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Charter Advocates Claim Rules in Works Would Affect Pensions

By Michele McNeil — February 02, 2012 3 min read
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By Sean Cavanagh

Charter school advocates have sounded a warning about an Advance Notice of Proposed Rulemaking from the Obama administration that they say could undermine the ability of teachers in those schools to participate in state retirement plans.

The notice, released by the U.S. Department of the Treasury and the Internal Revenue Service in November, says that federal officials are seeking to clarify what kinds of pension systems quality as “governmental plans,” which would affect the regulation of them.

Details of what’s in the works drew a strong response from the National Alliance for Public Charter Schools, which issued a statement saying the changes “would force states to prohibit public charter school teachers from participating in state retirement plans.”

Charter schools do not appear to be specifically mentioned in the notice, but the schools organization believes its members would be affected, based on its reading of the proposed language and definitions.

By the alliance’s interpretation, the proposal 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, if the proposal was made final, states would not “accept the risk of allowing charter school teachers to continue their participation in state plans,” the organization states.

“These regulations have not yet been proposed formally,” the group said. "[W]e have the unique, and critical opportunity to address these regulations now.”

Public comments on the notice are due by Feb. 6, and the charter school group is urging its members to voice their concerns to Capitol Hill lawmakers, as well as U.S. Secretary of the Treasury Tim Geithner and U.S. Secretary of Education Arne Duncan. Specifically, it wants the regulations to be crafted in a way that protects charter schools.

According to the alliance, 24 states have laws that mandate charter participation in state-sponsored retirement systems, and 18 permit it. Every state that allows public charter schools either requires or permits charter school participation in state retirement plans.

The alliance estimates that more than 90,000 employees, most of them teachers, would be affected, if the regulations as now envisioned took effect. The regs would not only jeopardize the retirement plans of charter school workers who are currently participating in the plans, but would also prevent charters recruiting or retaining teachers from public school systems, the organization argues.

The Obama administration has been a major supporter of charter schools, encouraging their growth through policies such as the Race to the Top program.

Both the president and Duncan have described charters as laboratories for testing innovative ideas that are difficult to set in motion in traditional public school settings. They have also backed charters playing a major role in federal efforts to turn around low-performing schools.

It’s unclear whether the administration agrees with the charter school advocates’ interpretation of the notice—or whether it was even intended to affect charters. Officials from the Treasury Department and Department of Education have not yet responded to requests for comment Thursday evening.

[UPDATE (Feb. 6): A U.S. Department official said that staff at the agency plan to have a conversation with the Treasury Department about the proposed rules and what they mean.]

Todd Ziebarth, the vice president for state advocacy and support for the alliance, said it was possible the administration’s regulations were aimed at dealing with a host of pension issues “and they didn’t intend to trap charter schools in the net.”

But the group was sufficiently troubled by what it saw in the advance notice to launch a campaign for changes, he said.

Not all charters participate in state pension systems, Ziebarth noted, “but at the end of the day, we want charters to have that option.”

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