TASA Midwinter Conference • Teacher Retention/Attendance Incentives • Retirement Education through Region 10 RAMS • Educator Retirement Update Download our School District Financial Health Checklist at www.tcgservices.com/tasa2019
ESC Region 10 • Located in Richardson • Provides services that impact over • 840,000 students • 106,000 school staff • 56,000 are teachers • 130 ISDs, charters and private schools • 10 north Texas counties • Motto • “Students • Service • Solutions” • Mission • The mission of Region 10 is to be a trusted, student-focused partner that serves the learning community through responsive, innovative educational solutions. Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 2 past performance is not a guarantee of future returns.
About Region 10 RAMS • Program established in 2001 • Includes 394 plans across Texas with over 416,569 participants • Trusts have over $474,587,620 in invested assets • Low cost, no commissions, oversight of investment by ESC Region 10 Investment Advisory Committee • 457(b) Tax-Deferred Savings Plan • Voluntary, pretax deferrals from paycheck • TERRP (Teacher/Employee Recruitment and Retention Program) • 401(a) plan for Educational Employer contributions • 457 FICA Alternative Plan • Part-time or substitute employees contribute in lieu of Social Security • 403(b) Third Party Administration • No affiliations with vendors; no conflicts of interest Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 3 past performance is not a guarantee of future returns.
N E W R A M S S E R V I C E Giving You the Power to Make Financial Decisions We are on a mission to improve the financial health of our communities and empower individuals of all income backgrounds to reach financial wellness. Learn more at: www.financialpathway.com
About TCG A fee-only investment advisor, financial planner and retirement plan administrator . Confidential and proprietary—for the exclusive use of authorized recipients only. 5 All investing involves risk and past performance is not a guarantee of future returns.
Agenda • Teacher Retention/Attendance Incentives • Financial Wellness and Keys to a Comfortable Retirement • TRS Care in Retirement Confidential and proprietary—for the exclusive use of authorized recipients only. 6 All investing involves risk and past performance is not a guarantee of future returns.
ESC Region 10 RAMS Incentive/Retirement Programs ESC Region 10 IAC TERPP FICA Alternative Coop 401(a) Incentive Plans 457(b) FICA Alternative Plans 457(b) Coop 457(b) Retirement Savings Plan TERRP/Signature Portfolio & Related Investments 403(b) Third Party Administration Confidential and proprietary—for the exclusive use of authorized recipients only. 7 All investing involves risk and past performance is not a guarantee of future returns.
Why Use Incentive Plans • Educational employers face tough issues on recruiting and retaining staff, improving attendance and many other staff issues • Incentive plans cost less than salaries, stipends, etc. • Incentive plans are more flexible than direct compensation Confidential and proprietary—for the exclusive use of authorized recipients only. 8 All investing involves risk and past performance is not a guarantee of future returns.
Successful Uses of Incentive Plans • Teacher employee retention and recruiting • Teacher attendance incentive (reduce use of substitutes) • Hard-to-retain/recruit incentive (special ed., math, science, bilingual, etc.) • Campus retention incentive • Campus performance incentive • Campus student attendance incentive • Safety goals • Encourage employee savings • Other educational employer incentives Confidential and proprietary—for the exclusive use of authorized recipients only. 9 All investing involves risk and past performance is not a guarantee of future returns.
Use of 401(a) Plan for Incentive Less Expensive for Educational Employers 5% Bonus Incentive 5% Plan Contribution Bonus Incentive $2,000 Plan Contribution $2,000 Plus TRS Ret. + H Care $167 (est.) Plus Medicare $29 Plus Worker’s Comp. (est.) $20 Plus Unemployment (est.) $5 Total Cost of Total Cost of $2,221 $2,000 Bonus Incentive Plan Contribution Assumptions: $40,000 Salary; 8.35% TRS Cont.; 1.45% Medicare Cont.; 1.00% Worker’s Comp. Cont.; and 0.25% Unemployment Ins. Cont. Confidential and proprietary—for the exclusive use of authorized recipients only. 10 All investing involves risk and past performance is not a guarantee of future returns.
Use of 401(a) Plan for Incentive Less Expensive for Educational Employers 5% Bonus Incentive 5% Plan Contribution Bonus Incentive $2,000 Plan Contribution $2,000 Less TRS ($167) Less Medicare ($29) Less Federal Taxes ($300) Total Cost of Total Cost of $1,504 $2,000 Bonus Incentive Plan Contribution Assumptions: $40,000 Salary; 8.35 TRS Cont.; 1.45% Medicare Cont.; 1.00% Worker’s Comp. Cont.; 0.25% Unemployment Ins. Cont., Fed. Tax @ 15% Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 11 past performance is not a guarantee of future returns.
TERRP: Example of Educational Employer Plan Structure Employer ESC Region 10 Plan/Trust District Adoption of District Plan Employee Deferral Employer Level Contributions 403(b)/457(b) Annual Employee Deferral Employer Basic Match = 50% of Employee Deferral (up to maximum % of pay) + Attendance Incentive (better attendance = higher match %) Vested in 4 th year 100% Immediately Vested Employee Account Inter-local Agreement between (employer’s choice) District & ESC Region 10 Fully Vested Vested in 4 th year Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 12 past performance is not a guarantee of future returns.
Plan & Trust Features • 401(a) Plan • Same tax code as TRS • Defined contribution plan • Greatest flexibility in plan and investment design • Trust to hold assets • Low cost mutual funds, fixed income ladder, other investments determined by Investment Advisory Committee • Investment pool • Investment committee • Professional investment advisor • Professional trustee • No commissioned products Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 13 past performance is not a guarantee of future returns.
Sample Statistical Analysis Used to Design a Plan Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 14 past performance is not a guarantee of future returns.
Teacher Turnover Teacher Turnover (Percentage) 35.00% 31.50% 28.00% 24.50% 21.00% 18.23% 17.50% 15.00% 12.05% 14.00% 11.19% 9.38% 8.33% 9.52% 10.50% 8.51% 7.50% 6.06% 5.71% 7.00% 4.52% 3.50% 0.00% One Tw o Three Four Five Six Seven Eight Nine Ten Eleven Tw enty- through one Plus Tw enty Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 15 past performance is not a guarantee of future returns.
Teacher Turnover Teacher Turnover (Numbers) 40 35 36 32 28 24 20 15 15 16 9 10 12 6 8 6 4 3 3 2 2 4 0 One Tw o Three Four Five Six Seven Eight Nine Ten Eleven Tw enty- through one Plus Tw enty Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 16 past performance is not a guarantee of future returns.
Hard to Retain Staff (Math, Science, Sp. Ed.) 100% 100% 100.00% 90.00% 80.00% 67% 70.00% 60.00% 50% 50% 50.00% 40.00% 30% 25% 30.00% 20.00% 0% 0% 0% 0% 0% 10.00% 0.00% One Two Three Four Five Six Seven Eight Nine Ten Eleven Twenty- through one Plus Twenty Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 17 past performance is not a guarantee of future returns.
Hard to Retain Turnover Hard to Retain Staff Turnover 20 18 16 14 12 10 8 6 4 2 0 One Two Three Four Five Six Seven Eight Nine Ten Eleven Twenty-one through Plus Twenty Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 18 past performance is not a guarantee of future returns.
403(b)/457 Participation 50.00% 45.00% 40.00% 32.88% 35.00% 27.78% 30.00% 22.55% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Teachers Administrators All Others Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 19 past performance is not a guarantee of future returns.
Teacher Attendance 1,200 1,034 1,080 960 840 720 600 480 360 240 123 120 63 0 Total Teachers Teachers - Perfect Attendance Teachers - Excellent Attendance Confidential and proprietary—for the exclusive use of authorized recipients only. All investing involves risk and 20 past performance is not a guarantee of future returns.
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