Harris County School District

THE HARRIS COUNTY SCHOOL DISTRICT, with central offices in Hamilton, Georgia, started developing its financial wellness program in late 2018, after seeing evidence that many of its employees felt financially stressed. “I noticed a recurring issue: our participants taking loans and hardship withdrawals,” Benefits Coordinator Renee Lipp recalls. “It just broke my heart. I thought, ‘This is not a savings account, this is a retirement account.’”

But there is only so much an employer can do in its role as plan sponsor to address employees’ broader financial issues, Lipp says. So a year ago January, the district launched a financial wellness program in partnership with financial education provider Mentoro, to address employees’ financial stress points.

The district has widespread employee demographics, and most of its workers lack any education in finance. “We have everything from our cafeteria lunch ladies who may have a GED [General Educational Development diploma] and little or no financial background, to people with a doctorate who are in leadership,” says Assistant Superintendent Stacey Carlisle. “On the education staff, our teachers have put their lives and hearts into helping students build their future. At the same time, if you talk to the teachers about their own financial future, that’s not their skill. So we decided to take our educators and turn them into students. We thought, if our people know better, they will do better.”

How the Program Works

Mentoro utilizes gamification—the application of game-playing elements such as scoring—to help incentivize employees to engage with the program and take action to improve their financial wellness. Once they register on Mentoro’s website and complete a financial profile, they get a personalized financial wellness score and action plan. Program participants can then earn points to improve their score, such as by increasing their 403(b) contribution or starting an emergency savings account.

After they have registered, employees also may have one-on-one phone consultations with Mentoro’s financial wellness educators and may attend the group educational meetings, held quarterly. Mentoro and the district collaborate to customize the meetings’ topics to workers’ needs.

At the kickoff event, Danny Kofke—a former teacher, author of the book “The Wealthy Teacher” and now a Mentoro educator—was a hit when he spoke about the financial stressors that many teachers face. Although the meetings switched to a virtual format last year, the district hopes they can resume in person sometime in 2021.

Within six months of the launch, nearly half of the workers had enrolled and received their personalized action plan. In the first year, the district held six virtual group financial wellness meetings, attended by a total of 215 employees; 43 had individual meetings by phone with Mentoro.

Metrics have shown improvement in employees’ financial wellness in first-quarter 2021, compared with first-quarter 2020. Twenty-one percent of those who have utilized the lifetime-income projection tool saw their projection improve during that time. And the number of employees who responded in a survey that they feel distracted by their finances at work has decreased by more than 10%.

At a recent 403(b) committee meeting, several employees spoke about their success with the program in its first year. One participant, for example, has made much progress in reducing her debt load and said she now feels she will be able to contribute enough to her 403(b) account to retire securely.

Says Carlisle, “Stories like that warm our hearts.”

Adding Automated Plan Design

In 2018, Harris County leadership also began to re-evaluate the plan design of the 403(b), which had a 71% participation rate at the time. The following year, the leadership engaged Hartmann-Astor Investment Consulting LLC to assist in evaluating the plan.

Hartmann-Astor Principal Eric Hansen has worked with numerous K–12 plans, and he says these plans frequently face challenges in convincing employees already covered by an active defined benefit (DB) plan to contribute to a 403(b). “The employees often believe this is the only income they’re going to need for their retirement,” he says. “Few understand what their true retirement needs will be.”

So last year, Harris County formed a committee­—with members representing a cross-section of employee demographics, occupations and income levels­—to dive into the plan design. “We were concerned that many of our employees were not participating, and leaving a valuable match on the table,” Lipp says. “We recognized that the pensions offered to our staff are valuable, but may not be able to fully fund our employees’ retirement, and so we’re working to have the 403(b) help fill that gap.

The plan added automatic enrollment for new hires last July, and the committee opted to hold off on adding automatic escalation or doing a re-enrollment. “In the K–12 403(b) marketplace, these are fairly new concepts to them,” Hansen explains. Rather than adding all automated design features at once, he says, “We decided, ‘Let’s be more methodical. Let’s do it one step at a time.’” That has paid off, as 100% of auto-enrolled new hires have stuck with participation.

Later this year, the plan will do an investment re-enrollment, moving current participants into the plan’s default Vanguard Target Retirement Funds, unless they choose to remain where they were. The committee is firming up plans to add an auto-escalation feature, likely early next year. “We’ll probably do it at 1% a year, because that’s the least disruptive for participants, ideally up to 10%,” Hansen says.

Harris County also has plans to do a re-enrollment sweep of all nonparticipating, employees and of participants deferring less than 3%, possibly next August or September. Budgetary considerations related to match expenses, as well as the need to take time to educate affected employees, will play a big role in the timing, Hansen says.

“We will most likely implement all of the automation steps,” he says. “It’s just an issue of what works best for having the least amount of disruption.” Asked if it is cutting edge for a K–12 403(b) plan to do auto-enrollment and auto-escalation, as well as investment re-enrollment and a sweep, he says, “Absolutely.”

—Judy Ward