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A Different Approach to Teacher Pensions in Charter Schools

In the 40 states that have charter schools, 24 of them require that teachers in those schools participate in the state's retirement system. But in the other 16 states, the retirement benefits for charter teachers vary enormously, according to a new report by the Thomas B. Fordham Institute. My colleague Steve Sawchuk offers a good overview of the findings in his Teacher Beat blog.

It's a timely topic, partly because of the strong interest among state and local officials in driving down school pensions and other benefits costs—and because supporters of charters see them as testing grounds for educational and financial innovations made possible by those schools' freedom from school district bureaucracy.

The report focuses on charters in six states: Arizona, California, Florida, Louisiana, Michigan, and New York. One of the numbers that most surprised me in the report was that among the charters in those states that don't take part in a state pension plan, 14 percent of them offer no alternative retirement plan. That number was even higher among charters in Florida, at 18 percent, and Arizona, at 24 percent, while in Michigan only one school fit that category.

Does this mean that teachers in those charters are basically required to set aside money for retirement on their own, with no contribution from their employers?

The answer is yes, said one of the report's authors, Amanda Olberg. She told me that most of those charters told the authors that they didn't offer retirement benefits either because of the associated costs or because of their small size.

"Not offering a retirement plan probably negatively affects the ability of these charters to lure teachers with certain characteristics—particularly teachers that are older and/or already vested in the state retirement system," Olberg explained in an e-mail.

But many of those charters are probably not recruiting from the same pool of educators as traditional public schools, she noted. They're most likely pulling in younger teachers, possibly even those who aren't planning on sticking in the profession, she said.

"These teachers may not care about retirement benefits, or they may at least care about them less than other perks (salary, job conditions, etc)," Olberg suggested.

For charter operators in Arizona, Florida, and other states that are offering limited or no retirement benefits, is this is wise strategy? Can they draw the kind of teaching talent they want, educators capable of helping students succeed?

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