Lifelong Learning Accounts CEDEFOP Seminar on Individual Learning

Lifelong Learning Accounts CEDEFOP Seminar on Individual Learning Accounts January 31, 2008

Who is CAEL? • CAEL is the Council for Adult and Experiential Learning • A 501(c)3 non-profit, international organization with 33+ years of experience • Headquartered in Chicago, IL with offices in Philadelphia, PA; Denver, CO; New York, NY; and Norwalk, CT • A national workforce intermediary dedicated to removing barriers to adult learning 2

Skills Gap • IDC, a global technology market intelligence firm, predicts as much as a 40 percent gap between the demand supply of technical networking skills by year 2012. Source: Cisco Addresses Global Networking Skills Gap with New Entry-Level Certification and Updates to CCNA, June 2007, found at www. cisco. com • In a 2005 survey, 90 percent of manufacturers reported a moderate to severe shortage of skilled production workers, including machinists, operators, craft workers, distributors, and technicians. National Association of Manufacturers (NAM), Deloitte. 2005. Manufacturing Institute, Skills Gap Report – A Survey of the American Manufacturing Workforce. 3

Education Gap Estimates suggest that by 2014, the U. S. labor force will be short 9 million college educated workers, including 3 million Associate Degree holders. As cited by Employment and Training Administration, Adults in Higher Education: Barriers to Success and Strategies to Improve Results (March 2007) 4

Lack of Funds is a Key Barrier Tuition and fees between 1997 and 2007 increased annually • • • 5. 6 percent at private four-year colleges and universities 7. 1 percent public four-year colleges and universities 4. 2 percent at public two-year colleges College Board. 2007. Trends in college pricing. Trends in higher education series. 5

Most Community College Students are Working Boswell, Katherine and Cynthia D. Wilson. 2004. Keeping America’s Promise: A report on the future of the community college. Education Commission of the States and the League for Innovation in the Community College. 6

Who Pays for Adult Learning? Informal Analysis by Ford Foundation 2003 7

What are Li. LAs? Lifelong Learning Accounts (Li. LAs): Employer-matched, portable, individual accounts to finance employee education and training 8

Key Characteristics of Li. LAs • Sponsored by Employer • Employer Matched • Optional 3 rd Party Matches • Portable (Employee Owned) • Universal • Voluntary Participation • Broad Use of Funds • Career & Education Advising 9

Initial Li. LA Demonstration Sites CAEL Demonstration (late 2001 – summer 2007) • Chicago - restaurant industry; 127 employees • Northeast Indiana - 79 manufacturing employees; 76 public sector employees • San Francisco – healthcare; 77 employees 10

Overview of Participants: Employers • 37 employers • 4 sectors: healthcare, restaurant, manufacturing, and public sector • Size varies from 3 to 5, 500 workers • 65% have fewer than 110 employees 11

What Appeals to Employers? • Potential increased recruitment and retention of employees • Affordable addition to existing benefit package • Career & education advising for frontline staff • Setting a cap on monthly and total annual Li. LA contributions • Being part of national initiative to increase access to education 12

Overview of Participants: Employees • 35% earn less than $30, 000 per year; 70% earn less than $40, 000 per year • 46% lacked any postsecondary credential • 43% are over age 40 • 37% are minorities • 55% are female 13

Income 14

Education Attainment 15

Preliminary Outcomes Co-investment strategy works • As of September 2006, leveraged $219, 404 from workers and $200, 512 from employers. • Employee contribution matched 1: 1 by employers up to $500. Project matched total contributions. • Average monthly contribution of Li. LA participants (excluding those who dropped out) = $33. 82 16

Preliminary Outcomes Participants use Li. LAs to advance and/or retool • Based on internal review, 70% reported educational goals related to ▷ current job, ▷ promotion with the same employer, or ▷ related work with the same employer or industry. • More often reported seeing a relationship between their studies and a future job as opposed to current job. 17

Preliminary Outcomes Li. LAs can provide a significant incentive to pursue education and training • Approximately half (44 to 58%, depending on the sector) of Li. LA participants had not been planning to enroll in education or training before the start of the Li. LA program • 84% of participants who made regular or significant contributions to their Li. LAs used their Li. LA for at least one class. • Across all sites, the average Li. LA expenditure per participant was $2, 003. 18

Preliminary Outcomes Participants valued advising services • 97% of participants report that they found their CAEL advisor to be helpful • 30 -40% of participants willing to pay for advising out-of-pocket 19

Preliminary Outcomes High level of program satisfaction • 88 to 90% of participants were “satisfied” or “very satisfied. ” • 87% reported that they would continue participation even if the program included only employer match funds. • 90% of responding employers reported that they were “very” or “somewhat” satisfied. 20

National Li. LA Project Sponsors Annie E. Casey Foundation Ford Foundation Bank of America Foundation Chicago Community Trust City of Fort Wayne Olive B. Cole Foundation Evelyn and Walter Haas, Jr. Fund Walter and Elise Haas Fund Friedman Family Foundation Richard and Rhoda Goldman Fund Grand Victoria Foundation Hewlett Foundation Indiana Department of Workforce Development Indiana Michigan Power Indiana Northeast Development Levi Strauss Foundation Lincoln Financial Group Foundation, Inc. Lumina Foundation for Education Noble County Community Foundation, Inc. Northeast Indiana Workforce Investment Board (in-kind contributions) Polk Bros. Foundation San Francisco Foundation Steuben County Community Foundation The Atlantic Philanthropies United States Department of Labor (Maine program) Verizon Foundation 21

Taking Li. LAs to Scale • • Administrative Infrastructure Program Marketing Advising Resources Public Policy 22

Li. LA Initiatives Moving Forward • Federal ▷ ▷ National Lifelong Learning Accounts Act of 2007 (S. 26) Lifelong Learning Accounts Act of 2007 (H. R. 2901) • State and Regional ▷ ▷ ▷ State-based program (Maine and Washington (new)) Mature Worker pilot (San Francisco) Legislative initiatives ▷ WIRED – US Department of Labor ▷ ▷ Planning grant for NYC Li. LA demonstration Planning grant for Michigan Li. LA initiative • • Illinois Hawaii • • Coastal Maine Kansas City region 23

Federal Li. LA Bills • January 4, 2007 - S. 26 introduced by Senators Maria Cantwell (D-WA) and Olympia Snowe (R-ME) • June 28, 2007, H. R. 2901 introduced by Rep. Thomas Allen (D-ME) 24

Features of the Federal Bills • Amend the IRC to establish a Li. LA demonstration program for up to 200, 000 workers in up to 10 states • Participating states selected in a competitive process • Tax credit equal to the amount contributed into a Li. LA up to $500 per tax year (refundable credit and additional deduction for individuals in the House bill) • Distributions excluded from gross income Targets tax incentives to lower and middle-income earners • Employer option to match workers’ contributions; tax credits of up to $500/tax year 25

Li. LA Participants say… “People should never stop learning. The Li. LA program helps you financially and it won’t break the bank. ” 26

Contact Information Amy Sherman Associate VP for Policy and Strategic Alliances (312) 499 -2635 asherman@cael. org www. cael. org 27