According to the report, in states where charters could opt out of state pension plans, many chose to participate in the state plan, and many provided teachers with defined-contribution plans such as a 401(k) or 403(b). However, researchers Michael J. Podgursky and Amanda Olberg found that 14% of charters offer no retirement plans, and 9% offer alternative plans with no employer contribution.
The findings vary by state; while only one non-participating charter school in Michigan offers no alternative, 18% of those in Florida and 24% of those in Arizona have none.
The report shows that of the 40 states with charter schools, 24 states require charter teachers to participate in state pension plans for public school teachers, and 16 states let charters decide whether to participate in the state retirement system or opt out. The researchers surveyed charter schools in six “opt-out” states to find out what alternatives to state retirement systems were offered. The six states accounted for 75% of charters in opt-out states and 46% of charters nationwide.
In Michigan, 401(k) retirement plans are overwhelmingly the preferred alternative; a majority of charter schools in Florida and Arizona also choose those plans. Most charter schools in Louisiana and New York instead opt for 403(b) retirement plans. In California, there is an even split between 401(k) and 403(b) retirement plans.
The researchers found that charter participation rates in state retirement systems are low in jurisdictions where teachers in the state plan also participate in Social Security (New York, Florida, Michigan, Arizona). However, in states where teachers in the state retirement plan are not also included in Social Security (California, Louisiana), charter participation rates are high. Participation rates vary from over 90% in California to less than one out of every four charters in Florida.
Restrictions and idiosyncrasies in state law also seem to affect charter participation rates. In Florida, for example, charter schools are required to identify themselves as either private or public employers; while the former are excluded entirely from the state retirement system, the latter have the option of participating. However, many charter operators are unaware of this distinction and may inadvertently opt out of the Florida Retirement System by choosing to operate as private employers.
Charter operators cite additional influences on schools’ decisions to opt in or not. One consideration is whether participation in the state retirement system will serve as a positive or negative teacher-recruitment tool.The report is here.
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