The program’s daily approval rate of applicants is already 16% above forecast. A 2024 analysis conducted by Milliman, the state’s contracted third-party actuarial firm, anticipated a rate of 361 applicants approved each day to receive payments, or 131,868 yearly expected beneficiaries divided by 365 calendar days.

Paid leave is supposed to be funded through payroll taxes split between employers and employees. According to a mid-year announcement from the Minnesota Department of Employment and Economic Development, which administers paid leave, the program took in roughly $344 million in employee and employer contributions in the first quarter of 2026.

If it sounds like the program’s input and output numbers are not adding up, and curiously span different reporting intervals, that is because second-quarter tax payments are not in yet. Businesses have a month after the June 30 quarterly end date to catch up.

“DEED has communicated poorly at every stage, and reporting payouts on a six-monthly basis and receipts on a quarterly basis is another example of that,” John Phelan, an economist at the Minnetonka-based Center of the American Experiment, told the Washington Examiner.

Paying for the program was a matter of basic math, entailing at least a payroll tax of 0.92%, but Minnesota Democrats disregarded repeated warnings from Republicans in the state legislature at the time of the program’s passage. In 2023, Democrats pushed the program through anyway, thanks to a trifecta controlling both chambers and the governorship.

“We kept flagging this for the Democrats, but they had full control, so they ignored us,” Minnesota state Rep. Kristin Robbins said in an interview with the Washington Examiner.

During deliberations, House Republicans required an actuarial study, which found that the break-even point on the program was a 0.92% payroll tax. Following the commissioned study’s findings, Democrats raised the proposed tax rate from 0.7%, where it originally was set, to 0.88%, its current rate.

“They started the program knowing it would be in the red,” Robbins said. “It’s another sign of Democratic mismanagement. They purposely created a program they knew would be in a deficit from the beginning.”

However, the DEED commissioner has the unilateral power to raise the tax to 1.1% as needed to cover the cost of demand without prior approval from the Minnesota legislature. Due to how the program is designed under state law, DEED has the authority to lower or raise the tax up to the 1.1% cap.

“They got themselves off the hook from having to vote on the second tax increase,” Robbins said of her Democratic colleagues, “and they ceded our taxing authority to the DEED commissioner, which I think is unconstitutional.”

Asked about concerns regarding rising premium collections, DEED referred the Washington Examiner to a press release published Friday announcing that the payroll tax rate remains unchanged for 2027 and that paid leave is “now fully funded” by these tax payments.

The program, which began paying out claims on its launch day, was backfilled by $668 million pulled from an initial fund that was front-loaded by state lawmakers in 2023 to jump-start immediate delivery of benefits.

THOUSANDS ALREADY APPLIED FOR MINNESOTA’S NEW PAID LEAVE PROGRAM OPEN TO ILLEGAL IMMIGRANTS

Robbins, a former economics professor, said the program is technically already operating at a financial loss, if not for the nest fund. The seed money itself was allocated from an $18 billion state budget surplus secured in 2023.

“That’s how they’re saying, ‘Oh, it’s not in the red,’ because they’re backfilling with this money they put into it at the beginning,” Robbins said. “That’s part of how they wasted our $18 billion surplus.”

Phelan, who has been calculating cost breakdowns when DEED periodically releases data on the paid leave program, also expressed skepticism about the program’s long-term sustainability balanced against increased utilization.

“The backfilling works as long as payouts match receipts,” Phelan said, “but if they exceed them, then that fund will be depleted, and the scheme runs out of cash.”

As for fraud indicators, some suspect that bad actors will likely try to abuse the program’s lax caregiver eligibility criteria and documentation requirements. Multiple caregivers can take paid leave for the same person, and they do not have to live together.

“Ten people could all decide they’re going to take paid leave the same week to go care for Grandma in Florida,” said Robbins, the Republican chairwoman of the Minnesota House fraud prevention and oversight committee. 

One of the caregiving categories that beneficiaries can claim to be providing is mental health support.

“Well, does that mean you just call them and say, ‘Hey, how are you doing?’ You send a quick check-in text?” Robbins asked. “There’s no one tracking to see what sort of care was being provided, or if, in fact, it was provided.”

The relationships do not have to be familial either, according to the paid family and medical leave law’s statutory language. A claimant can designate almost anyone who is “like family,” “even if not related by blood.” The threshold is simply an “expectation and reliance for care.”

“That’s the most broad definition of ‘family’ of any paid leave program in the country,” Robbins said.

Minnesota’s paid leave program is also one of the most generous, offering 20 weeks of paid time off, equal to nearly 40% of a standard work year, when combining claims. A worker can technically “double dip” by taking 12 weeks off purportedly to care for a close companion and then claim another eight weeks to handle one’s own healthcare matter, enjoying essentially an extended 20-week paid vacation, amounting to a leave of absence 5 1/2 months long, within a single year.

Applicants can also “top off” paid leave by using company-issued paid time off credits, sick days, and vacation hours in addition to their leave of absence, a mechanism known as “supplemental payment.”

DEED administrators have expressed confidence in the program’s vetting protocols, asserting they ensure that each claim is legitimate.

“Paid leave was built with strong systems in place to verify identities and work histories and to detect and prevent fraud,” a DEED spokesperson previously told the Washington Examiner. “We accept tips about potential fraud from all sources, and we investigate all reports.”

Gov. Tim Walz (D-MN), who signed the legislation into law, heavily promoted it while downplaying mounting concerns about the program being susceptible to fraud.

“Are people going to abuse the program?” Walz, addressing a frequent question from critics, said at an outreach event opening up the application portal. “How disrespectful to people to assume that ailing Minnesotans are scamming. That’s what I hear from [critics] all the time. I trust Minnesotans.”

“I believe they know you’re not going to get rich, and it’s not your full salary,” Walz insisted. “You’re not going to scam and take time off.”

Robbins said an overlooked aspect of this program is that it interrupts the social contract between bosses and workers, disrupting the employer-employee relationship. Before the paid leave program’s enactment, workers approached their supervisors to request time off, and they figured it out together. Such private arrangements did not impose a mandatory payroll tax on every single employee and employer in the state.

“I’m not saying we don’t need some form of paid leave, but what Minnesota has done is they have inserted the government in that relationship,” Robbins said. “Now, you apply to the government for paid leave, and the government grants the leave, and the employer doesn’t do anything but verify that you’re an employee.”

Early submissions of paid-leave applications showed that two-thirds of claimants work for companies with more than 200 employees, which typically already have corporate paid-leave policies in place, while only 13% are employed by small businesses.

THESE ARE THE WALZ APPOINTEES WHO FAILED TO STOP RAMPANT MINNESOTA FRAUD

“It’s the smaller businesses that are essentially subsidizing the program for people in larger companies who already probably have access to paid leave,” Robbins said.

Indeed, the Minnesota Chamber of Commerce reported that 80% of its member companies already provide paid leave. The business advocacy organization, representing over 6,300 companies across Minnesota, has called the paid leave law a form of government overreach, “dictating how employers run their benefits and their workplace.”