Published Online: February 21, 2012
Published in Print: February 22, 2012, as Charter Advocates Say Planned Rules Threaten Pensions

Policy Brief

Charter Advocates Say Planned Rules Threaten Pensions

Charter school advocates have sounded a warning about a federal rule in the works that they say could undermine the ability of teachers in those schools to participate in state retirement plans.

Facing those concerns, the Internal Revenue Service earlier this month extended the deadline on its Advance Notice of Proposed Rulemaking, which says that federal officials are seeking to clarify what kinds of pension systems qualify as "governmental plans," which would affect their regulation.

The National Alliance for Public Charter Schools, in Washington, worries that the proposal, first unveiled in November, could affect the ability of states' pension systems to meet the definition of a "governmental plan," if they allow charter employees to participate. As a result, states would not "accept the risk of allowing charter school teachers to continue their participation in state plans," the alliance said in a statement.

The charter school group urged its members to ask U.S. Secretary of the Treasury Timothy F. Geithner and Secretary of Education Arne Duncan to make sure the regulations are crafted in a way that protects charter schools. The IRS' deadline for public comments on the notice of rules is June 18, and it has set a public hearing for July 9.


The notice also drew objections from U.S. Rep. John Kline, R-Minn., the chairman of the House education committee, and Rep. Duncan Hunter, R-Calif., the chairman of the subcommittee on early-childhood, elementary, and secondary education, who co-wrote a letter to IRS Commissioner Douglas Shulman warning that regulations "could effectively prevent many public charter schools from recruiting or retaining veteran traditional public school teachers."

According to the alliance, 24 states have laws that mandate charter participation in state-sponsored retirement systems, and 18 others permit it. The alliance estimates that more than 90,000 employees, mostly teachers, would be affected if the rules as envisioned take effect.

Officials from the Treasury Department declined comment on the advanced notice. An Education Department official said that staff members planned to have a conversation with the Treasury Department about the proposed rules, but declined further comment.

Vol. 31, Issue 21, Page 23

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