A little-noticed proposed change in Internal Revenue Service regulations could have devastating effects for charter school teachers by making them ineligible for state retirement plans, and they could stand to lose much of the money that they already have accrued.
The proposed rule, released with little fanfare near the end of last year, would make major changes to the definition of “governmental plans,” the federal standard for who can be considered a government employee for the purposes of participating in state pension systems.
When you start dividing folks by labels, using "government schools" as an epithet, it leads to sticky situations.
“The IRS did not have charter schools in their sights, but whether they had them in their sights or not, it could have negative consequences for us,” said Todd Ziebarth, vice president for state advocacy and support at the National Alliance for Public Charter Schools. “Our concern is that this could raise some questions. It’s a gray area around whether charters would meet the test.”
The proposed change would establish five criteria for determining eligibility in state retirement plans, the most troublesome of which, from the point of view of whether charter school teachers could participate, is a provision stating that “the governing officers either are appointed by state officials or publicly elected.” Another condition is that a government body must be responsible for all the debt a participating institution accumulates.
If that's so, it's a moot point. Haley and our legislature isn't likely to assume any debt or liability for private charter schools.
Consider all the hoopla that's being made over the stability of the retirement system already, and the Henny-Penny ("the sky is falling!") wailing over unfunded liability -- the technical term that reflects the state's cost if all the state's public employees retired, all at the same time, and demanded their benefits to be paid out. That cacophony is bad enough; can you imagine the outcry over assuming all of charter schools' rental contracts and other contractual liability? O, no. That's not going to happen.
After all, sloughing off some of public education in the interest of privatization was the purpose of charters in the first place.
On the surface, charter schools may not meet either criteria because they are not wholly public institutions. For example, elected school boards do not have hiring or firing power over the employees at a charter school, and charter schools can go bankrupt and out of business without a government guarantee of their debts.
It was this very principle that led local school boards to reject charter applications early in Governor Mark Sanford's administration, which is why he pushed lawmakers to create a statewide charter school district, to get around the local control of local school boards.
NAPCS estimates that if the rule is enacted, more than 95,000 charter school teachers nationwide — more than 93 percent of the charter workforce — would be forced either to leave their schools or risk losing their pensions.
Risk losing their jobs? Risk losing their retirement benefits? Why, that makes them just like public school employees during the past decade, subject to the whims of lawmakers who don't support public schools.
Charter colleagues, welcome to our world.
After an uproar from the charter school community, the IRS last week extended until June a public comment period for the proposed rule, which could go into effect as soon as this summer.
Several Republican members of Congress also are putting pressure on the IRS to clarify its rule or risk inflicting a crippling blow to charter schools, which are responsible for educating more than 2 million students in 41 states and the District.
In a letter last week to the IRS, Republican Reps. John Kline of Minnesota, chairman of the House Committee on Education and the Workforce, and Duncan Hunter of California, chairman of the early childhood, elementary and secondary education subcommittee, said the proposed rule “could unfairly jeopardize the retirement security of charter-school teachers.”
What do you think it would take to get Rep. Kline to slip in some retirement security for public school employees, while he's at it?
Not much chance of that? Well, couldn't we try?
“The draft regulations could effectively prevent many public charter schools from recruiting or retaining veteran traditional public school teachers, significantly interfering with charter schools’ ability to achieve their educational goals,” the two men wrote.
Now wait just a blinking minute. This fellow states in black and white that charter schools can't afford this regulation because it might prevent them "from recruiting or retaining veteran traditional public school teachers, significantly interfering with charter schools’ ability to achieve their educational goals." Well, what about the ability of traditional public schools to achieve their educational goals? When you pull veteran teachers out of traditional public schools, it doesn't exactly result in sudden spikes of student achievement, I suspect.
Who are our lawmakers fighting for?
In a post on the IRS website explaining why it drafted the rule, the agency said it was attempting to limit governmental-plan eligibility to those working directly for “an agency or instrumentality of the state.”
The IRS also says it has become “increasingly concerned with the growing number of requests for governmental-plan determinations from plan sponsors whose relationships to governmental entities are increasingly remote.”
O, that's choice. Forgive my incredulity.
In the interest of privatizing a host of public services, including public schools, our wise leaders create all sorts of dodges and loopholes to move individuals off the public employment rolls. Yet, when these individuals gather together in their private entities, they want access to the same public retirement system plans that ever-fewer public employees have been promised.
Look at how the IRS describes it: "requests for governmental-plan determinations from plan sponsors whose relationships to governmental entities are increasingly remote.” That clearly means private entities -- contractors, more or less -- whose employees aren't public employees but who want the same retirement benefits.
Well, the question seems to be: Are charter school workers considered public employees, or are they the employees of private contractors or other non-public entities? If they're public employees, there's a retirement system for public employees. If they're not public employees, well...
If I'm an auto mechanic who works on Fords, that doesn't necessarily mean I'm eligible for employment benefits from the Ford Motor Company.
I'll keep my eye on this one and see what develops.