NY Charters Move Away from Traditional Teacher Pension Plans

Elizabeth Ling:

Here is another example of New York charter schools using their greater autonomies to develop innovative practices, in this case achieving operating efficiencies during this time where increasing pension costs are a particular concern for school districts. A recent Fordham Institute study reports that, between 2004 and 2010, district pension costs nationally increased from 12% to over 15% of salaries, amid concern that the public pension plans are underfunded.

The study reports that some New York charter schools are opting out of the traditional teacher-pension system, with only 28% of the state's charters participating in the state or city teachers retirement systems (NYSTRS and TRSNYC, respectively) in 2008-9. Those that opt-out cite the high cost of employer contributions. In 2009, the annual employer contribution rate to NYSTRS was 6.19% of an employee's annual salary, and that to TRSNYC was an astonishing 30.8% (by far the highest in this six-state study).

But that doesn't mean that these charter schools are not interested in helping their employees have a more secure future. Schools that choose not to participate in public pension plans most often provide their teachers with defined-contribution plans (401(k) or 403(b)) with employer matches similar to those for private-sector professionals. Although employer contribution rates vary, they generally range up to 6% of the employee's salary. Vesting periods range from immediate vesting to five-year vesting schedules.

Posted by Jim Zellmer at July 13, 2011 2:20 AM
Subscribe to this site via RSS/Atom: Newsletter signup | Send us your ideas