Charter School Case Study #1: Freedom Academy
“Freedom Academy” is a non-profit charter school headquartered in Macon, Georgia. They provide a rigorous K-5 academic curriculum for students as well as after school tutoring services. Joseph Stephens, the company’s founder, was a former teacher and founded the Freedom Academy when he was 36 years old.
When Joseph founded the school, he had twelve employees all located in Macon – the school started with grades K-1. He grew one grade per year and ended up with 45 teachers and staff for grades K-5. After running a successful school for five years, he petitioned the state for a replication charter to expand to Augusta and Savannah.
He oversaw the schools as they grew from a team of twelve to a team of almost 150 across these three locations. The schools developed a stellar reputation not only with the communities and families they served but also as an extremely inclusive workplace with a supportive culture.
When the school started to scale, Joseph (age 46 now) had not put a supplemental retirement plan into place, thinking that paying into the state pension system would be adequate. As he learned more about the pension system, he realized:
In a best-case scenario, the state pension system – while one of the more well-funded pension systems for teachers across the US - would only cover 60% of employees’ salary during retirement. Most would receive less.
· Most of his staff (~90%) did not set up a supplemental way to save or invest outside of the pension system. They cited reasons like “I thought the pension would cover me” and “I don’t have time to research and set up something right now.”
It became increasingly important to Joseph to offer great benefits to her employees to honor the hard work they put in every day. Joseph asked his CFO to research options for a supplemental retirement plan and propose the best solution.
They reached out to Investors Asset Management (IAM) because they heard IAM specializes in retirement plans for non-profits and educational entities. Here is what IAM proposed:
IAM would provide customized employee onboarding specific to Freedom Academy to support understanding the state pension system and using a supplemental savings plan.
Participants could opt in or out and make all their elections in about 45 minutes total,
The supplemental retirement plan could sync with their existing payroll company for a seamless process each payroll to make administration easy
IAM provides an investment line-up consisting exclusively of low-cost index funds and ETFs, with access to Target Risk model portfolios (hint: about 95% of participants opt into the Target Risk model portfolios rather than selecting individual funds from the line-up).
Coming from the private sector, the CFO noticed the investment options were similar to what he had seen in his retirement plan – but very different than the other options presented in the charter school space. In the conversation, IAM also let Freedom Academy know IAM would take on the 3(38) liability for their company (which they didn’t even realize was on their plate, but now they would sleep better at night).
After the transition and onboarding process, employee participation rose to 80%. They were also extremely satisfied with IAM’s customer service and response time. In retrospect, Freedom Schools wished they had started with IAM at the beginning as they could have saved headaches and money but they are glad they made the switch now and can offer this benefit to their employees.
The case study is for illustrative purposes only. IAM creates case studies to illuminate broad trends in the larger retirement plan market. The name of the school and characters in this case study are fictional. The pension estimates are pulled from information publicly available on trsga.com. IAM does not represent TRSGA; please refer to their information and resources for the most up-to-date and accurate information.
