Venturesome Capital- State Charter School Finance Systems

No requirements exist for what this plan must do in

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: o work directly for charter schools are considered public employees who must be enrolled in the appropriate plan. However, if charter schools contract for personnel with an employment agency, staff are not considered public employees and are left to whatever arrangements the private agency chooses to make. In Michigan, the exemption of private contractors from participation in the state retirement system resulted in several schools switching to management companies. TABLE 25 Participation of Charter Schools in Teacher Retirement System, 1998-99 Participation of Schools Alaska1 Arizona California1 Colorado Connecticut1 Delaware District of Columbia Florida Georgia Hawaii Illinois1 Kansas all about 25 % most all 12 of 16 all none none all all all all Participation of Schools Louisiana1 Massachusetts1 Michigan Minnesota New Jersey New Mexico North Carolina Pennsylvania Rhode Island South Carolina Texas1 Wisconsin2 Source: Telephone survey of retirement systems. 1 Public school teachers exempted from old-age assistance portion of Social Security. 2 78 Includes Milwaukee. all but one all 50 of 141 all all all 16 of 57 28 of 31 all all 82 of 87 about 80% Other Financial Issues The actual participation rate of charter schools is shown in Table 25. Florida, Arizona, the District of Columbia and North Carolina have the lowest participation rates. Reflecting the high percentage of private management contracts in Michigan, only 50 of 141 charter schools participate. On the other hand, some states allowing exemptions such as California, Connecticut, Pennsylvania and Texas experience a high rate of charter school participation in state retirement systems. Among the states without mandatory charter school inclusion in state retirement systems, California, Connecticut and Texas are states where public school teachers participating in the state retirement plan are exempted from the old-age portion of Social Security. Teachers play key roles in making decisions about retirement systems in California and Connecticut. Some evidence indicates that charter schools opt out of state retirement systems for financial reasons. Exemption from the state retirement system is a frequently mentioned explanation for the growth of private management contractors in Michigan (Horn and Miron, 1999; Prince, 1999b). Where charter schools can choose to opt out, the retirement plan participation rate remains high in states where all public school teachers are exempted from Social Security by participating in the state teachers retirement plan. On the other hand, opting out of conventional retirement systems allows charter schools to offer innovative retirement plans. Individual charter schools may offer more generous employer contributions. Exemption from the one size fits all statewide plans may lead to retirement plans that are more appealing to charter school teachers. Innovations could include portability across state lines, shorter vesting periods and ability to borrow against savings. Opting out of state retirement systems may lead to financial savings. However, the...
View Full Document

This note was uploaded on 02/11/2013 for the course ECON 101 taught by Professor Smith during the Spring '09 term at Harvard.

Ask a homework question - tutors are online