The outbreak of COVID-19 has presented unprecedented challenges this year, around the world and here in America. With the new school year rapidly approaching—or in some cases, already starting—one of the most looming questions is how we safely send students and education-related employees back to school. As school districts work quickly to address these concerns and ensure students, employees, and the families of these individuals are kept safe, these districts are also staring down unwanted reductions in their workforce.

In a recent CNN article, several teachers expressed their misgivings about what the new school term will bring. The article features Sarah Gross, a 37-year old high school English teacher in New Jersey,  who admits to CNN that she is eager for schools to reopen in the fall but adds, “I think a lot of times people forget that kids don’t go to school by themselves. The schools are run by a lot of adults, and a lot of those adults are especially vulnerable to coronavirus.” Gross said she’s not only worried about teachers but also bus drivers, lunch aids, and secretaries.

The Current Situation

Since more than one quarter of public schoolteachers are over the age of 50*, the fear is understandable. According to a USA Today/Ipsos online poll, nearly 1 in 5 teachers surveyed said they are not likely to return to work if schools reopen in the fall. For those age 55 and over, in most cases representing those teachers with many years of experience, 1 in 4 said they probably will not return. These figures suggest that school districts will potentially see a substantial amount of resignations. Another potential issue is a shortage in substitute teachers—if teachers resign or become sick, the need for temporary replacements will grow, exacerbating an existing challenge.

Schools have always struggled with employees leaving to pursue higher pay and advancements, but the COVID-19 pandemic may increase unwanted attrition. The voluntary reduction in force is most likely to be seen among:  teachers with compromised immune systems or those over age 60 because they fear the health risks; teachers reluctant to adapt to the online classroom scenario; and those experiencing overall reduction in job satisfaction. However, there are creative solutions to help offset any large-scale workforce reductions.

Understanding Your Options

Offering a targeted retention incentive in the form of a defined contribution benefit can encourage employees to continue working AND provide a reason for jobseekers to choose one district over another. A defined contribution plan can be more attractive than a retirement-based defined benefit because employees can see the contributions they are receiving while they are actively working.  Additionally, plan factors such as vesting schedules can be applied to persuade employees to remain with the district until they are fully vested in their benefit.

A Triple Tax-Free Defined Contribution Benefit

The Defined Contribution Health Reimbursement Arrangement, or dcHRA, is a type of defined contribution benefit that provides a tax-free way to pay for eligible medical expenses (including premiums) upon retirement or separation of service. Funded by the employer while the employee is actively working, funds are invested for potential tax-free growth, which can potentially increase the benefit value over time. With health care costs continuing to rise, a tax-free way to pay for the inevitable medical expenses during retirement can further incentivize employee retention. Funds can be used tax-free upon retirement or separation of service by the employee, their spouse and eligible dependents.

While the current health crisis is far from over, there are hopeful possibilities for school employees and employers. School districts have access to a valuable benefit option in the dcHRA, as it attracts talent and serves as a retention tool. School districts can even use accumulated leave as a funding mechanism for the dcHRA benefit. With its triple tax-free features (tax-free contributions, growth, and reimbursements), the dcHRA is a win-win for both employees and employers.

To learn more about reducing unwanted attrition, click here.

^* Results from the 2017-18 National Teacher and Principal Survey published by the National Center for Education Statistics