Actuarial update: CT Paid Leave fund holds $633M but breaches one early‑warning metric as claims reserves rise

The Connecticut Paid Leave Finance and Audit Committee heard an actuarial quarterly update May 22 showing an ending net fund balance of $633.1 million for the July 2025–March 2026 reporting period, but staff flagged one early‑warning funding metric as not met.

Actuary Harindra said net activity for the period was negative $5.8 million. Contributions earned were higher than projected (375.1 million versus an earlier projection of 371.6 million) and investment income matched projection at $17.9 million, but incurred claims rose to $383.3 million compared with a prior projection of $378.4 million. Harindra said the rise in incurred claims reflected an increase in reserves for outstanding and pending claims rather than a materially larger paid‑claims total for the quarter.

The committee was told it meets two of three funding metrics but does not meet the “adverse losses over one year versus net fund balance” metric, which the actuarial model stresses by projecting a 50% increase in claims to test resilience. Harindra described the metric as an early‑warning trigger: “If claims go up quite a lot…what would the final fund balance look like?” he said. The reported metric value was close to the threshold — staff showed a decimal comparison (about 0.549 versus a 0.500 threshold) — and several members characterized the breach as narrow.

Committee members asked whether this was the first time the metric had been breached. Harindra said this quarterly report is the first time the committee has seen the metric fail in a quarterly presentation, though prior multi‑year projections had shown scenarios where the metric would be breached in later years. He explained staff updated forward‑looking assumptions to reflect recent higher claim experience, which contributed to the current result.

When asked whether immediate remedial options were available, staff said they are not yet prepared to recommend specific interventions. Aaron and Dave (staff referenced during the exchange) said teams will analyze the claims and utilization data over the coming months to identify feasible, evidence‑based options, emphasizing the need for a reasonable basis for any recommendation.

Harindra also pointed to the reserve detail: paid claims in the quarter were slightly below earlier projections (375.1 million paid versus 376.2 million projected), but case reserves for outstanding claims increased (from 68.1 million in the prior projection to 74.1 million), which raised total incurred claims. The presenter closed by noting the committee should consider longer‑term projections — including a 10‑year view — when judging sustainability and timing of any corrective action.

The actuarial update concluded with staff saying they will continue to collect and clean data, especially to better separate recently added populations (discussed later in the meeting), and to use that analysis to inform any recommended policy or operational responses.