States are taking an increasingly central role in shaping the life sciences sector. To support state leaders in navigating these evolving responsibilities, CSG has released “The Biotech Frontier: How States Are Partnering with Industry to Advance Patient Care and Biotechnology,” the fifth installment of its nonpartisan 50‑State Scan Research series.
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The fourth installment of the nonpartisan CSG 50-State Scan research series, “Building Healthy Communities, Strengthening States: How States are Meeting Today’s Public Health Challenges,” is a strategic overview of the public health landscape that provides state and territorial officials with actionable insights and emerging trends to guide effective policy decisions.
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The Council of State Governments (CSG) released “Surveying the Tax Policy Landscape: A 50-State Review,” the second installment in its nonpartisan 50-State Scan research series. The report examines how tax policy decisions at the federal, state and territorial levels directly shape household budgets, business investment and the long-term stability of state economies.
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The CSG 50-State Scan is a new nonpartisan policy research series that examines key policy priorities across all 50 states. The first of four installments focuses on how states are improving government efficiency and accountability through a range of strategies.
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The Council of State Governments has launched its new policy research series, the CSG 50-State Scan, examining today’s top policy priorities through a nonpartisan, state-by-state lens. Featuring four installments, each scan in the series will tackle a key policy area by providing a comprehensive look at innovative strategies across our states.
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The labor force participation rate is the percentage of the civilian noninstitutionalized population that is either working or actively looking for work. Rather than a new phenomenon, the decline of states’ labor force participation rates is a structural trend dating to the 1970s.
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Public assistance benefit programs offer a safety net to more than 37 million low-income families. Yet, despite even the smallest increase in income or assets, individuals or families may be disqualified from certain programs. This sudden disqualification is a benefits cliff.
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By Mary Wurtz and Jackson Beauregard
According to the U.S. Chamber of Commerce, there are approximately 9.5 million job openings in the U.S., but only 5.6 million unemployed workers to potentially fill those roles. Considering these workforce shortages, many states pursue opportunities to expand work-based learning and to invest in upskilling existing workers through registered apprenticeship.
A registered apprenticeship is a high-quality, industry-driven career pathway that combines paid on-the-job training with classroom instruction to prepare workers for skilled careers in a variety of occupations. Historically, apprenticeships have been associated with trade professions, but now more than 1,000 occupations have been approved for registered apprenticeship by the U.S. Department of Labor, including roles in nursing, information technology, cybersecurity, human resources and more.
Registered apprenticeship programs can help states to address workforce shortages by empowering employers to grow their own talent pipelines. Through apprenticeship, employers invest directly in employees by providing training both on the job and in the classroom and mentorship by pairing apprentices with skilled mentors who support them throughout the program. Because apprentices learn while they work, programs typically have few to no minimum experience requirements. This makes apprenticeship programs a great tool for recruiting individuals who have traditionally faced barriers to employment and postsecondary training, like formerly incarcerated individuals or individuals with disabilities.
Throughout the 2023 legislative session, several states adopted strategies to expand registered apprenticeships, such as establishing apprenticeship grant programs, promoting the use of apprenticeships in previously non-apprenticeable occupations and providing additional benefits to individuals in apprenticeship programs.
Texas introduced HB 3723 (2023), which would establish a Rural Workforce Training Grant Program providing targeted funding for job-specific training, including apprenticeship programs, in counties with a population of less than 200,000. Grant money may be used to cover “costs associated with training materials, instructors’ fees, participant wraparound expenses, facility fees, administrative costs, and outreach, mentoring, and recruiting costs” for apprenticeships and other training programs.
Kansas enacted HB 2292 (2023), which establishes multiple grant funds and tax credits for employers offering apprenticeships in a variety of fields, including:
Idaho enacted SB 1069 (2023), which amends existing law to enable the State Board of Education to issue a certificate to a teacher who completed an approved registered apprenticeship program. These amendments create the possibility of state developed apprenticeship programs that meet the same standards as traditional teacher preparation programs and will be targeted toward individuals who have not earned bachelor’s degrees. Education degrees are often costly, and requirements of traditional programs, like unpaid student teaching, dissuade many individuals from pursuing their teaching certifications. Idaho is now one of more than a dozen states utilizing paid teacher apprenticeships to address these challenges.
Additionally, Idaho passed HB 16 (2023), which removes barriers for state agencies when hiring apprentices to fill public workforce shortages. Under new legislation, state agencies will be able to hire apprentices to fill shortages without counting them toward their annual budgeted full-time equivalent caps.
Washington enacted HB 1525 (2023), which expands the state’s existing child care subsidies to include individuals participating in a state registered apprenticeship program. Previous bill language included those in a registered apprenticeship, but the individual also needed to be a full-time student. Now, those who are in an apprenticeship program but are not students may receive the child care benefit. Apprentices are eligible to receive child care benefits for the care of one or more eligible children for the first 12 months of their enrollment in a registered apprenticeship program, if the individual’s annual adjusted household income does not exceed 75% of the state median income.
Minnesota enacted HF 1937 (2023), which increases the reimbursement amount that eligible service members and their family members are entitled to receive for costs associated with apprenticeship programs and other on-the-job training programs. The new law increases the aggregate amount of reimbursement from $10,000 to $15,000 over the eligible person’s lifetime, or a total of $3,000 per fiscal year. This reimbursement is in addition to benefits provided under the federal G.I. Bill, which provides funding for books, supplies and housing to veterans in approved apprenticeship programs.
These pieces of legislation build on the work accomplished by states in previous years to expand their apprenticeship systems. For example, in 2019, Alabama passed HB 570, which eliminated barriers to obtaining an occupational license by completing an apprenticeship program. Under the 2019 legislation, individuals who complete an apprenticeship may be granted an occupational license in that trade if the individual also completes all necessary examinations and meets other statutory requirements. The law also states that individuals who complete apprenticeship programs may not be required to complete additional testing requirements, affirming apprenticeships as high-quality preparatory programs for occupational licensure examinations.
Additionally, in 2022, Alaska passed HB 114, which directs the Department of Education and Early Development to “provide educational opportunities in the areas of vocational education and training and basic education to individuals over 16 years of age who are no longer attending school.” This includes encouraging engagement with “businesses and labor unions to develop a program to prepare students for apprenticeships or internships that will lead to employment opportunities.”
As states continue to expand their apprenticeship systems to build new career pathways, The Council of State Governments education and workforce team is available as a resource for policymakers. CSG provides states with no-cost technical assistance on registered apprenticeship, work-based learning and other topics related to workforce development. CSG can also help states to develop registered apprenticeship programs in state and local government to address their own public sector workforce needs.
For more information, contact CSG Policy Analyst Mary Wurtz via email at [email protected].
By Trisha Douin and Dr. Dakota Thomas
The United States currently has no federally mandated paid family leave policy. To fill this gap, 13 states and the District of Columbia have enacted their own paid family leave laws (see Map 1), while three others — Georgia, New Hampshire and South Carolina — offer paid parental leave exclusively to state employees.
Most of these state programs provide parental leave out of consideration for a new child, foster care or adoption while also providing leave options for family caregiving. Also included in most programs is temporary disability insurance to cover paid personal medical leave.
State policies vary in multiple dimensions, including costs, funding models, permitted duration of leave, eligibility requirements and impacts on parental child welfare. Depending on the specific funding model a state pursues, these policies can have little to no impact on the state budget. Research suggests that paid leave has positive impacts on child health and wellbeing, parental finances and parents’ mental health. Unpaid leave does not confer any of these benefits.
Costs and Funding Models
Although funding structures for paid leave policies vary, most states use a social insurance policy design that funds benefits through pooled payroll taxes on employees and/or employers. Others offer paid family leave through private insurance on a mandatory or voluntary basis.
In these systems, companies and/or workers pay premiums to private insurers that provide benefits for paid parental, family caregiving and/or personal medical leave (see Map 2). For example, Virginia enacted a law establishing paid family leave as a form of private insurance that employers can voluntarily purchase for their employees. While the law does not mandate coverage, it is expected to expand access to the benefit through public demand in a competitive labor market and by providing flexibility. NewHampshire and New York use private insurance models, but participation is mandatory.
States can opt to fully fund programs through mandated contributions. California, for example, fully funds their program through employee contributions, with no additional direct cost to employers. This means that the policy has functionally no impact on the state’s expenditures, though employees’ wages are impacted by paying into the program.
Paid Parental Leave Duration, Eligibility & Protections
Duration, eligibility and job protections are among the areas where state paid parental leave policies differ. As it relates to duration, time ranges from a minimum of six weeks to a maximum of 12 weeks (see Map 3).
States may have a specific set of requirements that employees must meet in order to be eligible for paid family leave. These criteria may include the total number of hours or months worked, total wages earned, and size and type of the company. California, for example, requires employees to work at least 12 months for an employer, contributing 1,250 hours of service, prior to taking their paid leave. The District of Columbia requires employees to spend at least 50% of their time working in the district.
Additionally, several states have also created policies to address job protections for employees who do take a leave of absence. Seven states — Colorado, Delaware, Maryland, Massachusetts, New York, Oregon and Rhode Island — have enacted policies that provide job protections for employees on leave.
Pay Amount During Leave
The amount of pay that eligible employees receive while taking leave under the policies varies by state. In California, for instance, eligible employees can receive up to 60% to 70% of their weekly wages for a period up to six weeks, while New Jersey offers eligible employees up to 85% of their weekly wages for the same duration, while in New York, eligible employees can receive up to 50% of their weekly wages for up to 10 weeks.
Impacts of Paid Parental Leave
Research indicates that paid parental leave policies have positive effects on mothers, fathers and infants, resulting in increased leave-taking by both mothers and fathers. Several studies examining the effects of California’s paid family leave found that leave-taking doubled among mothers who extended leave by an average of three weeks, in addition to having a greater impact among economically disadvantaged mothers.
Studies have also revealed benefits of paid parental leave on the health and development of children, as well as the mental health for mothers. For instance, it has been reported that paid leave reduces infant mortality and hospitalizations, which is not as common with unpaid leave. Paid leave also reduces stress and is beneficial for parents’ mental health. Mothers participating in paid leave have been shown to less commonly experience post-partum depression, and leaves longer than two to three months are expected to be especially protective. In addition to offering mothers improved mental health, longer leaves can lower stress and reduced hospitalization rates. Evidence on mental health benefits for fathers was more mixed and less conclusive.
Summary
The Federal Family and Medical Leave Act provides eligible employees up to 12 weeks of unpaid, job protected leave per year for the arrival of a new child, their own serious health condition or to care for a seriously ill family member. Despite this, no paid family leave policies exist at the federal level. The lack of federal law for paid leave allows states to develop their own policies to address this gap. They have accomplished this through funding structures, eligibility requirements, duration of time and pay during time off. Although states approaches may differ in providing paid family leave, research suggests that providing such opportunities presents benefits that unpaid leave does not. Benefits include positive impacts on child health and wellbeing, parental finances and parents’ mental health.
By Grace Harrison
State and local pension plans provide retirement benefits and payments to more than 20 million individuals. These obligations are not always fully funded, though, resulting in a projected cumulative $1.3 trillion funding gap for states following negative fiscal year 2022 returns. The stability and participation rates of defined-benefit pension plans vary over time, making investment returns and available assets a cause for concern. Each state has created and executed its plans and funding in differing ways, which allows for detailed comparisons of these plans, their policies and the health of asset holdings.
Putting Pension Plans into Perspective
Pension systems primarily derive revenue from investment returns on assets, which are subject to investment risk, interest rates and economic volatility. For instance, during the 2007-09 financial crisis pension investments lost $889 billion in value after initially standing at $3.2 trillion in 2007. While pension plan values have largely recovered — reaching nearly $3 trillion in 2013 — not all losses have been recouped. In 2021, investment returns reduced outstanding pension plan debt below $1 trillion; however, a rise in aggregate pension debt occurred in 2022, bringing its total to nearly $1.3 trillion.
Assessing Pension Plan Health with Funding Ratios
A pension’s funding ratio is a widely used way of assessing the plan’s overall health. This ratio measures the extent to which a plan’s required payouts are covered by what is currently held as assets. Estimates compiled by the Equable Institute through Dec. 31, 2022, detail state-by-state funding ratios and estimated liabilities using data from 76.4% of retirement systems that provide investment reports. State pension plans range from 103% funded to 47% funded (See Map 1).
Another way to assess pension plan health is by examining pension debt as a share of states’ personal income, which consists of the combined wages, salaries and supplementary benefits of all state residents. According to 2019 data from The Pew Charitable Trusts, the aggregate share of this debt was 6.8%. That percentage is consistently larger than the other two main sources of state debt: unfunded retiree health care and overall outstanding debt, which are respectively 4% and 3%. Across the country, this debt varies by state (See Map 2).
How States Can Address Unfunded Pension Liabilities
States have implemented various reforms in recent years. These reforms include improved risk assessment through stress tests, more realistic projections of investment returns, and costs passed on to public higher education institutions and taxpayers.
A Pew assessment of the 2018 pension funding gap stated that the risk of unfunded liabilities can be reduced by decreasing return goals and discount rates. Since projected returns on pension plans once averaged around 8%, many states have maintained that benchmark. However, recent data predicts rates of return will fall closer to 6.5%. Making this adjustment by decreasing the discount rate would help eliminate some of the gap between calculated liabilities and contributions.
A second option for states to better adjust to economic conditions is to conduct stress tests. The National Conference of State Legislatures explained this as “evaluating how pension systems would respond to a variety of potential scenarios,” such as changing market conditions. Thirteen states now require stress testing for public retirement pension systems, according to the National Conference of State Legislatures. These states include Arizona, California, Colorado, Connecticut, Hawaii, Indiana, Maryland, Montana, New Jersey, North Carolina, Pennsylvania, Virginia and Washington.
Stress test methodology can vary, but analyses generally involve testing the sensitivity of individual variables such as inflation and returns on investment, determining the outcome of scenarios on multiple variables at a time, and/or determining composite results of thousands of random simulations like stochastic modeling. Results from these tests guide the decisions and expectations of lawmakers and advisors as they adjust investments and holdings to be more resilient in future economic downturns.
Impacts of Unfunded Pension Liabilities
There are severe risks that come with underfunded pension plans. Like other gaps in funding, states must either find ways to increase revenue or adjust existing expenditures. The latter has had a detrimental effect on school systems via increased class sizes and cuts to necessary extracurricular and health services.
Public university systems are also impacted by gaps in pension funding on both the administrative and student sides. Professors and university employees can be at risk of losing their expected pension benefits, while students are faced with potential tuition hikes to combat those losses. For instance, Illinois universities have seen an exodus of professors and employees anxious to secure their pension benefits before cuts or changes can be made, even though they otherwise would have delayed retirement. While states previously funded the majority of public pensions, colleges are now facing expectations to fund pensions from a larger percentage of their payrolls. Consequently, universities are turning to increasing tuition rates and decreased rates of funding for educational programs.
In addition to damage to public schools and universities, taxpayers also experience the increased burden from these state pension debts. In California, taxpayer support for state pensions increased from $611 million to $3.5 billion over nine years (2001-10). While adjusting revenue in other sectors might be challenging, increasing taxpayer shares is often less difficult, and thus, a more common option when finding a way to finance rising pension costs.
Looking Ahead
The $1.3 trillion pension debt across more than 5,500 state and local pension plans will not disappear overnight. Existing state law and legal protections can limit what reforms states are able to enact. Some states provide protection for pension plans in their state constitutions, while others treat them as contracts protected by state and federal law. These limitations, in combination with rising cost of living over time and longer lifespans for pension recipients, indicate that more rigorous efforts are needed to close the unfunded pension liability gap.