Protecting Charter School Employee Retirement Funds

Understanding the Threat

NAPCS has been the leading voice in the effort to amend the Internal Revenue Service’s Advanced Notice of Proposed Rulemaking (ANPRM) titled “Determination of Government Plan Status.” Released on November 8th, 2011, this draft proposed regulation, if adopted as currently drafted, would lead states to prohibit charter school employees from participating in state retirement plans. Presently, every single state that authorizes charter schools either requires or permits charter school participation in the state’s retirement system. Therefore, this regulation would negatively impact nearly all charter school employees in the country.

We persist in our efforts to educate law- and policy-makers on this issue, and we are committed to mobilizing our sector and our supporters.  The public comment period, originally set to expire on February 6th, has been extended and now will close on June 18th.  Additionally, the IRS will convene a public hearing in Washington D.C. on July 9th.  Anyone can submit a request to testify on July 9th; click here to submit a public comment in which you can ask for an opportunity to be heard (Note: submitting a request to testify does not guarantee that you will be chosen).

The Sector and Its Supporters Voice Opposition

To date,

• NAPCS has filed public comment, signed by 34 city- and state-level charter support organizations across the country;
• Chairman John Kline, House Committee on Education and the Workforce, and Chairman Duncan Hunter, House Subcommittee on Early Childhood, Elementary and Secondary Education, have submitted a letter in support to IRS Commissioner Shulman;
• Senate Republicans have submitted a letter in support to IRS Commissioner Shulman;
• A coalition of 17 Members of the House has sent a bipartisan letter in support to IRS Commissioner Shulman;
• The Council of Chief State School Officers (CCSSO), a national organization that represents state superintendents of education across the country, has submitted comments in support; and,
• In February, more than 8,300 individuals voiced opposition to the IRS’s draft proposed regulations.  More than 43,000 emails were sent to Congress, Secretary Geithner, Secretary Duncan and IRS Commissioner Shulman!

Moving Forward

Between now and the July 9th public hearing, we will update our webpage devoted to this issue to spotlight the latest developments—including media coverage, public statements made by lawmakers, position statements issued by our supporters, white papers, and data.

It is imperative that the final regulations be amended to protect public charter school employees and allow public charter schools to continue to recruit and retain veteran public school employees.  Failure to do so will risk the retirement security of charter school employees, interfere with charter schools’ ability to reach their educational goals, undermine both state and federal education policy and reform initiatives, and subject some states to potential financial liability.  We urge the Internal Revenue Service to clarify the draft proposed regulations such that public charter schools will be treated as agencies or instrumentalities of the state under Section 414(d) of the Internal Revenue Code.

Winners Announced for federal Charter Schools Program SEA Grants

• support charter school efforts to find suitable facilities
• disseminate information about successful charter school practices, and 
• replicate and expand high-quality charter schools

President Barack Obama's fiscal year 2013 budget request also includes $255 million to expand educational options by helping grow effective charter schools and other autonomous public schools that achieve positive results and give parents more choices.

Year 1 RTT Reports Reveal Range of Charter Support Efforts

On January 10, 2012, the US Department of Education released the Annual Performance Reports (APRs) for the first 12 states awarded Race to the Top (RTT) funds.  The Department uses the APRs to monitor the implementation of their grant programs by grantees. It allows Department staff and members of the public an opportunity to follow the grantees’ progress and review certain metrics of success.

NAPCS has just released our summary and analysis of each state’s APR. In reviewing the APRs, we were pleasantly surprised with the efforts a number of states have made to support charters:

• In Georgia, the Governor found state funds to support the RTT goal of strengthening charters (after a State Supreme Court decision threatened the operations of a number of schools). The State used RTT funds to support a competitive grant program for innovation, through which a majority of the awards went to support charter-related programs.
• Rhode Island extended their High Performing Charter Schools project to allow for smaller grants to support four schools, rather than larger grants supporting only two schools.

There are also states with promising opportunities on the horizon:

• Tennessee created a public-private fund to support charter schools, and kicked it off with $14 million in RTT funds.
• Florida continues to require LEAs to offer charters within their districts the opportunity to participate in RTT with equity to other traditional public schools.

There are, of course, also states which NAPCS feels have made little to no progress in their support of charters:  In Hawaii, the Department has noted a number of concerns regarding RTT implementation across the board. Since these reports were completed, they have taken steps to address these concerns, most notably by placing the grant on high risk status. Charters are only one of the sectors not receiving adequate support under RTT in Hawaii. In New York, the State used the RTT amendment process to drastically change a program that would have provided a competitive facilities funding to charters. Instead, the State transferred a majority of the funds to a program that encourages EMOs to take over failing public schools and turn them into charters. While this creates new charter schools, it does nothing to support those currently operating in the state. 

We will continue to monitor RTT implementation in these and all of the RTT states very closely!