.

“Based on a Department of Labor survey on the use of FMLA leave and information about state programs providing similar benefits, CBO estimates that about 6% of federal employees would use an average of seven weeks of medical leave and that about 2% of federal employees would use an average of 7 weeks of caregiving leave each year,” the report stated. “[After] accounting for the cost of benefits, CBO estimates that, in total, the federal government would pay employees on medical or caregiving leave $1.6 billion in 2022. That amount would rise to $3.3 billion in 2023 and rise with expected increases in federal pay thereafter.”

But the analysts warned that the actual budgetary impact of the new benefit is subject to “considerable uncertainty.”

“Spending subject to appropriation and off-budget direct spending could differ significantly if a larger or smaller proportion of employees used the newly available leave for longer or shorter periods than expected,” CBO wrote. “Additionally, the extent to which federal employees substitute the new leave for sick leave they would otherwise use under current law is uncertain. If employees substituted the new leave at a greater rate and therefore retired with larger sick leave balances than CBO expects, those employees would generally retire with higher annuities, increasing direct spending.”

In a letter to Maloney, the House Oversight and Reform Committee’s Republican members, led by ranking member James Comer, R-Ky., excoriated Maloney for previously touting the much smaller preliminary cost estimate.

“Simply put, H.R. 564 is a bill that is out of step with our constituents’ circumstances and out of touch with reality,” Comer said. “The committee never should have been forced through a markup of this bill without a reasonable and open understanding of the bill’s likely costs. Had all committee members had a more accurate understanding of the bill’s costs during our markup, it is possible that the bill never would have been approved and ordered favorably reported.”

CBO does not perform full cost analyses of bills until they have been reported out of a House or Senate committee. And a committee spokesperson told Government Executive that the CBO report failed to account for the potential cost savings that paid leave can provide agencies through retaining employees who might otherwise leave the federal workforce due to the lack of paid leave.

“I have worked to pass comprehensive paid leave for so long because it is crucial to support federal workers and their families and to recruit and retain a talented workforce to serve the American people,” Maloney said in a statement. “Investing in our federal workforce pays dividends for all Americans who rely on federal programs and services. Unfortunately, Republicans have made it clear that regardless of the cost, they simply do not believe that federal workers deserve this benefit.”