Teachers, public urge board not to eliminate Value Teachers as 403(b) vendor as district plans single plan administrator

Knox County Board of Education staff briefed the board on a procurement process to select a third‑party plan administrator and vendor for district‑facilitated 403(b) payroll deductions. That procurement identified USI (USI Consulting Group) as the recommended administrator and vendor; the procurement, as presented, would make the chosen firm the sole provider for payroll deduction contributions under the district’s 403(b) arrangement.

Ms. Semmelgarn, a district staff member, described the district’s intent as improving fiduciary oversight and compliance with Department of Labor and IRS administration, noting the board’s longstanding rule requiring vendors to maintain a minimum number of participants for payroll deduction eligibility. She said the district sought to “come into full compliance with our fiduciary requirements around transparency and fees, compliance with Department of Labor Standards and the IRS administration of the plans,” and that an RFQ had been run for a provider and plan administrator.

The procurement and its practical effect drew immediate public comment and opposition from multiple Value Teachers representatives and from current and retired employees. Brandy Gerald, regional manager for Value Teachers, said the procurement would prevent current Value Teachers clients (about 2,232 clients cited by speakers) from contributing by payroll deduction to the supplemental 403(b) product they already use. She told the board, “We shouldn’t be saying at this point in the procurement it’s too late.”

Other speakers detailed the vendor‑service differences. Value Teachers representatives and local employees described on‑site, in‑school education and individualized consultations they say increased employee participation in supplemental savings. “Please don’t remove options from us,” Emily Cimino, a Value Teachers representative, told the board, citing the company’s in‑person consultations and free education to staff.

USI’s local president, Bob Cross, defended USI’s product mix in a public appearance and said mutual‑fund options would be offered, and that one option could include a guaranteed principal product. He described his company’s mutual fund share classes and availability of a principal‑guarantee product, and said implementation details about transfer penalties would be determined case‑by‑case and would require review of existing contracts by the eventual administrator.

Board members pressed staff on options that would preserve multiple vendors while addressing the district’s desire for third‑party administration. Ms. Semmelgarn and procurement staff said the RFQ had asked for a combined plan administrator and provider; respondents had bid under that assumption and USI scored highest. Procurement director Matt Myers walked the board through the RFQ process and evaluation criteria (organizational qualifications, personnel, investment advisory and administrative services, participant services and references).

Board member questions focused on teachers’ choice and transition costs. Speakers said many current participants hold Value Teachers accounts that include surrender periods or penalties on transfers; staff said those contractual details vary and would depend on the specific product and the vendor’s agreement with participants. District staff said participants could keep their existing 403(b) accounts if the board approved a single vendor, but they would not be able to continue payroll deductions to a plan other than the newly contracted vendor; they also said the board could negotiate an effective start date with the vendor if the board wished to accommodate near‑term retirements.

Two brief board actions recorded in the transcript were related: the board approved a procedural motion that placed agenda items before it, and later voted to invite a Value Teachers representative to address the board after public commenters requested that opportunity. The transcript does not record a final board vote approving the USI procurement; staff indicated a vote on the procurement was expected on a later agenda (referred to in transcript as Thursday).

Speakers urged the board to consider alternatives: hire an independent third‑party administrator that would process multiple vendors (TPA model), or negotiate a contract that allowed multiple vendors while providing the district with the administrative oversight and IRS compliance it seeks. Public commenters warned that eliminating multiple vendors could depress overall employee participation in supplemental retirement savings and would remove a service many employees said they depend on for retirement planning.