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Workers could gain new benefit option: Education savings accounts | State Legislature
Low-wage workers who are looking to climb up the career ladder may gain a new resource to help improve their skills and marketability if a bill lingering in a House committee moves on to gain support from legislators on final passage.
In its latest effort to help those hurting during the recession, the legislation proposal allows establishment of employer-matched accounts that workers could use to fund educational and training opportunities.
The House Committee on Labor and Workforce Development held a public hearing on the bill, Engrossed Senate Bill 6141, on Feb. 15.
The Senate passed the bill on Feb. 11 with a vote of 36 to 11. The measure must complete its House journey and then gain the governor’s signature for its terms to be implemented.
ESB 6141 would establish the Lifelong Learning Program under the Workforce Training and Education Coordinating Board.
“[It’s] kind of a new innovative approach to ensuring that people can constantly retrain to new jobs as industries change,” said Sen. Jim Kastama (D – 25th District, Puyallup) who is one of the bill’s sponsors.
The program proposal allows employees to create Lifelong Learning Accounts (LiLAs). The accounts are employee-owned educational savings accounts. Employers match, to a determined limit, what their employees invest.
The Workforce Training and Education Coordinating Board is a nine-member body whose governor-appointees represent business, labor, industry and government. The members advise the governor and the Legislature on policy related to workforce development.
“What’s good about it? Again, it’s a combination of the worker’s salary and an employer match that they can go ahead and use to pay for worker retraining efforts, whether it be night school or an education program that comes into the business itself and helps people retrain,” said Kastama.
According to Eleni Patadkis, executive director of the board, the LiLA program would eventually become self-sustaining.
The board has committed to provide financial resources as well as educational resources to help financial institutions set up accounts, to act as a conduit in order to develop LiLA and to help market the program across the state.
About three years ago, according to spokesman Tim Sweeney, the board initiated a pilot program and helped six employers establish LiLAs at their businesses. Those employers included Halosource, Hanner Enterprises, PanelTech, STECK Medical, Buds and Blades and Vaughan Chopper Pumps.
PanelTech is located at the Port of Grays Harbor in Hoquiam. The company’s employees work to manufacture panels from recycled materials. According to Chrissie Kincaid, the company’s office manager, PanelTech has seen few participants.
“No one really shows any interest,” said Kincaid.
The company’s employees don’t want to invest in the program, she said.
Julianne Hanner is the chief executive officer and owner of Hanner Enterprises. Her company operates five McDonalds restaurants in Grays Harbor County. Hanner Enterprises allows employees to set aside an amount from each paycheck to go into their LiLA account. The company matches up to $30 per pay period or $60 per month.
“It’s a no-brainer,” said Hanner who currently has about four out of 175 employees enrolled in the program. The company tries to encourage employees who are young adults to set up LiLAs, she said.
According to Hanner, there’s a low enrollment in the program because most of the employees work full-time and don’t have time to go back to school. “It would be more valuable if it goes statewide,” said Hanner.
Buds and Blades is a landscape maintenance company in Olympia. According to the owner, Rick Longnecker, Buds and Blades is a small company with only four employees, one of whom is participating in the learning program. Over the last few years, Longnecker and his employee have been letting the funds accumulate so that the employee can take an industrial trade class in order to get certified for landscaping.
Longnecker isn’t certain that the learning program will be successful for his company. “To be honest, the jury’s still out,” he said.
The legislation recognizes LiLA as an employee benefit. Businesses that are registered with the State of Washington are eligible to participate in the program. It is voluntary therefore businesses that don’t find the program viable for their company or employees do not have to participate.
Sen. Derek Kilmer (D – 26th District, Gig Harbor), the bill’s main sponsor, compared LiLA to a 401(k), in which an employer and the employee invest in the employee’s retirement fund.
According to Patadkis, the legislation intends to help low wage workers gain the education and the training necessary to move up the career ladder.
There are many employers in Washington that already offer tuition assistance, said Patadkis, but those programs have restrictions or require employees to meet credentials to qualify for aid such as meeting a certain grade point average. The LiLA program gives employees an alternative method of financial aid.
“We wanted a program that would be palpable to low-wage workers,” she said.
According to Patadkis, the concept also requires workers to create career plans and participate in career counseling.
The legislation has no fiscal impact on the State. The Legislature would not appropriate funds to implement the program.