PIERRE, S.D. (KELO) — Governor Kristi Noem’s attempt to substantially expand family-leave benefits for state government employees has died.
So has her proposal to use state funds to subsidize family-leave insurance for private employers.
Those defeats came a day apart this week while the Republican governor was out of state on a three-day swing in Washington, D.C., where in speeches and public appearances she spoke about how well she has been leading South Dakota.
On Wednesday, Republican members on a Senate panel blocked her proposal to use up to $5 million annually from state government’s general fund for the private subsidies. The program would have ended after four years.
On Thursday, a bipartisan group of nine House members unanimously set aside her plan to upgrade family leave for state employees. She had wanted them to be able to use it longer and in more situations than just birth or adoption of a child, and be paid 100% of their salaries while they were out.
Noem had spoken about those plans in her State of the State speech on January 10 opening the 2023 legislative session.
“Currently,” she told lawmakers that day, “the state provides paid family leave benefits at 60 percent of an employee’s salary for eight weeks. I am proposing that we extend that benefit to 100 percent of salary for 12 weeks. And this new family leave policy won’t just cover new births or adoptions – it will also cover taking care of a child, spouse, or parent with a serious health condition, or a situation where a spouse is called to active-duty military service.”
She also called for making state government’s family-leave program available to the private sector.
“This will make it much cheaper for companies to offer this benefit to their employees,” Noem said. “And the more people that buy in, the lower the cost will be for everyone. My budget provides $20 million in grants to incentivize private sector companies to participate for the first few years.”
The Senate Health and Human Services Committee however voted 4-2 on Wednesday to reject the private subsidies outlined in SB-154.
Rachel Oglesby, the governor’s chief of policy, described it as a pro-life effort during her testimony. Oglesby said it also would help South Dakota businesses compete with Minnesota businesses for employees.
The Minnesota Legislature is considering a statewide family-leave program that would rely on a payroll tax for funding. Oglesby said South Dakota’s proposal was patterned after one that New Hampshire started in 2022.
She was the only one who testified in favor. The only opponent was Justin Smith, representing the American Council of Life Insurers. He said the government subsidy that would flow to one provider would create uneven competition for others offering wholly private plans.
None of the other major business organizations took a public position.
Noem had somewhat more support — including from the life insurers — at the House Appropriations Committee hearing the next day for HB-1151 that sought to expand family leave for state employees and make the risk pool open to private employers. The House State Affairs Committee had already voted 11-0 to endorse an amended version of it.
But Republican Rep. William Shorma spoke against it. He had worked up some possible amendments but, because they weren’t viewed as friendly, he didn’t offer them. He said private employers liked the concept of family leave but didn’t want to go so far as the governor’s proposed 12 weeks at 100% of salary.
Oglesby said the plan didn’t require any employer to offer 12 weeks at 100%. She said there was “a huge list of options employers can do” to make the plan work for them. She acknowledged that the proposal was developed by looking at other states’ plans and that South Dakota government officials didn’t consult directly with any South Dakota business about it.
The appropriators voted unanimously to kill it. They praised Noem for making family leave a priority but said they would rather see state government’s estimated cost of nearly $3 million to purchase an outside insurance policy go instead into state employees’ pay.
Republican Rep. Chris Karr said, “I think family leave is important. I think there were several issues with this particular bill that were stated by many, and personally I would rather see any resources we’re going to dedicate to state employees that applies to all of them as much as possible, and I’d rather focus on the actual compensation versus this particular benefit.”
Republican Rep. Chris Kassin commended the governor and her administration for bringing the family-leave plan. “This issue is important. Representative Karr brought up pay, but I also think benefits are important to the employees. And so, hopefully, I don’t think this is a vehicle by which this particular thing should be achieved, but hopefully moving forward we can get these benefits as they were proposed for our state agencies and state agency employees in a different way.”
Democrat Rep. Linda Duba said family leave is important and didn’t want to diminish that. She spoke about being the mother of three children, now adults, who might someday need family leave. “But I just don’t feel that this mechanism is in the right direction and the fact that we didn’t work with any of these small businesses or medium-sized businesses in this state — and really, the New Hampshire plan is much different from what we’re proposing here.”
New Hampshire pays up to 60% of salary for six weeks for any participating public or private employee.
Republican Rep. Tony Venhuizen, who had served for a time during Noem’s first term as governor as a senior advisor and later as her chief of staff, said the governor should be commended for raising the issue of paid family leave. She started family-leave for state government employees in 2020.
“The state is one of the largest employers in the state, and I think setting that standard for other businesses to follow is important, and so I appreciate her leadership in this area,” Venhuizen said. “Kind of piggy-backing on Representative Kassin, there’s room to do this in state government without this particular bill and I hope that moves forward.
“I do think,” Venhuizen continued, “when we get into the state participating or creating a pool to participate in the private market, it’s maybe something that goes a little bit further than our body (the Legislature) is ready to go. I would just throw out as a comment, you wonder what the proponents such as the Sioux Falls Chamber could facilitate, some kind of buying group for employers like has been envisioned, and that might be a worthy discussion going forward.”
A request for comment from the governor’s office emailed at 10:38 a.m. Friday hadn’t been acknowledged by her communications director or press secretary as of 9 p.m. Friday. Noem however on Friday night issued a statement on Twitter criticizing Duba for making the motion to kill one of the bills.
Noem’s statement said, “Strange that a Sioux Falls Democrat won’t help families who need flexibility. Rep. Duba has done nothing to help families gain paid family leave.” Duba responded on Twitter, “Here is the full story. I was asked to bring the motion. There are eight republicans and me. The vote was 9-0 to send the bill to the 41st day. You didn’t consult with SD businesses. Do better next time.”