Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR
Reps. Chandler, Roybal Caballero and
Serrato
/Sen. Stewart
LAST UPDATED
ORIGINAL DATE 1/24/2025
SHORT TITLE Paid Family & Medical Leave Act
BILL
NUMBER House Bill 11
ANALYST Faubion/Garcia
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
General fund
payback
- - - $6,000.0 $6,000.0 Recurring General Fund
General fund
payback
- - - ($6,000.0) ($6,000.0) Recurring PFML Fund
Contributions - - $233,101.7 $481,176. 9 $507,860.6 Recurring PFML Fund
Benefits Paid - - -
($157,425.6)
to
($267,623.5)
($322.079.1)
to
($547,534.4)
Recurring PFML Fund
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation. See PFML fund analysis in Fiscal Implications for more
detail and additional years of analysis.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27 FY28 FY29
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
WSD Startup
Costs
- $25,286.8 $24,118.8 - - $49,405.5 Nonrecurring
General
Fund
WSD Ongoing
Operating Costs
- - - $30,097.9 $23,338.5 $53,436.4 Recurring PFML Fund
State Employer
Contributions
(employer
portion)
- - $11,359.7 $23,400.9 $24,1 02.9 $58,863.6 Recurring
General
Fund
State Employer
Contributions
(employee
portion)
- - $14,199.6 $29,251.2 $30,1 28.7 $73,579.5 Recurring
General
Fund
Total - $25,186.8 $49,678.1 $82,7 50.0 $77,570.1 $235,185.0
Recurring and
Nonrecurring
General
Fund and
Other State
Funds
Parentheses ( ) indicate expenditure decreases. *Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files; various state PFML annual and legislative reports
Agency Analysis Received From House Bill 11 – Page 2
Workforce Solutions Department (WSD)
State Personnel Office (SPO)
Health Care Authority (HCA)
Attorney General’s Office (NMAG)
University of New Mexico (UNM)
State Investment Council (SIC)
General Services Department (GSD)
Early Childhood Care and Education Department (ECECD)
Agency Analysis was Solicited but Not Received From
Public Education Department (PED) Department of Finance and Administration (DFA)
Economic Development Department (EDD)
Council of University Presidents (CUP)
Workers’ Compensation Administration (WCA)
NM Municipal League
NM Association of Counties
Agency Declined to Respond
Higher Education Department (HED) Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of House Bill 11
House Bill 11 would codify a 12-week family leave and nine-week paid medical leave (PFML)
benefit for nearly all workers in the state and establish a state-run PFML program for employees
who do not receive a qualifying benefit from their employer. Medical leave duration is subject to
adjustment to 12 weeks if the paid family medical leave fund is solvent in calendar year 2031.
The bill establishes procedures for administering and overseeing the state PFML program and
calculating payroll tax contributions and leave benefits and establishes mechanisms to maintain
fund solvency.
Contributions. The bill requires employee contributions of 0.5 percent and employer
contributions of 0.4 percent of wages and salaries into the newly established PFML fund.
Taxable income is capped at the maximum income subject to the federal social security payroll
tax, set at $176.1 thousand by the Social Security Administration in 2025 and increased each
year to account for inflation. Employers with fewer than five employees are exempt from paying
the employer share of the payroll tax.
Starting on January 1, 2029, the Workforce Solutions Department (WSD) secretary would be
required to ensure the fund is self-sufficient by performing an annual financial analysis and
setting the premium for the following calendar year at a rate that would generate enough revenue
to equal 140 percent of the benefits paid during the previous year plus all administrative costs
minus net assets remaining in the fund as of June 30 of the current calendar year. The rate can
only be raised up to 0.1 percent each year. The premium set by this standard would be paid 55
percent by the employee and 45 percent by the employer.
House Bill 11 – Page 3
Solvency Equation:
Payroll x Tax Rate = Prior year benefit payments x 140% + admin costs – fund balance
Example:
Payroll x Tax Rate = Prior year benefit payments x 140% + admin costs – fund balance
$60 billion x (tax rate) = $430 million x 140% + $23 million - $100 million
$60 billion x (tax rate) = $525 million
Tax rate ~ 0.9%
The bill includes a provision allowing the department to waive employers and employees from
contributing to the fund if the employer already has a leave program in place that is equal to or
more generous than the proposed PFML benefit for an equal or lesser contribution premium by
the employee.
Benefits. The 12-week benefit can be taken consecutively or intermittently and in increments of
no less than eight hours. Medical leave for oneself or to care for family members is capped at
nine weeks for the first two years of the program but can be increased to 12 weeks if the fund can
support it and remain solvent. To receive the benefit, the employee would have to pay into the
fund for at least a six-month period in the year prior to taking leave. Benefits paid equal 100
percent of the state minimum wage plus 67 percent of the employees wage above the minimum
wage up to the state average wage.
Definitions. Leave can be taken for oneself or to care for a family member for the following
qualifying events:
A serious health condition;
Seeking safe leave from domestic violence, stalking, sexual assault, or abuse; and
On active military duty or called to impending active duty.
Family member is defined as the employee’s spouse or domestic partner and the employee’s or
employee’s spouse or domestic partner’s biological, adoptive, foster, or step:
Child or child under one’s care (in loco parentis),
Parent or legal guardian,
Grandparent,
Great-grandparent,
Grandchild,
Sibling, and
Any other individual that is the equivalent of a family relationship.
Leave can be taken for oneself:
To bond with a child following birth or adoption, and
Following the death of family member under the age of 18.
Administration. The PFML benefit would be paid for with money in the PFML fund, with some
of the money in the fund going to administrative costs and paying back the general fund for start-
up costs incurred by WSD. The bill includes annual $6 million transfers starting on January 1,
2029, from the newly created PFML fund to the general fund until the total transfers from the
PFML fund equal the amount of appropriations made to WSD for administrative start-up costs. House Bill 11 – Page 4
The bill creates a PFML implementation advisory committee with representatives of both
employers and employees, provides for rule-making authority for WSD, clarifies that the bill
would not affect collective bargaining unit agreements, preempts local entities’ policies, creates
an administrative process for appeals, establishes WSD disciplinary powers, and makes it
unlawful for an employer or other person to interfere with a person attempting to exercise a right
under PFML.
The bill also requires WSD to contract with an actuarial consultant by January 1, 2026, to
analyze the program components, including the premium rate, the rate structure, the benefit
formula, and the fund reserve.
The bill requires WSD process and resolve claims according to timeliness standards outlined in
the bill, including providing claimants with notice of claim approvals within 20 business days
and afford parties with appeal and procedural due process. Individuals or the department may
bring motions of alleged violations of PFML, and the department must provide a due process
hearing and ruling within 30 days.
The bill outlines the following timeline:
1/1/2026 – Contract with actuarial consultant in place (Section 3(D))
1/1/2027 – Premium collection begins (Sections 4(B), (C) and (D)
1/1/2028 – Claim payment begins (Sections 5(A) and (B))
10/1/2029 – Solvency calculations due, based on 2028 data (Section 3(E))
10/1/2030 – Annual solvency calculation based on 2028 data due and used to determine whether
to adjust payroll tax or benefit amount (Section 5(C))
1/1/2031 – First year in which there might be 12 weeks available for all types of leave (Section
5(C))
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns.
FISCAL IMPLICATIONS
Fund Solvency
Payroll taxes are estimated to generate $466.2 million in the first year of collections, rising to
nearly $545 million by 2031 as incomes rise. This revenue estimate includes adjustments to
account for the employer contribution exemption for businesses under five employees, federal
employees, self-employed opt-ins, and a small share of waiver-eligible business.
Three scenarios were used to provide a range of potential costs depending on the assumed uptake
rate. The low uptake scenario uses a 5 percent uptake rate, the middle scenario uses a 6.5 percent
uptake rate, and the high uses an 8.5 percent uptake rate. In the high uptake scenario, the fund is
cash flow negative, but because fund balances are quite high from the first year of collections,
this does not trigger the provision requiring the secretary to increase the premium rates for many
years, giving the department and the Legislature time to adjust if deemed necessary. The other
two scenarios show revenues into the fund outpacing benefit payments out of the fund, resulting
in fund sustainability and the possibility to lower the premium rate or increase benefits.
Contribution payments by employees and employers into the PFML fund begin January 1, 2027. House Bill 11 – Page 5
Leave compensation benefit payments to employees from the PFML fund begin January 1, 2028.
The estimated contributions and payouts included in the tables represent a range of scenarios
given varying, but plausible, estimates of the number, duration, and average amount of leave
compensation claims, as well as varying estimates of the value of contributions. Other
assumptions—such as wage levels, employment duration, length of leave, number of claims per
qualifying event, and others—could have significant impacts on the estimates of the fund’s
revenues and disbursements. As a comparison to the state’s unemployment insurance system,
both revenue into the fund and disbursements annually could be significantly larger than the
state’s unemployment insurance system; in 2024, the state’s unemployment insurance (UI) fund
collected roughly $206 million in revenue and distributed roughly $199 million.
2027 2028 2029 2030 2031
Eligible Workers 853,642 858,160 861,293 864,438
Leave Claims 42,682 42,908 43,065 43,222
Annual Benefi ts Pai d 314,851,147 $ 329,306,998$ 343,172,396$ 360,495,525$
Administrative Costs* 49,305,500 $ 30,097,872$ 23,338,497$ 23,338,497$ 23,338,497$
Rei mburse General Fund 6,000,000$ 6,000,000$ 6,000,000$
Total Estimated Cost 49,305,500 $ 344,949,019$ 358,645,495$ 372,510,893$ 389,834,022$
Estimated Revenue to FMLA Fund 466,203,439$ 484,044,510$ 504,309,421$ 524,218,900$ 544,917,995$
Interest Earned 12,105,979 $ 15,261,377$ 18,600,764$ 22,074,459$
Calendar Year Cash Flow 466,203,439 $ 151,201,470$ 160,925,302$ 170,308,771$ 177,158,432$
Fund Balance Pri or Year - $ 466,203,439$ 617,404,909$ 778,330,211$ 948,638,983$
FMLA Fund Balance (deficit) 466,203,439$ 617,404,909$ 778,330,211$ 948,638,983$ 1,125,797,415$
2027 2028 2029 2030 2031
Eligible Workers 853,642 858,160 861,293 864,438
Leave Claims 55,487 55,780 55,984 56,188
Annual Benefi ts Pai d 409,306,491 $ 428,099,098$ 446,124,114$ 468,644,182$
Administrative Costs* 49,305,500 $ 30,097,872$ 23,338,497$ 23,338,497$ 23,338,497$
Rei mburse General Fund 6,000,000$ 6,000,000$ 6,000,000$
Total Estimated Cost 49,305,500 $ 439,404,363$ 457,437,595$ 475,462,611$ 497,982,679$
Estimated Revenue to FMLA Fund 466,203,439$ 484,044,510$ 504,309,421$ 524,218,900$ 544,917,995$
Interest Earned 10,216,872 $ 11,358,646$ 12,560,944$ 13,750,870$
Calendar Year Cash Flow 466,203,439 $ 54,857,019$ 58,230,472$ 61,317,233$ 60,686,185$
Fund Balance Pri or Year - $ 466,203,439$ 521,060,458
$ 579,290,930$ 640,608,163$
FMLA Fund Balance (deficit) 466,203,439$ 521,060,458$ 579,290,930$ 640,608,163$ 701,294,348$
2027 2028 2029 2030 2031
Eligible Workers 853,642 858,160 861,293 864,438
Leave Claims 72,560 72,944 73,210 73,477
Annual Benefi ts Pai d 535,246,950 $ 559,821,897$ 583,393,073$ 612,842,392$
Administrative Costs* 49,305,500 $ 30,097,872$ 23,338,497$ 23,338,497$ 23,338,497$
Rei mburse General Fund 6,000,000$ 6,000,000$ 6,000,000$
Total Estimated Cost 49,305,500 $ 565,344,822$ 589,160,394$ 612,731,570$ 642,180,889$
Estimated Revenue to FMLA Fund 466,203,439$ 484,044,510$ 504,309,421$ 524,218,900$ 544,917,995$
Interest Earned 7,698,063 $ 6,155,004$ 4,507,851$ 2,652,750$
Calendar Year Cash Flow 466,203,439 $ (73,602,249)$ (78,695,969)$ (84,004,819)$ (94,610,144)$
Fund Balance Pri or Year - $ 466,203,439$ 392,601,190$ 313,905,221$ 229,900,402$
FMLA Fund Balance (deficit) 466,203,439$ 392,601,190$ 313,905,221$ 229,900,402$ 135,290,258$
2027 administrative costs include all startup costs and is not calculated as part of the PFML fund cashflow as it is a separate general fund
appropriation. Subsequent years only reflect ongoing operating expenses.
Low Uptake Scenario
Middle Uptake Scenario
High Uptake Scenario
The PFML fund builds a large balance in the first year before benefits are paid out. This could House Bill 11 – Page 6
result in the artificial reduction of the PFML tax rate beginning in 2030, even if the fund’s cash
flow is negative because the tax rate calculation incorporates the fund balance. This could result
in an artificially low tax rate the first few years after rate adjustments, then a subsequent tax rate
increase as the fund balance depletes. For example, in the middle uptake scenario, taxes would
only need to be about 0.1 percent to satisfy the solvency requirement in 2030 because the fund
balance covers most outflows. However, the tax rate would eventually need to increase to about
0.8 percent to reach a stable fund cashflow and fund balance. See a hypothetical example below
of the solvency calculation with a high fund balance.
$60 billion x (tax rate) = $430 million x 140% + $23 million - $500 million
$60 billion x (tax rate) = $525 million
Tax rate ~ 0.2%
The 0.1 percent cap on tax rate changes will help moderate this effect but may not alleviate it
altogether. The actuarial study should include analysis of this mechanism and recommend proper
fund balance targets and tax rates to maintain tax predictability and consistency and fund
solvency.
Risk: Uptake Rates.
Uptake rates are extremely difficult to predict. Uptake rates of other state
PFML programs vary from around 4 percent in Connecticut to 10 percent in Rhode Island ,with
the average around 6 percent.
1
Differing health outcomes, wages, existing leave landscape,
number of births, program structure, eligibility, and other factors greatly affect uptake rates.
Own Health
(Maternity + Medical) 3.5% 3.1% 2.2% 2.9% 4.2% 3.2% 8.2%
New Child
(Bonding) 2.2% 1.2% 1.7% 1.9% 1.4% 0.4% 1.3%
Family Medical
(Caretaker) 0.9% 0.6% 0.6% 0.7% 0.2% 0.5% 0.4%
Military 0.002% 0.002% 0.010% 0.0005%
Safe Leave 0.05% 0.10% 0.004%
Total 6.6% 4.8% 4.6% 5.6% 5.8% 4.0% 10.0%
Note: Percent calculated as number of claims as share of total w orkf orce.
California Connecticut Rhode IslandWashington Massachusetts Oregon Colorado
There are several reasons to suggest more New Mexicans could utilize a PFML program, and
New Mexico could have a higher uptake rate, than existing programs:
The package proposed in this bill covers a broader set of eligible events and more broadly
defines family than most comparator states.
o New Mexico has the ninth highest rate of families living in multigenerational
households (defined as three or more generations) at 5.4 percent. This is the second
highest among other PFML states after California. This family structure could elevate
family leave usage in New Mexico compared to other states.
1
LFC analysis of public state PFML annual reports, legislative reports, and data sets. Uptake rate calculated by
number of claims as a share of total workforce. House Bill 11 – Page 7
Data from the U.S. Department of Labor shows low-wage workers have a 3 percent
higher rate of taking the unpaid leave available under the federal Family and Medical
Leave Act (FMLA).
o New Mexico has one of the highest rates of workers earning under $15 hourly at
about 31 percent.
o Leave utilization increases as duration allowed and benefit amounts increase. This
proposal has a more generous leave benefit calculation than many other states.
New Mexico ranks unfavorably on several potentially impactful, qualifying health
indicators that may elevate the number of people qualifying for leave:
o New Mexico has higher rates of diabetes, chronic liver disease death, chronic lower
respiratory death rates, and injury than the national average.
o New Mexico has the ninth highest premature death rate among states, with about 498
lives lost early per 100 thousand people.
o New Mexico has had the highest alcohol-related death rate in the United States since
1997.
This bill includes exigency leave for an individual or for family members on or about to
go on active duty that is not included in many other state paid family leave programs.
New Mexico is ranked 18
th
in active and reserve enlistees per capita and has:
o 14,330 active-duty service members,
o 4,818 spouses of active-duty members,
o 8,161 children of active-duty members.
This bill includes safe leave, which is not included in many other comparator states. New
Mexico violence data indicate many people may qualify for this leave.
2
o New Mexico’s law-enforcement reported rate of domestic violence is 1.3 percent of
the population, comprising 12,999 separate incidences in 2019.
o The U.S. annual rate of partner violence is around 6.5 percent.
o The U.S. annual stalking rate is 4.2 percent for women and 1.9 percent for men. New
Mexico ranks in the worst 10 states for stalking for both men and women.
Fifteen percent of eligible employees nationally take unpaid FMLA each year, according to the
most recent federal studies.
3
This, along with other state experience, suggest a high-end estimate
of PFML uptake of around 10 percent of eligible workers. It is well-documented that more
people will apply for and utilize leave when it is paid, and more people are taking leave than ever
before. The percentage of U.S. workers taking leave for FMLA reasons increased by 2 percent
from 2012 to 2018, even while number of eligible workers declined by 3 percent over the same
period.
Other New Mexico Leave Programs’ Uptake Rates. In Executive Order 2019-036, the
governor created a 12-week paid parental leave program for state employees after employees
complete one full year in the position. The Legislature passed a similar policy for legislative staff
in 2022. In the executive order, the qualifying reasons for taking leave are following the birth or
adoption of a child. The policy is much more narrowly defined than proposed in this bill. Even
with this much narrower definition, the uptake rate for the state’s parental leave policy in 2023
2
nmcsap.org/wp-content/uploads/DV_Report_Trends_2015-2019_Betty_Caponera_Oct20web.pdf
3
www.dol.gov/sites/dolgov/files/OASP/evaluation/pdf/WHD_FMLA2018SurveyResults_ExecutiveSummary_Aug2
020.pdf House Bill 11 – Page 8
was about 3 percent. Including paid sick leave under FMLA, utilization at the state increases to
almost 13 percent. The University of New Mexico (UNM) reported between 4 and 5.5 percent
uptake rate for its paid parental leave and paid extended sick leave program across university
entities, not including unpaid leave, intermittent leave, or family leave benefits.
Risk: Insufficient Contributions. If enacted, New Mexico would be the lowest-income state to
implement a PFML program. This, combined with the generous benefit amounts included in this
bill, could result in the payroll contribution being insufficient to cover the needs of the fund. This
would result in an increase in the payroll tax over time. Other states have had to increase their
payroll taxes to cover increasing utilization of their PFML programs. Washington State’s rate has
increased from 0.4 percent to 0.92 percent since the start of the program due to high usage.
Actuarial studies in Washington predict the rate will reach its statutory cap of 1.2 percent by
2028. Rhode Island, Massachusetts, California, and Rhode Island have all experienced rate
increases.
An estimated 34 thousand employees in New Mexico work for a business with fewer than five
employees, contributing to 5 percent of total payroll in the state. Exempting small business
employers from contributing to the PFML fund could put stress on or jeopardize fund solvency.
This bill also allows self-employed individuals to opt out of the program. However, self-
employed individuals only need to pay into the fund for six months to qualify for benefits,
opening the door for people, especially those who are expecting a child or have upcoming
medical needs, to pay in for six months, claim the benefit, and then opt out of the system. In fact,
other states have found extremely high uptake rates for opt-in participants because they can make
an informed decision on enrollment. For example, in Washington the uptake rates for elective
individuals are eight to 16 times higher than other covered employees, with an average of
between 0.5 and one claim submitted per employee per year. Washington requires elective
participants to enroll in the program for a minimum of three years to alleviate solvency issues
from “dine and dash.”
This bill also allows organizations to waive their participation if they provide a PFML program
that meets the basic requirements outlined in the state plan. This will overwhelmingly apply to
larger, higher paying industries and businesses, jeopardizing the revenues flowing into the fund.
The payroll tax on higher wages helps sustain the fund.
The bill caps the income that can be taxed for the program at the social security taxable income
level, which is $176.1 thousand in 2025.
4
This renders the PFML payroll tax regressive, as those
with income higher than $176 thousand are taxed at a lower rate than those at lower incomes.
Additionally, taxes on higher incomes help sustain the fund, and capping the income level that
can be taxed may not be prudent in a low-income state. However, the maximum weekly benefit
is capped at the average wage, so it may not be fair to tax all income, especially once the amount
paid into the fund far exceeds the benefit one could possibly claim.
4
https://www.ssa.gov/oact/cola/cbb.html
2027 Estimated Benefit and Contribution Amounts, by Income
Weekly
Wage
Weekly
Contribution
(.9%)
Weekly
Benefit
Annual
Wage
Annual
Contribution
(.9%)
12-Week
Benefit House Bill 11 – Page 9
New Mexico Model Specifications and Results. LFC staff used the latest UNM Bureau of
Business and Economic Research forecast of employment levels and total wages and salaries in
New Mexico and data from the Social Security Administration to estimate the number of
possible eligible employees and payroll contributions into the fund. Adjustments were made to
account for exemptions for small businesses, self-employed individuals, federal employees, and
the contribution cap at the social security taxable income cap.
To estimate benefits paid out of the fund each year, LFC staff used high-, middle-, and low-end
uptake rates and leave durations from other PFML programs and income data to estimate a range
of benefit costs at high and low program utilization. Uptake rates are the largest factor in benefit
costs and are extremely difficult to estimate (see “Risks: Uptake Rates” above).
Beginning January 2029, this bill allows the secretary of WSD to adjust the rate a maximum of
0.1 percent each year to ensure collections reach 140 percent of the prior year’s disbursements.
This could significantly increase the required contributions for both employees and employers if
increases are required year after year. The bill does not include other solvency triggers, such as
allowing WSD to lower the benefit rate, payout amounts, or leave duration if solvency is in
question.
Appropriations
There are no appropriations included in this bill for start-up costs. If the Legislature adopts this
bill, funding will need to be included in the General Appropriation Act of 2025 or other
legislation.
The General Appropriation Act, as recommended by the Legislative Finance Committee,
includes a $35 million special appropriation from the general fund to the paid family and medical
leave fund, for expenditure in fiscal year 2026, to implement the Paid Family Medical Leave
Act, contingent on passage of a paid family medical leave bill. The appropriation would provide
WSD with funding for start-up costs associated with implementing the program. However, the
appropriation would not cover all projected start-up costs, and WSD would likely request
additional start-up and recurring operating costs in future years.
Direct Costs to State Agencies
Total cost to the state to pay the 0.4 percent employer contribution is just under $25 million per
year as estimated using FY26 figures and 3 percent growth each year. The state may choose to
give employees a raise to cover the employee contribution above other planned compensation
increases. If state agencies absorb the 0.5 percent employee contribution in the form of higher
salaries, the total cost is between $50 and $55 million per year. The first year of contributions,
FY27, begins halfway through the fiscal year, so impacts are lower. A high-level breakdown can
be found in the table below.
Minimum Wage
$540.00 $4.86 $540.00 $28,080.00 $252.72 $6,480.00
Average Wage
$1,274.12 $11.47 $1,031.86 $66,254.17 $596.29 $12,382.31
High Wage (at
taxable limit) $3,617.31 $32.56 $1,274.12 $188,100.00 $1,692.90 $15,289.42 House Bill 11 – Page 10
FY26 - LFC Salary
Rec*
0.5% employee
contribution
0.4% employer
contribution
Total PFML
Contribution
Legislative $18,346,200 $91,731 $73,385 $165,116
Judicial $265,602,200 $1,328,011 $1,062,409 $2,390,420
Executive $1,398,831,800 $6,994,159 $5,595,327 $12,589,486
Public Education $2,689,170,60 0 $13,445,853 $10,756,682 $24,202,535
Higher Education $1,142,455,40 0 $5,712,277 $4,569,822 $10,282,099
FY26 Total $5,514,406,200 $27,572, 031 $22,057,625 $49,629,656
FY27 Total $5,679,838,386 $14,199,596 $11,359,677 $25,559,273
FY28 Total $5,850,233,538 $29,251,168 $23,400,934 $52,652,102
FY29 Total $6,025,740,544 $30,128,703 $24,102,962 $54,231,665
FY30 Total $6,206,512,760 $31,032,564 $24,826,051 $55,858,615
Salaries are grown by 3% each year. Contributions begin in January 2027. *LFC Volume III, FY26
Agency analysis may vary. This analysis uses payroll figures as reported in Volume 3 of the
2025 LFC report to the Legislature, Legislating for Results: Supplemental Tables and Graphs,
for consistency. Agency analysis may vary. For example, UNM estimates the total cost to pay for
the contributions at almost $7 million across their campuses (see table below).
In addition to costs to pay for contributions for state employees, the state may need to increase
contract costs for services the state pays outside contractors. Some agencies rely extensively on
contracts to perform their duties. This could directly impact state costs for early childhood and
disability waiver providers, Medicaid providers, IT projects, and transportation and other
infrastructure projects, among others. While difficult to calculate, this increased cost could be as
high as $65 million across state agencies, not including increased costs to nonrecurring or one-
time projects.
ECECD anticipates only minor fiscal implications related to this bill. However, the bill cites the
implementation date of leave beginning in January 2028. This is likely to have a fiscal impact
beginning in FY28 due to the need for additional substitutes for coverage for educators.
Workforce Solutions Department
According to the Workforce Solutions Department, the estimated cost associated with this new
program for the first two fiscal years would be approximately $49.4 million. This includes direct
operational staffing, IT Infrastructure support, and indirect cost for operational sustainment – House Bill 11 – Page 11
such as facilities and administrative services.
The bill includes annual transfers of $6 million, starting on January 1, 2029, from the newly
created PFML fund to the general fund until the total transfers from the PFML fund equal the
total appropriations made to WSD for start-up costs.
WSD estimates it would collect enough funds in FY27 to cover the costs of administration,
although the timing of receipt of those funds (collection of contributions would start half-way
through FY26), may necessitate an additional one-time appropriation in FY27. Both these
contributions would be repaid to the general fund from the PFML fund over time.
Program Yea
r Year 1 Year 2 Year 3 Ongoing
Fiscal Year
State Fiscal Year 2026
7/1/25 to 6/30/26
State Fiscal Year 2027
7/1/26 - 6/30/27
State Fiscal Year
2028
7/1/27 to 6/30/28
State Fiscal Year
2029+
7/1/28 +
Activities
Planning/Rule Making/
Initial Contract Awards/
Start IT build
Operational Builds and
IT and Facilities, Half
Operations
Full implementation,
O&M, post-
implementation
improvements
Running Full
Program
Milestones
Rulemaking Complete
6/30/2026
Premium Collections
begin 1/1/27; New
governor 1/1/27
Benefit begins
1/1/28
IT $17,510,000 $10,815, 000 $9,527,500 $4,120,000
Ops $2,639,400 $8,480,000 $14,550,798 $14,550,798
Totals $20,149,400 $19,295,00 0 $24,078,298 $18,670,798
With AS&T $25,186,750 $24,11 8,750 $30,097,872 $23,338,497
WSD used a variety of methods to compute staffing, including receiving data from states with
existing programs, evaluating the bill for program requirements and modeling staffing based on
the UI staffing structure. Direct comparison to other states is difficult because no other state
houses the contributions, benefit administration, appeals and enforcement all in one agency.
The following policy choices would affect staffing, and as a result, administration funding
estimates:
The timeline of 20 business days for WSD to issue a determination of eligibility after an
application is complete could be costly. PFML cases may entail medical documents that
require review and evaluation under strict confidentiality requirements pursuant to the
federal Health Insurance Portability and Accountability Act. Washington State for
example reports over four weeks as an average and over five weeks as a median for
processing claims, now that its program is mature.
Similarly, the bill prescribes hearings be held within 10 business days with a ruling and
final decision 20 business days later. These narrow timeframes entail significant amounts
of staffing and resources dedicated to the hearing procedures to ensure timeliness and
compliance. Also, as a practical matter, it is unlikely all parties will always be available
and prepared to present all relevant evidence at hearing within these narrow timeframes.
Timeliness and compliance will require significant staffing and resources dedicated to
meet PFML’s objectives.
Making government agencies subject to PFML means WSD (like all agencies) will need
to staff in anticipation of coverage issues. Many states do not mandate that public
agencies are covered (RI, CA, NJ, DC). House Bill 11 – Page 12
WSD notes that estimates related to fund solvency are difficult to make with any degree of
confidence. Utilization rates vary widely from state to state and change over time. For example,
Washington State has found that demand for leave increased dramatically over time, receiving
40, thousand more applications in FY23 than in FY22 (see “Risk: Uptake Rates” above).
A 2021 U.S. Department of Labor (USDOL) report suggests states implementing paid family
leave have generally assumed two to three years of start-up costs for programs before they begin
to disburse program benefits. IT costs are generally the largest start-up costs states incur,
accounting for 48 to 91 percent of costs reported in implementing states. Among analyzed states,
the USDOL report noted projected and actual start-up costs up to $82 million.
The 2021 USDOL report noted claims processing and review staff are the largest drivers of
ongoing administrative costs, and the number of processing staff is driven by the expected
number of claims and time to process determinations. The report included ongoing
administrative costs ranging between $8 million and $239 million in implementing states and
noted costs tend to increase incrementally over time. Among existing and operating programs
included in the report, costs per processed claims ranged between $155 in Rhode Island and $256
in California, or between 4 percent and 6 percent of benefit disbursements. In addition, a 2023
brief published by National Partnership for Women analyzed administrative costs in the District
of Columbia, Washington State, Massachusetts, and Connecticut and reported operating costs to
range between 4.6 percent and 10.5 percent of premiums collected annually.
Investment of the Fund
The State Investment Council notes the paid family and medical leave fund shall be invested by
the state investment officer, with investment income to be reinvested into the fund. However, the
bill provides limited detail about how the fund is to be invested, and the State Investment
Council (SIC) notes potential logistical challenges, given the nature of the PFML fund and
program. SIC notes, ideally, investments placed with the state investment officer are intended to
be long term, with investments of, at minimum, a year. Typically, investments that involve a
shorter timeframe or that are used for ongoing programmatic uses are placed with the Treasurer’s
Office. The bill does not establish a distribution policy, and the funds would likely require a high
level of liquidity, presenting an asset allocation challenge for SIC.
SIGNIFICANT ISSUES
Waiver Eligibility
Waiver eligibility outlined in the bill is ambiguous and leaves open the interpretation of whether
a private program is “substantially similar to or greater than the leave and leave compensation
offered” pursuant to this bill. There are concerns that unless the benefit amount, leave length, and
leave eligibility are each at least as generous as outlined in this bill, employees may be able to
contest their employer’s waiver and could put the state at risk for lawsuits. For example, the state
employee leave program includes 12 weeks of paid parental leave at full pay but does not offer
paid family medical leave. The parental leave program is more generous than the leave offered in
this bill, but the family medical leave is less generous. Would this be “substantially similar” if
one component is more generous but others less generous?
House Bill 11 – Page 13
The University of New Mexico (UNM) made the following comments on its leave programs and
waiver eligibility in analysis submitted for a similar bill in 2024:
The criteria used for considering a waiver are unclear, specifically as it pertains to
existing paid leave programs that run concurrently with FMLA and how the department
will determine what constitutes “substantially similar.” It is not clear how the
reemployment requirements would apply to employees who are subject to an
employment agreement or contract with a fixed end date, and whether reinstatement
rights extend past the contract end date.
Workforce
This bill could improve labor force participation in New Mexico. Research published in the
American Economic Review suggests short-duration paid leave in the months directly
proceeding and following a birth increases the labor force attachment of women who otherwise
would have exited the labor force temporarily in the months around a birth. Analysis of the
impact of paid leave laws in California and New Jersey concluded short leave is unlikely to alter
the behavior of women who were planning to exit the labor force for prolonged periods after a
birth; however, reducing a brief interruption following a birth may have long-term employment
benefits for affected women who intended to remain in the labor force.
The Early Education and Care Department (ECECD) notes this bill would support families in
caring for children in the time when no licensed childcare is available (0-6 weeks) and for other
child health-related issues. At this time, there is a lack of infant care across the state and infants
are the most underserved group of children in ECECD’s programs. This is especially of concern
because secure attachment and stable caregiver relationships are most impactful on development
in the earliest weeks of life. In addition, licensed childcare programs must exclude children when
they are ill, meaning this bill would also serve to address that gap in care.
Business Environment
This bill acts as a 0.5 percent payroll increase on employees and a 0.4 percent increase on
employers. The Tax Foundation 2025 State Business Tax Climate Rankings currently rank New
Mexico at 31
st
overall, with corporate taxes ranking 22
nd
and unemployment insurance (UI) taxes
(one of the primary payroll taxes) ranked 16
th
. Revenue into the state’s unemployment insurance
trust fund was roughly $200 million in 2024, and the UI taxable wage base in 2024 was $31.7
thousand, considerably lower than the wage base proposed in the bill. Increasing taxes on
businesses will likely make New Mexico less competitive compared with other and neighboring
states in business-friendliness rankings. However, other rankings such as Oxfam’s “Best States
to Work Index,” and WalletHub’s “Best States to Raise a Family” reward states with paid leave
programs. New Mexico ranks last in WalletHub’s 2025 highly cited ranking, which also
considers education, healthcare, employment, and quality of life measures.
The reporting and administrative requirements outlined in this bill may increase costs of doing
business in New Mexico, especially smaller businesses and those without a full human resources
department or staff (see “Administrative Implications” for further discussion).
Other Significant Issues
House Bill 11 – Page 14
In Executive Order 2019-036, the governor created a 12-week paid parental leave
program for state employees after employees complete one full year in the position. The
Legislature passed a similar policy for legislative staff in 2022.
In 2019, the state enacted Section 10-16H-1 NMSA 1978, which expanded state
employee and public-school employee use of accrued sick leave for extended family
members.
In 2021, in Section 50-17-1 NMSA 1978 the state enacted the Healthy Workplaces Act
requiring all public and private employers to allow employees to accrue earned sick leave
of 64 hours per year.
As of January 2025, 13 states and the District of Columbia offer paid family and medical
leave. All state programs are funded through employee-paid payroll taxes, and some are
also partially funded by employer-paid payroll taxes.
Federal social security disability benefits apply to those with a terminal diagnosis or if the
disability diagnosis is determined to last at least 12 months.
The bill does not include guardrails around WSD’s authority to adjust the benefit in the
event of surpluses in the fund as opposed to adjusting the rate.
ADMINISTRATIVE IMPLICATIONS
WSD is very concerned that the first day of tax collection would be the first day of a new
administration. This means a new secretary could be in place; in addition, many senior WSD
staff including the deputy secretary and UI director, are eligible for retirement. This would be a
very difficult position for a new administration and potentially impact implementation.
Building and administering the PFML, including substantial rulemaking, is an immense
administrative undertaking. New Mexico’s unemployment insurance system, also administered
by WSD, provides a point of comparison regarding potential administrative costs and
infrastructure that might be needed in New Mexico to administer a PFML program. The
unemployment insurance program has an FY25 operating budget of $14.1 million and 164 FTE
and processes between 45 thousand and 48 thousand claims annually; as displayed in the high-
end scenarios above, New Mexico could have significantly more PFML claims than this UI
benchmark.
WSD estimates the act would create a program about equal in size to the unemployment
insurance program, effectively increasing the size of WSD by about one-third. This will
necessitate new facilities under current personnel policies. Nothing in the bill appears to prohibit
WSD from outsourcing components of the program. For example, Colorado outsources the call
center for its PFML program.
The bill states specific timeline requirements that will directly impact the requirements on
operational staffing and system automation. Appropriate funding is required to ensure effective
implementation to meet these performance standards. The volume of claims will also impact
performance levels and operational support requirements.
Part of the basis of WSD’s staffing analysis is the estimated number of annual claims. Estimates
of the number of annual claims vary quite widely. Applying Washington State’s claim numbers
proportionally to New Mexico’s population yields an estimate of 52.8 thousand annual claims.
Direct comparisons are challenging because each state has its own definitions of covered House Bill 11 – Page 15
conditions, and each state has unique population characteristics. WSD believes estimates should
be based on UI staffing levels with certain adjustments.
Using the UI staffing base as a comparator, WSD projects an increase for PFML
processing staff to reflect the statutory timelines for processing claims and hearings.
In comparison to certain other states with lower relative staffing levels, WSD allows
filing by phone and in person for UI and would anticipate the same for PFML. New
Mexicans require phone and in-person service because of limited broadband access and
lack of familiarity with government services. Washington, Rhode Island, and California
do not do in person claims, while New Jersey started in 2022. The District of Columbia
does not allow filing by phone or in person.
Comparison to other states’ staffing levels is also challenging because states with lower
relative staffing levels have different roles and less administrative burden. For example,
California appeals from PFML go to a different agency.
In discussions with other states, WSD notes the cost of processing applications to opt-out of the
fund and program and address related claims is substantial. Other states have imposed fees on the
opt-out application and related appeals and claims to address this issue. WSD reads the bill to
allow this to occur by rulemaking.
WSD is required to coordinate with the Department of Information Technology concerning this
project effort. This will impact the timeline and require consideration in increased cost for
independent verification and validation (IV&V WSD may be able to purchase technology
solutions used in other states, which could reduce costs.
OTHER SUBSTANT IVE ISSUES
Participating Workplaces
The reporting and administrative requirements outlined in this bill may present more
administrative duties and costs for business owners, state agencies, and other eligible places of
work, especially smaller businesses and those without a full human resources department or
staff. For example, the business owner must work with the WSD to report employees applying
for PFML and help certify their leave. Additionally, businesses must hold a position for
employees that take PFML and who have worked for that business for at least six months. This
requirement could be difficult for a business with a small workforce where a single worker may
constitute a large share of the business output. They may be forced to stretch their remaining
employees’ duties to cover the absent coworker, or the business may hire someone new to cover
their duties and be forced to release the new worker on return of the worker on PFML.
The state PFML program may also help local businesses keep employees during and after leave
who may otherwise leave the workforce, stabilizing their workforce, reducing onboarding and
training costs, and possibly reducing the cost to provide paid leave. Employers may want to
provide leave to their employees in case of emergency or after the birth of a child but cannot
afford the cost of an independent program, given a small workforce and slim profit margins. This
program may extend that benefit and provide an affordable program for employers.
POSSIBLE QUESTIONS
House Bill 11 – Page 16
How does this bill affect labor supply and demand? A full review of the labor market and the
New Mexico economy is needed to determine the impact of PFML and the associated payroll
tax.
How can the program address “dine and dash”—self-employed people who may pay into the
program for six months, use the leave for a qualifying event, and then stop paying into the fund?
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