Financial Planning on Tight Budgets

Transcription

1 MAKING THE GRADE Containing Costs and Optimizing Benefits in Public Education Financial Planning on Tight Budgets From quaint elementary schools to sprawling high school campuses, public primary and secondary schools across the country are facing unique business and workforce challenges. Typically referred to as the K-12 sector, these schools are consistently working within constrained budgets, which affects employee benefit offerings and consequently, employee satisfaction. Entrusted with the care and education of our children, K-12 schools, teachers and staff members are extremely valuable resources to our nation. By effectively addressing and navigating the cost challenges that they currently face, they hope to secure their own future, as well as that of the young learners attending their schools. MetLife s 13th Annual U.S. Employee Benefit Trends Study 1 surveyed those working in the K-12 sector about their workplace benefits attitudes and priorities. In this paper, you will learn about K-12 employers and employees expressed concerns, wants and needs when it comes to financial planning and controlling costs and benefits through the workplace, as well as the employers opportunities to enhance and maximize their benefit strategies to attract and retain skilled talent. continued Customer-Focused Solutions Exceptional Service Proven Expertise

2 A Shared Focus on Stability More than half (56 percent) of K-12 employers report that over the next 12 months they will be focused on stability for their organizations, which comes as no surprise as public education budgets continue to shrink. In fact, a recent report by the Center on Budget and Policy Priorities notes that the majority of states provided less aid per student in 2014 than they did during the economic recession. 2 As a result, costs associated with employee benefit offerings particularly those related to the changing healthcare landscape are top-of-mind, with 79 percent of K-12 employers stating that their most important benefits strategy is optimizing plan designs to reduce costs to the organization. Top three business concerns for K-12 employers Increased healthcare costs 66 % Complying with new legislation/ regulations 52 % Amount of benefit coverage school districts can offer employees 49 % Uncertainties around Health Care Reform (HCR) requirements are driving cost worries around benefits in the K-12 sector. Nearly two-thirds (63 percent) of K-12 employers are extremely concerned with having to pay additional costs as a result of HCR, and more than half (57 percent) are concerned with understanding the impact of potential regulatory changes on benefits administration, including penalties for not complying. Reluctantly, K-12 employers are moving toward a health benefits strategy that requires a more active role from their employees, including increased co-pays (45 percent) and deductibles (45 percent). Easing the impact and strain of these changes on their workforce will be critical to maintaining satisfaction and loyalty, and some K-12 employers have already begun to seek guidance. Already Doing 33 % 31 % Change employee co-pay Change employee deductible 28 % Utilize an outside source to assist with ACA compliance Plan to Do 21 % 23 % Change employee co-pay Change employee deductible 11 % Utilize an outside source to assist with ACA compliance 1 Except where otherwise noted, all statistics are from MetLife s 13th Annual U.S. Employee Benefit Trends Study. 2 Leachman, M., & Mai, C. (2014, October 16). Most States Still Funding Schools Less Than Before the Recession. Retrieved from

3 Like their employers, K-12 employees seek greater financial stability, with only one-third (36 percent) saying they feel in control of their finances. The good news is that employees overwhelmingly agree (77 percent) that workplace benefits provide peace of mind. In the face of increased contributions to those benefits, 32 percent of K-12 employees are interested in their employers providing a wider array of voluntary benefits that they can choose to purchase and pay for on their own. Notably, portable benefits those benefits that an employee can take with them to a new workplace are of interest to employees. Interest in receiving benefits vs. likelihood they will be offered Portable Benefits 17 % 47 % Employers likelihood to offer Employees interest in receiving Dependent Coverage 46 % Employees interest in receiving 25 % Employers likelihood to offer Benefits related to retirement are of particular significance to employees in the K-12 sector. The public sector workforce is aging baby boomers (ages 51+) make up the largest portion of employees in this industry. This means that many K-12 employees will soon transition into the post-employment stage of life, and as a result, 32 percent are looking to employers for more help in achieving financial security. Half of all K-12 employees are concerned with the status of their retirement savings and outliving their nest eggs. This worry is likely related to K-12 demographics women, who frequently handle the finances for their entire household, make up 76 percent of the public education sector. 36 % 56 % 36 % 55 % Concerned with status of retirement savings Concerned with outliving retirement savings continued

4 Loyalty, Satisfaction, and Engagement Workplace benefits have an emotional value for employees that goes beyond dollar contribution. In general, those employees who are offered a variety of voluntary workplace benefits for example, accident insurance, financial planning workshops, critical illness insurance are more likely to perceive their employers as loyal to them. Expanded benefit offerings can also drive feelings of loyalty from employees to employers. In fact, 38 percent of K-12 employees say that having benefits customized to meet their needs would increase their loyalty to their employers. By designing and optimizing benefits plans with these things in mind, K-12 plan sponsors can create more opportunities to retain skilled employees and attract new talent. 4 TIPS FOR RECRUITING AND RETAINING EMPLOYEES THROUGH BENEFITS OFFERINGS 1. Include more voluntary benefits Similar to peers in other industries, employees in the public K-12 education sector now consider many voluntary benefits to be must-haves, indicating their desire for more robust workplace benefit offerings. By expanding voluntary benefits and communicating those options to employees, K-12 plan sponsors demonstrate that they understand the needs of their workforces and, in the process, establish strong relationships with their faculty and staff. 2. Improve benefit education and communications While K-12 employees have a strong desire for more benefit options, they don t necessarily understand how those products work, highlighting a need for more education. More than one-third say that their employer s benefit communications effectively educate them on their benefit options so that they can select those that best meet their needs. Just 34 percent say that their employer s benefit communications helped them understand how much they would pay for specific services a serious issue for a workforce with many financial concerns. How well do employees understand their must have benefits? Auto Insurance 63 % 84 % Must-have benefit Understands how this benefit works 79 % Must-have benefit Home Insurance 61 % Understands how this benefit works Accident Insurance 36 % 40 % Must-have benefit Understands how this benefit works K-12 plan sponsors have an opportunity to connect with their employees and recruits by providing clear, direct and educational benefit information. Thirty-two percent of K-12 employees say they value the one-on-one consultation of a benefits expert to help them make their decisions.

5 3. Offer guidance and decision support Millennials have less exposure to many benefits than their older counterparts. As a result, they are unsurprisingly less confident in their benefit enrollment decisions, and they desire more assistance than their peers from other generations. Still, Millennials prefer to receive benefit information through their employers, rather than from the benefits provider or onsite enrollment representative. Public education plan sponsors have an opportunity to specifically target Millennials with direct benefit communications and decision-support during open enrollment, which encourages trust and loyalty, helping to solve the Millennial retention challenge that many K-12 employers face. Benefits impact: delivering dynamic benefits to a loyal workforce MILLENNIALS GEN X BOOMERS Confidence in decisions at last enrollment 24 % 44 % 56 % Benefits information was easy to understand Confused about some or all of the information around benefits 18 % 20 % 14 % 24 % 39 % 31 % 4. Promote communication resources and channels For K-12 employees, is the preferred method of receiving benefits and enrollment information. These employees also have a higher interest in access to digital tools for their benefits, specifically mobile apps, than their peers in other public sector industries. However, very few employers say that they are likely to offer these tools. As digital channels of communication become larger parts of personal and professional lives, these demands are likely to increase. Plan sponsors in the sector have an opportunity to innovate and promote communication channels now for future workforce growth and stability. Mobile app for managing benefits 30 % Employees interest in receiving 20 % Employers likelihood to offer Mobile app for learning and education about benefits 31 % Employees interest in receiving 18 % Employers likelihood to offer Mobile app for enrollment information 27 % Employees interest in receiving 21 % Employers likelihood to offer continued

6 Overall, employers in the public education sector are tasked with doing more with less. They are facing heightened budget pressures resulting from increasingly limited access to funding, as well as escalating healthcare costs and benefit uncertainties surrounding Health Care Reform. Simultaneously, K-12 employees want more choice and guidance from their employers when it comes to benefits and general financial wellness. Notably, when employees receive more voluntary benefits choices, they are more likely to feel loyal toward their employers and perceive that such loyalty is returned. By optimizing benefit plans to reduce costs while offering a broader range of options, plan sponsors are able to address financial concerns while recruiting, retaining and motivating talent. FOR TIPS AND MORE RESOURCES ON HOW TO MEET EMPLOYEES VARIOUS BENEFIT NEEDS: metlife.com/publicsector

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