The fall school semester already has started for your workers and their dependents, with some employees pursuing advanced degrees and others working to pay for college or secure backup care options for those unforeseen school closings.
To help employees in all of those groups, progressive employers are trading dunce caps for graduation caps by providing assistance programs for all schooling stages of employees' and dependents' lives.
In the upcoming months when the sniffles start and college applications are submitted, employers who offer backup care and tuition reimbursement benefits will find their employees present in body and mind.
Tuition benefits
Looking to reward your top performers without breaking the bank? Consider giving them a $5,250 raise - pretax to both of you. Section 127 of the Internal Revenue Code permits employers to dole out this amount pretax to pay for tuition reimbursement, books and courses.
Another option for aiding employees and dependents in reaching their higher education goals is a 529 plan with a company match, similar to a 401(k) plan. In terms of setting up these programs, employers have full discretion, save that they don't discriminate.
Employers typically offer anywhere from a couple thousand dollars to over $10,000; some provide an amount that refreshes each year, while some have a lifetime maximum.
An advantage of a tuition reimbursement program is that it is innately predictable and therefore budgetable.
"Tuition reimbursement is relatively inexpensive, and for the most part you can ascertain what your liability is going to be going forward," says Donald Lassere, senior VP of Programs at Scholarship for America. Because of the IRS cap on the benefit, "you know what your costs are going to be. So when you look at the benefits you're going to offer, you're going to want to keep that one, as it's a manageable benefit, as opposed to health care, which is going to change every year."
However, it's important for HR/benefits pros to remember that although predictable, such benefits are pricey. Sarah Lecuna, senior benefits analyst at software company Intuit, concedes that the benefits are not inexpensive, but return great results important to the company culture.
"We consider it important that people continue to develop," she says. Their program presents all employees with $5,000 per year of tuition reimbursement at an accredited university, providing they achieve a passing or a "C" grade. So far this year the company has posted a 10% participation rate and expects to add to that percentage this fall.
Experts agree with Lecuna that tuition reimbursement plans are great relationship builders between the employer and employee, as well as providing the employee with invaluable knowledge.
"It really is a very good program to have as an employee benefit. It helps with retention and it helps keep your employees up to date in terms of the latest management concepts," says Lassere.
Further, the benefit can be extended to employees' dependents, mainly to help them pay for college, a benefit that is a sure-fire way to get on employees' good side - particularly during difficult economic times.
According to projections from Peter Van Buskirk, president and CEO of "The Admission Game," approximately half of employees at a given company will have a child in college or are preparing to send one, not including grandparents. Clearly, a large portion of the workforce has an interest in these programs, which, if offered, "create [a] lot of affinity [for], and create long-term fans," of the company, says Mordarski.
Perhaps that's why, despite the recession, most employers are holding on to their tuition benefits, says Lassere, with 80% not making changes to their tuition reimbursement program, and only 12% decreasing tuition reimbursement.
However, as employees struggle to make children's tuition payments, the benefits don't go as far as they have in previous years.
"You've got more people knocking at the door, but there are less slots," says Marty Mordarski, director of Research & Membership at Employers Resource Council.
Adds Edward T. Menster, executive director of the College Leadership Foundation: "Especially in today's economy, people are looking to the employers to help anyway they can to provide some program to help pay for college with pretax dollars."
Among the lower-cost options, Buskirk provides webcasts, brown bag lunches, onsite one-on-one consulting and 24-hour e-mail access to a "College Talk" listserv for about $1 per employee.
Finding funding
Even if you don't offer tuition benefits or scholarships, educating employees about their college financing options may be a necessity in furthering your fiduciary responsibility if you offer any type of retirement plan, says Linda P. Taylor, RFC, CCPS, principal advisor at the College Funding Network.
Parents are taking money out of their IRAs and borrowing against 401(k)s to pay for college - a big risk for participants and for employers with a fiduciary responsibility.
"It doesn't cost the employer much to make sure their employees don't create a human resources nightmare when they have to go in and adjust these 401(k) problems," says Taylor, who estimates that worksite sessions to avoid these debacles would cost employers $250 to $1,500 for "pizza and maybe consulting fees."
According to Buskirk and Taylor, educating employees can save everyone a lot of headaches and provide the peace of mind necessary to return to work, focused and content.
Backup care
Some employees this school year are less concerned with college than child care before and after school, and securing back-up care options. Employers' programs in these areas need to make the grade as well, experts say.
According to Roxanne Szczypkowski, work-life director at EAP firm ComPsych, the two most requested programs are child care and elder care. "EAP has retained its presence while the other benefits have gotten cut," she says, adding that the one-stop-shop benefit has garnered a 10% uptick in overall utilization, compared to January to June of last year.
Statistics show that with an average cost of about 75 cents per employee per month - just $9 per year - backup care programs can yield 9.6 work hours saved per issue.
"These are productivity benefits," especially important in tough economic times when fewer people are doing more work and companies need their people working and engaged, says Dan Henry, who works with leading child care and early education provider Bright Horizons. After all, backup child care has permitted 72% of backup care participants to work on a day that they otherwise could not have, Bright Horizons finds, and also reports that these employees have been able to work seven days they otherwise would have missed.
Intuit looked into the benefit for this exact reason. They also found backup care to be a good fit because they could equalize benefits for onsite and remote- access workers.
Working through Bright Horizons, Intuit has virtually nothing to worry about administratively, says Lecuna. The program's set up requires employees pay $15 for one child and $25 for two or more children, or $4 an hour for in-home care.
Each dependent child is awarded 20 days per calendar year, and the benefit was so successful the company had to add memberships. Last year, almost 1,000 of Intuit's 7,500 employees took advantage of the backup care benefits.
While the benefit is not inexpensive, she admits, it was important that they not cut corners.
"People's children are the most important thing to them, so you want to make sure you're providing a safe and a secure environment at the centers. And when it's [in-home care], you want to make sure you're using a reliable source that checks references and backgrounds," she says.
No matter the cost, the results have been extraordinary, she says. "Just the feedback that we've received on the program has been worth it alone. Employees really do appreciate it when they have some sort of support system."
In fact, 74% of backup care respondents reported that they are more likely to continue to work for their current employer because of the presence of backup child care at or near their workplace, according to the Bright Horizons survey.
Barbara Wankoff, national director of KPMG's workplace solutions group, understands this. The company's 21,000 employees and partners use its backup care benefit more than 7,000 times each year, she says. "Our employees think that this is one of the best benefit that we offer. The feedback is tremendous because it solves a dilemma for people in real time," she says.
Not all things come free, unfortunately. Because of the tough economy KPMG has instituted a copay for the backup care program (child and elder care), but employees still are raving about it, says Wankoff. And they're happy to provide it because it brings employees back to work and posts a greater than 300% ROI.
"Certainly with back-up care there's a very high ROI because it does get our people back to work in a situation where they have a break in coverage," explains Wankoff, who concedes that "there is a significant cost to the firm, but the ROI is extremely positive, so we know it's worthwhile."
