Lifelong Learning Accounts (LiLAs) support current and future workforce needs. LiLA funds differ from tuition reimbursement in several ways: being available before course registration, being portable, and merging employee savings with contributions from both employers and third parties.Labor market - Maine ; Employees, Training of - Maine

Auta Main

English

Research Papers in Economics

18    Fall 2008
by Auta Main
Good News for Workers, Businesses, and the Economy
MAINE’S
Lifelong Learning Accounts
Getty Images Communities & Banking    19
In late 2007, a group called Skills2Com-
pete released a report refuting the idea that 
the new economy will depend primarily on 
a combination of very low-skilled jobs and 
very high-skilled jobs, with few of the jobs 
that support a healthy middle class. Skills 
2  Compete  argued  that  “the  demand  for 
workers to fill jobs in the middle of the la-
bor market—those that require more than 
high-school, but less than a four-year de-
gree—will likely remain quite robust rela-
tive to its supply.”1 
Will we have the skilled workers to fill 
those positions? And if not, how do we get 
more people to go beyond high school and 
pursue the education and training they need 
for critical jobs in health care and emerging 
high-growth industries like clean energy? 
One of the biggest challenges is paying 
for  the  additional  education  and  training. 
Some believe that employers should foot the 
bill because they benefit from a skilled work-
force, others say that workers should pay, and 
still others consider it a government responsi-
bility. A reasonable solution may be the Life-
long Learning Account, or LiLA, which en-
ables all parties to share the cost.
What Are Lifelong 
Learning Accounts?
LiLAs  are  education  and  training  savings 
accounts designed to leverage contributions 
from  individual  workers,  employers,  and 
third parties such as government agencies 
or nonprofits. They are similar to individu-
al development accounts (IDAs) but are fo-
cused on education, whereas IDAs can be 
used for other purposes, such as housing. 
They  also  differ  from  tuition-reim-
bursement  plans.  The  employee  builds  a 
portable  account  with  both  an  employer 
match and a third-party match, so the mon-
ey  is  ready  before  registration.  Moreover, 
any level of employee can build a LiLA, and 
there are advantages not generally associat-
ed  with  tuition-reimbursement  programs. 
For example, career counseling is offered, 
and money can be spent on supplies and 
on classes unrelated to the industry the em-
ployee works in.
Jason Gamache, a carpenter at Morris 
Yachts in Bass Harbor, Maine, is one person 
who wanted to upgrade his welding skills and 
increase his knowledge of boat building. Af-
ter Morris Yachts enrolled in Maine’s Lifelong 
Learning Account pilot program, Gamache 
signed up and took welding classes offered 
by the local adult education center and the 
Eastern Maine Community College. Now he 
plans to use his LiLA money toward his Mor-
ris Yachts apprenticeship classes.
The  Chicago-based  nonprofit  Coun-
cil for Adult and Experiential Learning is 
the force behind LiLAs. Since 2001, CAEL 
has helped launch several small-scale initia-
tives nationwide. New demonstrations and 
pilot programs are adapting CAEL’s LiLA 
model to specific uses, administrative struc-
tures, and target populations. The Maine 
Department of Labor, for example, is pilot-
ing LiLAs through its network of Career-
Centers. They have partnered with Maine’s 
NextGen college-investing plan to provide 
account management and with the Maine 
Centers for Women, Work, and Commu-
nity to provide advice to LiLA participants. 
Of the employers who signed up for Maine’s 
LiLAs, 75 percent had no tuition assistance 
before. Others like to supplement what they 
already offer.
LiLAs share the following design fea-
tures:
  •  Universality. All individual workers are 
eligible for accounts.
  •  Broad Use of Funds. A wide range of uses 
are eligible, including tuition and fees, as-
sessments, supplies, materials, and books.
  Portability. •   Even though employers can 
contribute to LiLAs—typically by match-
ing the individual’s contribution up to an 
established annual cap—the accounts are 
owned by the individual, regardless of the 
person’s current employer or employment 
status.
  •  Voluntary  Participation.  Individuals 
and employers have the option of partici-
pating. The design encourages and facili-
tates widespread participation.
  •  Informed Choice. Individual participants 
choose what they need to meet their career 
goals based on a learning plan that is devel-
oped with educational and career advisers.
Good for Workers
In  several  of  CAEL’s  demonstration  pro-
grams  around  the  country,  participat-
ing workers have seen firsthand how using 
LiLAs to access education and training can 
change lives. 
Tracey  Perkins  is  another  Maine  ex-
ample. A bookkeeper in the accounting de-
partment at gas manufacturer Maine Oxy in 
Auburn, she became one of the state’s first 
LiLA  holders  in  fall  2007.  Although  she 
had long known that an accounting degree 
was necessary for a promotion, she had been 
holding off. Tuition was just too expensive. 
When  Maine  Oxy  decided  to  provide  a 
LiLA program as a new education benefit, 
Perkins jumped at the opportunity. She is 
now taking classes at Central Maine Com-
munity College in Auburn and hopes to fin-
ish her degree by 2009. Meanwhile, Maine 
Oxy executives are grooming her to be the 
company’s  chief  financial  officer  after  the 
current CFO retires. 
Good for Business
Workers are not the only ones to benefit. Em-
ployers who have participated in LiLA dem-
onstrations across the country find that LiLAs 
are helping the business. They are an afford-
able  benefit.  In  South Thomaston,  Maine, 
the chief financial officer at Ask ... For Home 
Care reports that LiLAs are serving as a re-
cruitment tool. “It’s great to be able to offer 
possible employees the opportunity to further 
their education,” Jodie Heal says. For a recent 
hire who wanted to attend nursing school in 
the fall, the deciding factor was Ask ... For 
Home Care’s LiLA contribution. Addition-
ally, she says that for current employees and 
home-care aides “to be able to continuously 
save toward these classes and have us match 
those funds, that’s a big asset to them—and a 
major retention tool for us.”
Human  resource  director  Diane  Cla-
remont  of  employee-owned  Maine  Oxy 
agrees. “Our future relies on our employees. 
Educated individuals are our future and will 
bring  this  company  into  the  next  decade 
and beyond.”
Other employers see LiLAs as a way to 
foster positive attitudes. Michael Coughlin, 
executive director of Goodwill Industries of 
Northern New England, has heard repeat-
edly from employees that help with fund-
ing education is important. When Good-
will announced its participation in the LiLA 
program, workers were thrilled. He hopes it 
“will create a sense among employees that 
there is a path to growth, even when man-
agement positions are in short supply. Em-
ployees who can better themselves through 
education are living the values and the mis-
sion of our organization: ‘A hand up, not a 
hand-out.’ “ 
Good for the Economy
CAEL’s  vision  is  for  LiLAs  to  become  a 
standard  feature  of  employee  compensa-20    Fall 2008
tion packages. Government champions are 
also  working  on  the  issue.  In  2007,  fed-
eral legislation was introduced in both the 
U.S. Senate and House of Representatives 
that would establish demonstration LiLAs 
in up to 10 states and give both employers 
and employees a tax credit for their account 
contributions. In cooperation with CAEL, 
Maine’s Congressional Delegation has sup-
ported  and  cosponsored  the  federal  LiLA 
legislation in both houses. 
U.S.  Senator  Olympia  Snowe,  a  co-
sponsor of the Senate bill, says, “The Life-
long Learning Accounts program will give 
millions of Americans an opportunity to de-
velop the skills necessary to compete in an 
increasingly  knowledge-based  economy.” 
U.S. Representative Tom Allen says, “Stun-
ning advances in science and technology are 
creating exciting opportunities for American 
businesses and American workers, but to take 
advantage of the promise these innovations 
hold  and  for  America  to  remain  competi-
tive in the global economy, we must have a 
workforce with the education and training to 
fill the jobs businesses create. ... We see Life-
long Learning Accounts as a way to keep our 
workforce  educated  and  current  in  today’s 
technology and business environments.”
In addition to the federal efforts, sever-
al state officials are working to make LiLAs 
available on a larger scale, sometimes with 
government-sponsored  incentives  such 
as additional matching dollars for low- or 
moderate-income workers or tax credits for 
individual  employer  contributions.  Maine 
has  established  the  first  phase  of  a  state-
based program in which the state’s finance 
authority manages the investment of LiLA 
funds through the NextGen program. 
Although  LiLAs  provide  a  promising 
response to the need for a competitive work-
force, they are not a replacement for cur-
rent  employer-based  education  and  train-
ing  benefits,  which  education  consulting 
firm Eduventures has estimated could be as 
high as $20 billion annually. Nor can they 
be a substitute for targeted aid to disadvan-
taged populations. Instead, LiLAs help to 
fill a gap in the current landscape of fund-
ing  for  worker  education. They  can  help 
the working poor, individuals in dead-end 
jobs, workers and employers in highly com-
petitive industries, and they can help retrain 
workers  in  professions  that  are  becoming 
obsolete. In getting individuals, employers, 
and government to co-invest, they make ed-
ucation a more affordable prospect for all. 
As one LiLA account holder says, “People 
should never stop learning. The LiLA pro-
gram  helps  you  financially,  and  it  won’t 
break the bank.”
Auta Main is LiLA program manager for the 
state of Maine. She is based in Augusta.
Endnote
Harry  J.  Holzer  and  Robert  I.  Lerman, 
1  America’s 
Forgotten  Middle-Skill  Jobs  (Washington,  DC: 
Skills2Compete Campaign, November 2007).
This Communities & Banking article is copyrighted 
by the Federal Reserve Bank of Boston. The views 
expressed are not necessarily those of the Bank or 
the Federal Reserve System. Copies of articles may 
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commdev/c&b/index.htm.

Maine's lifelong learning accounts: good news for workers, businesses, and the economy

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Maine's lifelong learning accounts: good news for workers, businesses, and the economy

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