In the face of strong teacher protest, the School Board decided last week to delay moving forward with an exclusive contract with the Philadelphia-based Lincoln Financial Group as its 403(b) vendor, The Daily-Press in Newport News reported. The district previously had six vendors whose contracts expired in 2008.
The newspaper said school employees inundated board members with complaints and threats to leave the district. “Very rarely have I received so many complaints from employees,” board member William Collins said, according to The Daily-Press. “I feel like as a board member we’re in a corner.” The news report quoted school spokeswoman Michelle Price as saying that the group reviewing the plan provider bids had not planned to narrow the vendor choices to one.
However, based on the scope of Lincoln’s proposed offerings and the new Internal Revenue Service rules requiring, among other things, that 403(b) sponsors more closely monitor and manage vendors, the committee went with just Lincoln. The contract was awarded October 14 and the new plan was scheduled to begin January 1.
The newspaper said AIG Retirement also objected. AIG senior managers told the board they had a 37-year relationship with the district, managed more than $30 million in accounts for more than 800 employees, and had not received the request for proposals, even though it had been advertised and posted on the district Web site.
The board plans to revisit the issue at a special work session in the next two weeks.
Last week, a union official in Utica, New York, informed the school board there that the union would try to block a decision on limiting school employees’ choice of a financial adviser to one (see Teachers Union Wants to Keep Adviser Choice)
In October, Baltimore County’s school board unanimously voted down a recommended contract with Lincoln to be the system’s exclusive 403(b) provider (see Baltimore School Officials Give Thumbs Down on 403(b) Vendor Consolidation).
The new 403(b) regulations effective January 1 have led many plan sponsors to pare down vendor offerings (see The New 403(b) Model: Exclusive versus Multiple Vendor Programs).