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Education Funding

Congressmen Worry About Draft Pension Rules’ Effect on Charters

By Alyson Klein — February 06, 2012 2 min read
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By Sean Cavanagh

Charter school advocates are upset about the prospect of pension rule changes that they fear would bar them from participating in state pension plans, and today, members of Congress echoed those concerns in a letter written to the commissioner of the Internal Revenue Service.

U.S. Rep. John Kline, R-Minn., who chairs the House education committee, and Rep. Duncan Hunter, R-Calif., chairman of the subcommittee on early childhood, elementary and secondary education, told IRS Commissioner Douglas Shulman that regulations in the works could “unfairly jeopardize the retirement security of charter school teachers.”

"[U]nder the new test articulated in the draft regulations, these teachers could be prohibited from participating in state retirement systems,” they write. “The draft notice could effectively prevent many public charter schools from recruiting or retaining veteran traditional public school teachers, significantly interfering with charter schools’ ability to achieve their educational goals.”

The congressman sent the letter on the final day for public comment on the advance notice of proposed rulemaking, which was published in November. They ask that any rules be amended to clarify that charter schools not be adversely affected.

[UPDATE: The IRS has extended the deadline for public comments on the notice of rules until June 18, and it has set a public hearing for July 9, according to a notice posted on Friday.]

As we reported last week, charter school advocates have sounded the warning about the advance notice of proposed rulemaking, which was issued by the U.S. Department of the Treasury and the Internal Revenue Service.

The notice said that federal officials are seeking to clarify what kinds of pension systems qualify as “governmental plans,” which would affect the regulation of them.

Details of those changes being considered drew objections 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.”

The alliance warned that at least 90,000 charter school employees could be affected if the ideas laid out in the notice took affect.

The Obama adminstration is a major backer of charter schools. It’s unclear whether the administration intends for the draft rules to apply to charters—or if even interprets them the same way as the charter advocates. A spokesman for the Treasury Department declined comment on the notice, and the U.S. Department of Education has not said anything publicly about it. Stay tuned.