Learning Lasts a Lifetime

By Susan Ladika May 1, 2008

HR Magazine, May 2008 Lifelong learning accounts give employees an incentive to keep up their studies.

Paul Kelvington dabbled in college classes more than two decades ago. But at the time, the 18-year-old wasn’t prepared for the rigors of higher education and soon dropped out.

Now 40 and a senior waiter at Rhapsody restaurant in Chicago, Kelvington is about to graduate as an honor student from Loyola University and has been accepted into the school’s Master of Social Work degree program. He credits his achievements, in part, to the lifelong learning account (LiLA) program offered by his employer. “I would not have done this if I had not had the opportunity from LiLA,” he says.

Spearheaded by the nonprofit Council for Adult and Experiential Learning (CAEL) and launched in pilot programs around the country starting in 2001, LiLAs offer a kind of “401(k) plan” for adult education—employers and employees contribute, and the employee owns the plan and keeps it even if he or she leaves the organization. Unlike true 401(k) retirement plans, however, LiLAs offer no tax advantages and other organizations, such as foundations, can contribute to the accounts.

LiLAs have been introduced in a handful of states nationwide, federal legislation is pending to expand LiLAs and offer federal tax credits and tax breaks, and some private employers such as IBM have begun similar programs of their own.

Learning’s Allure

CAEL, a Chicago-based national organization that promotes workforce development, introduced a pilot program to provide “a little financial assistance for working adults to stay competitive in the workforce,” says Amy Sherman, CAEL’s associate vice president for policy and strategic alliances. CAEL launched the pilot in Chicago’s restaurant and food-service sector, in the manufacturing and public sectors in northeastern Indiana, and in the health care industry in San Francisco.

About half of those who participated never intended to enroll in classes, Sherman says. “This really is something that could potentially serve as an incentive.”

The University of California San Francisco (UCSF) Medical Center is setting up a second LiLA pilot program. “It’s an amazing opportunity for us to do something for our employees,” says Jennifer Hermann, director of workforce planning and human resources, especially since limited resources prevent the medical center from offering a tuition reimbursement program.

While each organization or state might organize such initiatives a bit differently, the basics are the same:

  • Employees and employers both contribute funds into a lifelong learning account, up to a certain limit.
  • The money can be rolled over year to year.
  • Employees can take the accounts with them if they move to another job.

The money covers a wider range of educational expenses than a typical tuition reimbursement program or student loan. It can be used for expenses such as books, fees and certification courses not required for specific jobs.

Maine Leads the Way

Jodie Heal, chief financial officer at Ask … For Home Care, a provider of health and support services for the elderly, based in South Thomaston, Maine, used her LiLA account to help pay costs connected with the bachelor’s degree in business administration she attained online from Berkeley College in West Peterson, N.J. The money helped pay for books and Graduate Management Admission Test fees—expenses not covered by her student loans.

Maine became the first state to usher in lifelong learning accounts in 2005. The state “has a history of recognizing education is a pathway to self-sufficiency,” says Laura Fortman, Maine’s labor commissioner.

Working with CAEL, Maine established the LiLA program, pulling together the state’s Department of Labor; Maine Career Centers, providing enrollment assistance for employers and employees; Maine Centers for Women, Work and Community, providing career and education advisory services; and the Finance Authority of Maine (FAME), providing the funding vehicle for LiLAs in the form of a 529 account—a tax-advantaged savings plan for college costs. Employers provide a match of at least $300. For families with annual incomes of less than $75,000, FAME contributes $200 to each LiLA account.

The first year was spent publicizing the program; the past year involved signing up employers, now numbering about a dozen. While the state doesn’t offer any tax breaks to employers who sign up, the program does provide an opportunity for organizations to do something extra for their staffs, Fortman says. The program also provides “more of a career ladder” for some participants.

Ask … For Home Care, with about 60 employees, matches workers’ contributions up to $1,300 per year; employees contribute through payroll deductions. Joanne Miller, administrator at Ask … For Home Care, says the company signed up for the program because “in another few years, we are going to have a huge deficit of quality health care workers.” Part of the solution, she says, is helping individuals further their educations. The company has had four aides who want to become nurses, for example.

For employers competing for labor in sectors such as health care, offering LiLAs serves as a recruitment tool. While many larger companies offer tuition reimbursement programs, Miller says, for small companies like hers, “this is a nice way to support education.”

Miller doesn’t obsess about the possibility that employees who make use of the program will polish their skills and leave. Employees who are stifled and held back are not good employees, she said, adding that “they need to keep going till they hit the ceiling. When they leave, it leaves a space for someone else for whom this job might be perfect.”

At the same time, Miller is convinced that helping to educate workers benefits society. If someone makes the leap from an aide to a nurse, and goes off and works elsewhere, she says, “maybe she’ll save my life when I go to the hospital.”

Growth Spurt

Maine is not alone in supporting LiLAs. In January, Washington state came on board through a $75,000 CAEL grant, funded by the Lumina Foundation for Education, to help the state develop lifelong learning accounts. The pilot program will target five western counties. State officials want to roll out the program statewide eventually.

U.S. Sen. Maria Cantwell of Washington state co-sponsors the federal Lifelong Learning Accounts Act of 2007. The legislation would establish a LiLA demonstration project for up to 200,000 workers in 10 states. The proposal would allow individuals to contribute up to $5,250 to LiLA accounts annually, and the contributions would be excluded from their gross incomes for federal tax purposes. They also could receive tax credits of up to $500 each.

Employers could match the contributions and would receive tax credits for each dollar matched, up to $500 per year for each employee.

Perry Sofferman, founder of the Palm Beach Strategy Group, a consultancy in Boca Raton, Fla., says LiLAs “place the whole notion of learning on a higher pedestal,” and if tax credits were provided, it would motivate more individuals and employers to take part.

Alexandra B. Griffin, director of government relations at the American Society for Training & Development in Alexandria, Va., says that without employee education and training, “a company risks losing its competitive edge. It could risk going out of business.”

This is particularly crucial given the aging of the U.S. population. Now nearing retirement, the massive baby boomer generation holds the majority of leadership and management positions at organizations today. Generation X workers are next in line to move into the leadership ranks, but they are less experienced and fewer in number than previous generations.

Mary Key, leadership pillar director at the Institute for Corporate Productivity in Tampa, Fla., says LiLAs will have particular appeal for younger people, who typically like doing things their own ways in their own time. Opportunities for development and growth are important to Gen Xers and millennials, yet these generations also tend to be less influenced by loyalty to their employers, so the portability of LiLAs can be appealing, Key says.

The accounts also give older employees an opportunity to keep their skills sharp. UCSF Medical Center was so pleased with the results of the university’s first LiLA program, also available to other campus employees, that it is implementing a new LiLA pilot program targeting employees at the medical center ages 55 and older who earn less than $60,000 a year.

“We need to provide education and training for the older workforce to keep them in the workforce longer,” Hermann says. Under the pilot program, employees and the employer can contribute up to $500 each; The Atlantic Philanthropies foundation adds another $300 per participant.

During the first phase of the pilot program, 35 employees took part. While UCSF Medical Center officials wanted the money to be spent on health care training, some employees used it to go to real estate school. One administrative assistant used the money to take courses such as finance and word processing, and has been promoted several times since.

Executives at UCSF Medical Center say they don’t worry that employees may jump ship if they gain more education. “Most likely, they’re not going to because you’ve invested in them. They feel a moral commitment,” Hermann says. And if they do depart, UCSF is happy to have had the chance to make a difference in their lives.

Sofferman says the accounts can also be used for employees to shift to a new career area within the same organization. Employees tend to get compartmentalized, but LiLAs can help “transition individuals into other areas that might be more conducive to their next phases of life.”

Homegrown Programs

Transitioning employees to new phases is part of the philosophy behind IBM leaders’ decision to introduce lifelong learning-type accounts and other training.

Even without tax incentives, the Armonk, N.Y.-based Fortune 500 company has made continuing education a priority, introducing its own form of LiLAs. “It’s not an environment where the solution is going to come from the public sector alone,” says Stanley Litow, IBM’s vice president of corporate affairs and corporate citizenship. Still, Litow says LiLAs should receive the same tax breaks afforded to other savings accounts such as 401(k)s.

Last July, IBM announced plans to introduce Global Citizen’s Portfolio, a $60 million investment designed to enhance the skills of the company’s employees. Employees need to be “ready not just for the jobs that exist today but for the jobs that will exist tomorrow,” Litow says.

The Matching Accounts for Learning initiative represents a key component of IBM’s efforts. Under the program, employees can contribute up to $1,000 per year into a portable, interest-bearing account, and the corporation will match half that. The money is designed to be used for employees to enhance skills not directly related to their current jobs, such as taking a Mandarin Chinese course or learning how to operate a small business.

The accounts will be available initially to any U.S. employee who has worked at IBM for at least five years. The company has a U.S. workforce topping 60,000. Eventually, the program will be rolled out worldwide.

The company also is implementing an in-house “Peace Corps,” called the Corporate Service Corps, designed to train 600 emerging leaders worldwide through involvement in projects in the developing world. Another program, called Enhanced Transition Services, creates bridges for IBM employees to move into positions in government, nonprofit, educational and economic-development organizations.

While IBM isn’t looking to lose talented employees, company officials say that if it helps employees do what they want—particularly in launching second careers—they are more productive for the organization and serve as ambassadors for IBM after they leave.

BJC HealthCare, based in St. Louis, also has taken matters into its own hands without waiting for federal or state support. With its Learning Accounts, em­­ployees contribute up to $500 each, made through payroll deductions, and the company puts in a matching amount, says JoAnn Shaw, vice president and chief learning officer.

In 2005, the first year the accounts were offered, fewer than 100 employees signed up. “People are always a little skeptical” when something new is introduced, Shaw says. Now, nearly 1,200 of BJC’s 26,000 employees have taken part.

The health care provider also has its own Center for Lifelong Learning, which provides free continuing education for every employee and is the site of a program for a master’s degree in business administration from Webster University. Money from the Learning Accounts can be used to pay fees that aren’t covered through other programs, to obtain certifications that aren’t required for employees’ jobs or to pay for courses unrelated to their current positions.

Any full-time or regular part-time employee who has worked for at least six months at BJC is eligible to sign up for the Learning Accounts program. It requires a minimum contribution of $5 per paycheck.

BJC’s leaders were immediately supportive of the idea of offering such accounts, says Shaw. “We have a real culture of learning. It’s just the right thing to do.”

Shaw says the program offers entry-level employees living paycheck to paycheck an opportunity to advance their educations, and it serves as a recruitment and retention tool. “Five hundred dollars is not a huge cost to the organization. What that buys you is unbelievable employee loyalty and engagement.”

Susan Ladika is a freelance writer based in Tampa, Fla.

Web Extras

SHRM weekly online survey:
Employee Education Assistance Benefit 

SHRM article:
Singapore: Pilot Program to Test Individual Learning Accounts
(SHRM Online Global HR Focus Area) 

Web site:
Council for Adult and Experiential Learning 

Implementing Pilot Projects for Individual Learning Accounts
(U.S. Office of Personnel Management)

State resource:
Maine Lifelong Learning Accounts


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