The July 2008 survey, conducted by LIMRA in collaboration with the Association of School Business Officials International (ASBO) among ASBO members, found 56% of the more than 4,000 school districts polled selected employee service as an important factor in vendor selection. Half of respondents said choice of investment funds is important.
Only 35% of school districts polled selected cost as an important factor in vendor selection. However, LIMRA noted that for districts that have more than 12 vendors, cost was more important (45% versus 25% of those with 12 or fewer vendors).
The survey found more than a third of districts (37%) do not receive any value-added services from vendors LIMRA specifically asked about, perhaps indicating that value added services are an area in which vendors can differentiate themselves in the market. However, LIMRA found 81% of school districts said they would not payer higher fees than currently for any added services.
Forty-six percent of districts indicated vendors currently provide online account information, while a third (34%) said they receive onsite time from vendor representatives. More than a quarter each said they receive customized participant communication and education (27%) and contribution and distribution compliance monitoring (26%) from vendors currently.
Most districts (55%) indicated they did not send out a request for proposal (RFP) in the vendor selection process, while a third indicated they did use an RFP with the help of a third party administrator (TPA) or consultant.
K-12 Districts a Businessfor Consultants
Services school districts will pay for, according to the LIMRA study: TPA or consultant services.
Among those districts that did not currently pay for a TPA or consultant as of the July 2008 survey, 59% said they would be willing to over the following 18 months. The biggest number (89%) said they would pay a TPA or consultant for compliance monitoring.
Eighty-two percent said they would hire a TPA or consultant to perform compliance testing, and 80% said they would pay for recordkeeping consolidation.