Minnesota's new paid leave director faces his first challenge — rising costs for the program

A few weeks into his job setting up Minnesota's paid family and medical leave program, Greg Norfleet was confronted with a new financial analysis showing costs for the program could come in at least $600 million more than anticipated in the first three years.

Seemingly unfazed by the numbers, Norfleet, who helped set up a similar program in Massachusetts, said getting that report well before the program is set to roll out in January 2026 is an advantage other states didn't have.

"It really puts us in a great position to think about the long-term funding of the program, and a lot of states didn't have that when they started," he said.

It's his job to implement the Minnesota program passed this spring to ensure workers can take 12 weeks of paid family leave and 12 weeks of paid medical leave per year, capped at 20 weeks total. The issue was the subject of fierce debate during the legislative session, with business leaders and Republicans criticizing its structure and the payroll tax used to fund it. That tax will likely have to increase to cover rising costs, and there are calls to revisit the program next session.

"Republicans believe in supporting families and helping job creators provide this benefit for their employees, but this clearly is not the way to do it," Republican House Minority Leader Lisa Demuth said. "This program was poorly crafted and should be reassessed before Minnesotans' paychecks take a hit."

Norfleet has had some experience dealing with tricky areas of state government.

In Massachusetts, he was initially placed in the governor's office as an innovation fellow from the Harvard Kennedy School and ultimately stayed on as part of an in-house consulting group that acted as an "operational SWAT team going around fixing problems in state government," he said.

While he was working there, legislators passed a 26-week paid leave law. He helped set up the product management office and was eventually hired as the deputy director for operations at the new Massachusetts Paid Family and Medical Leave program.

"I got really into the subject matter and I saw it as a once-in-a-lifetime opportunity for both professional development but also the impact the program could have," he said.

When Massachusetts launched its program, there were fewer states to look to regarding how to roll out a program, he said. Minnesota is the twelfth state to set up a program and the first in the Midwest. Norfleet said it can learn from other states' growing pains.

Washington had to boost its premium rate twice because of more demand than anticipated, and even Massachusetts had to make fixes when checks were slow to arrive for some recipients in the early days of its program.

"We have workable models of how those questions have been answered in other places," said Norfleet, who noted leaders from programs in other states meet regularly.

There's a lot of work ahead, and a set timeframe to do it. A countdown clock in the program's St. Paul office shows the hours ticking away until Jan. 1, 2026.

Norfleet said the first two major hires for the program have been made — a chief strategy officer and a manager of public engagement. A fiscal note for the paid leave program last session estimated a need for more than 400 full-time employees by the time it's up and running.

"I think people will want to work here," Norfleet said. "We're not competing on money, we're competing on mission."

The department will have to figure out how to handle the rising costs laid out in the new report, an actuarial analysis put together by the company Milliman at the state's request.

Under law, the Department of Employment and Economic Development (DEED) must adjust tax rates to ensure the program has enough funding. Milliman recommends DEED tax employers at 0.78% in the first three years — up from 0.7% in the legislation — and 0.83% after that to prevent wild swings in tax rates for businesses and employees.

Evan Rowe, a deputy commissioner at DEED, said the report wasn't "terribly surprising" and the financial needs for the program are still well below the 1.2% premium cap established in the law.

"We're going to carefully review the recommendations from the actuaries, but I think the output was broadly in line with the previous analysis and not a surprise," he said.

Tax collections won't begin until 2026.