Behind the Des Moines Public Schools $50,000 Retention Bonus

Key Takeaways

Would you stick around an extra year for $50,000? Shashank Aurora, Chief Financial Officer of Des Moines Public Schools, takes us behind the scenes of the school district’s offer to get retiring teachers to stay one more year.

Season 4, Episode 8: Behind the Des Moines Public Schools $50,000 Retention Bonus Approval |Transcript

Steve Soter: Hello and welcome to Off the Books where we surf the unchartered waters of accounting, finance, risk, and wherever else the waves take us. This episode is brought to you by Workiva, the risk, reporting, ESG, and compliance platform that simplifies your complex work so you can get back to helping your kids with their calculus homework. Check it out at workiva.com/podcast. My name is Steve Soter, accounting enthusiast and Diet Coke aficionado. I'm looking forward to debiting a great conversation today, and I'm so happy to have you with us. I am also, as always, very happy to have Catherine Tsai joining us. Catherine, can you please tell the fine folks who you are?

Catherine Tsai: I am not an accountant or Diet Coke aficionado, but I like asking questions and learning new things, which is appropriate for today's episode.

Steve:That's right, because we are heading back to school of sorts, specifically to the Des Moines Public School District. There has certainly been some labor challenges earlier this year. A lot of employers have been worried about finding the right staff, and school districts are no exception. So this last fall, the Des Moines Public School District said it would offer a $50,000 retention bonus to teachers who agreed to delay retirement to help mitigate that labor shortage.

Catherine: We asked the district's chief financial officer, Shashank Aurora, to join us to tell us more about it.

Steve: Well, Shashank, welcome to the show.

Shashank Aurora: Thank you. And good morning, Steve and Catherine.

Steve: So, as we mentioned, you are the CFO for the Des Moines Public School District, but you worked in the private sector before that, including roles at Nestlé and DuPont, as well as being a CFO at two other companies. Tell us what drew you to the public sector.

Shashank: I wanted to bring the experience from private sector to public sector, and I value education a lot. Growing up in India, my father always provided a lot of emphasis on education. Education is the top of our minds. And we think if you have education, you can always have a job, you can always be successful, and you can be a good citizen.

Catherine: Yeah. Well, we wanted to bring you in to talk about this big headline here. What prompted Des Moines Public Schools to consider a $50,000 retention bonus?

Shashank: So this was the year of the Great Resignation where employees are hard to find. As you can see, the unemployment rate is extremely low, and we consider this to be the best option to ensure that employees stay with us for an additional year. This gives us a heads up so that we know that employees have raised their hands to retire by June of 2023, and we have ample time to fill the positions. Historically, we as a management team come up with a similar program based on what the needs are, but this is the first year that we actually launched a scheme, which was raising a hand in one year and resigning in year two. So we would typically come up with an offering in October of year one. The employee raises the hand, lets us know, and we accept if they're interested to retire in February–March of the following year. This year, we came up with an offer in February–March of the year with the employee retiring in June of the following year. So instead of a typical two to four months, we had almost 16 months to plan and ensure that we have the vacancies filled out.

Steve: Were there other options that that you had considered? Seems like the job of being a schoolteacher is getting more and more difficult. COVID, gun violence, I mean, you know, the list goes on and on. And so when you think about the role of compensation—salary—in terms of attracting talent, how does that change the outlook? I mean, I know that compensation is one thing, the amount that people get paid. There are other things. As you think about the way that may be, just having to—I don't want to just say throw more money at it because it's a little more complicated than that—but does that impact a long-term financial outlook and maybe viability, if that's the right word, at Des Moines Public Schools generally.

Shashank: That is a big question to answer. So two of the basic sources of funding for us is enrollment, and the second is the supplemental state aid, which is decided by the governor and the legislators. Unfortunately, the enrollment for Des Moines Public Schools has been declining for the last few years. That is definitely hurting the money that is available to us in the general fund through which we pay the teachers and other employees. On the other hand, the supplemental state aid, which used to be in the range of 6.5 to 7%, came down to almost 3.5 to 4%, and for the last 10 years has been under 2%. To provide you another perspective, 1% of state supplementary aid can get me only .5% of increase in the payroll. To remain competitive in this market without giving a reasonable raise gets very, very challenging to both attract and retain employees. The way we have structured it, because we have limitations on how much money we get, both in the state as well as based on enrollment. We have a very healthy employee benefit plan. I call it the Cadillac plan, where the employee does not have to contribute a single dollar towards the health insurance. And the copays are extremely low, typically ranging from $15 to $20. The other attraction that the public sector or the school systems have is the state-sponsored IPERS.

Catherine: IPERS, that's the pension plan for Iowa?

Shashank: That is correct. You're absolutely right, Catherine. That is the state pension plan. And in today's day and age, a defined benefit plan is getting extremely rare. Those are the two things which really help attract employees to the district.

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Catherine: I wanted to go back to something you were saying before. It's just about the funding challenges in general for schools. How did you make a $50,000 retention bonus fit into your budget?

Shashank: The school finance system is extremely siloed, and the salaries which are coming from general fund is not the same silo from which we are paying the retention bonus. That is one. But besides this, we were also offering hiring bonuses and referral bonuses. Historically, we have given hiring bonuses only to the bus drivers, and that is a subset of employees which have been extremely hard for most districts to hire. And I think that's a national challenge. This year, we decided to give hiring bonuses not just to the bus drivers, but to all employees because hiring was becoming increasingly difficult for us. Not just that, we also decided to pay referral bonuses to employees. If they refer an employee, they would get the same amount that we were paying as hiring bonuses because the referral bonuses used to be a very small amount, which we increased significantly based on the hiring challenges.

Catherine: Can I ask how much it was?

Shashank: Fortunately, I did not, I mean, we were paying, depending on the position, we were paying anything between $2,500 to $5,000 a position. What came to our help was actually the funding which was being provided by the federal as part of the COVID relief, which you may have heard as a SLFRF or CARES Act or ARPA and all those different things. We as a district got the funding on that, and we were able to leverage that to be both hiring bonuses as well as referral bonuses. Again, we did pay something which we have never, ever done before, which is called the retention bonus. So we told the employees that if you continue to work with us til June of 2023, we are going to pay retention bonuses to every employee. And it was a reasonable amount: 1,250 employees. And when you have a pool of employees, which are almost 5,000, that runs to almost $6 million. Again, we were able to leverage the federal funds—the SLFRF, CARES, ARPA, as I mentioned—to pay for those bonuses. If we were not getting those federal funds, we could not afford to pay retention bonuses to employees or even referral bonuses and hiring bonuses that we are paying today.

Steve: So before we wrap up here, just curious, did it work? I mean, do you have a perspective on how successful it was at this point?

Catherine: Yeah. How many takers did you get?

Shashank: As far as the retirement incentive goes, we had quite a few employees who actually raised their hands: 62 in all who who decided that they are willing to give us a heads up and they would retire by June of 2023 versus June of 2022. So we have them for a longer period of time.

Catherine: And they're all still with the district?

Shashank: And they are with the district. And they would get this amount only if they continue working with us til June of 2023. If they leave before that, then they would not be getting this amount.

Steve: Got it. Well, when we end the podcast, we always try to close out on maybe a lighthearted question. And so this question, is there a non-financial incentive that would make you want to stay at your job for one more year after retirement?

Shashank: So on the serious side, I would say that if I was deeply involved in a project which needed my expertise and it was half through or close to getting to an end, I would definitely continue working with the district. I would like to see it to its completion. And on the lighter side, my wife, who is a few years younger than me, if she decides to retire the same year I am deciding to retire, then I would want to extend retiring.

Steve: Ahh, how funny. Catherine, how about you?

Catherine: Oh, cookies would make me stay. Cookies every day.

Steve: You'd do it for a box of Girl Scout cookies. Boy, you are sure easy.

Catherine: How about for you, Steve?

Steve: Well, actually, I had a similar answer to Shashank. I thought to myself, you know, if I was doing something that was important and that I enjoyed and maybe was not finished. And so it's almost like, okay, I'm willing to stay if I get full discretion about the work that I'm doing and the contribution that I'm making. I think that would get me to stay, especially to your point, Shashank, if it was something that was important and impactful and meaningful that I was vested in. Yeah, I'd like to see that to completion.

Shashank: I think you've done a better job in articulating that than me, Steve. Thanks. But you read my mind pretty well.

Steve: Well, no. Thank you for joining us again. We really appreciate the perspective that you are bringing. Again, Shashank Aurora from the Des Moines Public Schools. We sure appreciate you joining us.

Shashank: Thank you, Steve and Catherine. I appreciate it.

Catherine: And thank you, dear listener, for surfing along with us. I'm Catherine Tsai, that was Steve Soter, and this has been Off the Books presented by Workiva. Please subscribe. Leave a review. Tell your buddies if you liked the show. If you're watching this on YouTube, leave us a note in the comments, or feel free to drop us a line at offthebooks@workiva.com. Surf's up and we'll see you on the next wave.