When learning lasts a lifetime: lifelong learning accounts give employees an incentive to keep up their studies

HR Magazine, May, 2008 by Susan Ladika

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.