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June 22, 2011

The Charter School No-Pension “Innovation”

Richard Kahlenberg

    When Albert Shanker first proposed charter schools in 1988, he envisioned institutions where teachers could try new and creative pedagogical approaches to reach students.  Part of the idea, as Minnesota state legislator Ember Reichgott Junge noted, was to make teaching a more attractive occupation.  “Many teachers were frustrated with their work and were leaving the profession,” Reichgott Junge explained.  “I wanted to give them more ownership.” 

    But, according to an interesting new paper published by the Thomas B. Fordham Institute, one of the “innovations” some charter schools have adopted is recent years is the no-pension plan.  According to researchers Michael J. Podgursky and Amanda Olberg, “a significant number of charter schools not participating in their state retirement plans offer no alternative retirement plans at all for their teachers.”

    Podgursky and Olberg note 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 author surveyed charter schools in six “opt-out” states to find out what proportion availed themselves of alternatives to state retirement systems, and what those alternatives looked like.  The six states accounted for 75% of charters in opt-out states and 46% of charters nationwide.

    In states where charters could opt out of state pension plans, many charters chose to participate in the state plan nevertheless; and many provided teachers with familiar defined-contribution plans such as a 401(k) or 403(b).  But the authors also find that 14% of charters offer no retirement plans, and 9% offer alternative plans with no employer contribution.  In total, almost one-quarter of charters in opt-out states don’t provide a nickel for teacher pensions.

    On the plus side, I suppose one might say, giving college-educated employees no money towards pensions could be considered an effective  “cost-cutting” device.  But the education reform community is supposed to be all about boosting teacher quality.  In the long term, what kind of talent can a school attract – and then retain over time -- when one of the basics of the employer-employee social compact is simply eliminated altogether?

    The charter school movement has a teacher retention problem.  As researchers David Stuit and Thomas M. Smith have found: “The odds of a charter school teacher leaving the profession versus staying in the same school were 130 percent greater than those of a traditional public school teacher. Similarly, the odds of a charter school teacher moving to another school were 76 percent greater.” Some charter advocates have tried to spin the higher turnover rates as a virtue, but according to researcher Gary Miron “attrition from the removal of ineffective teachers—a potential plus of charters—explains only a small portion of the annual exodus.”

    Some of the best charter schools offer stimulating work environments and the chance to experiment that Shanker and Reichgott Junge envisioned.  But overall compensation – including pensions –  matters too.  The Fordham report, to its credit, shines light on a largely unexamined issue and exposes a deeply unattractive feature of our grand experiment in education deregulation. 

    This post first appeared on the Fordham Institute's Flypaper blog.

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