Teacher pensions don’t tend to grab headlines like for-profit colleges or cheating teachers, but they have serious implications for teacher quality. As Bill Tucker wrote earlier this year in a legislator’s guide to pension reform, pension policies can affect whether an energetic and effective teacher chooses to stay in the classroom after an across-country move, or whether a burned-out veteran sticks around for a few more years. That message recently came home to charter advocates when the IRS released proposed regulations on what kinds of pension systems qualify as a government plan.
By limiting who qualifies as a government employee, the regulations would cause state pension plans to exclude charter school employees in order to keep their preferred status as a government plan. While private pension plans are closely regulated by the Employee Retirement Income Security Act, government plans have far fewer restrictions. Most important, public plans can be significantly under-funded, a critical provision for most cash-strapped states these days.
Of the 41 states (plus DC) that have charter school statutes, the majority require charter school teachers to enroll in the state pension system, and the rest permit it. If finalized, the regulations could force many of the 90,000 charter school teachers to choose: leave their school and return to the traditional public school system, or lose their accrued pension wealth. For a system based on student choice, charter school teachers would lose theirs.
There is good news though: it looks like the regulations will be amended to allow charter teachers to participate in state pension systems. Charter schools have strong advocates in their corner. In a letter to the IRS Commissioner, U.S. Rep. John Kline, R-Minn., chair of the House education committee and Rep. Duncan Hunter, R-Calif., chair of the subcommittee on early childhood, elementary and secondary education, wrote that, “the draft notice could effectively prevent many public charter schools from recruiting and retaining veteran traditional public school teachers, significantly interfering with charter schools’ ability to achieve their educational goals.” On the other side of the aisle, President Obama and Secretary Duncan are also fans of high-performing charter schools. While the deadline for public comments on the regulations was originally February 6th, the IRS changed it to June 18th and scheduled a public hearing later this summer. All of this is a good indication that the initial regulations will not stand.
But saving charter schools’ right to be in the state pension system is like putting out a fire in a house that is already falling down. Most pension systems are underfunded to the point of affecting expenditures for education, healthcare, and housing. They reward veterans at the expense of younger teachers and place stiff penalties on teachers who move across state lines. Putting out this most recent fire isn’t enough—we need to rebuild public pension systems from the ground up to serve teachers better and protect state budgets.