Charters & Choice

As if the teachers unions need another reason to hate charter schools, here's one: The finding, from a new Fordham Institute report, that when given a chance to opt out of state pension systems, many charter schools take it. Furthermore, a fair number of these charters replace traditional pensions with nothing at all.

Why is this such a big deal? It's not just that unions will worry that charter schools are mistreating their teachers. More fundamentally, if charter schools continue to multiply, and they are allowed to opt out of state retirement systems, those systems will collapse under their own weight--an outcome the unions will fight to the death.

First some background. The new Fordham study, by Michael Podgursky and Amanda Olberg, examines six large states where charters are allowed to opt out of the traditional pension system. In a few of these states, including California and Louisiana, most charters stay in the system. (That's largely because teachers in those states don't participate in Social Security; see the report for an explanation about that.) But in other states, including Arizona and Florida, most charters bolt. Typically they offer a 401(k) or 403(b) instead, but almost one-quarter offer either no pension or a plan without an employer match.

On this latter point, Rick Kahlenberg of the Century Fund hit the charter movement hard. In a Flypaper forum (that also...

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In this "Ed Short" from the Thomas B. Fordham Institute, Amanda Olberg and Michael Podgursky examine how public charter schools handle pensions for their teachers. Some states give these schools the freedom to opt out of the traditional teacher-pension system; when given that option, how many charter schools take it? Olberg and Podgursky examine data from six charter-heavy states and find that charter participation rates in traditional pension systems vary greatly—from over 90 percent in California to less than one out of every four charters in Florida. As for what happens when schools choose not to participate in state pension plans, the authors find that they most often provide their teachers with defined-contribution plans (401(k) or 403(b)) with employer matches similar to those for private-sector professionals. But some opt-out charters offer no alternative retirement plans for their teachers (18 percent in Florida, 24 percent in Arizona).

Guest Blogger

Today, Fordham released our latest, "Charting a New Course to Retirement: How Charter Schools Handle Teacher Pensions." Authors Amanda Olberg and Michael Podgursky explain the report's findings here.

In the wake of the economic downturn, American public schools face serious, long-term fiscal challenges. Of them, rising pension costs are a particular concern. Yet school districts have no mechanisms for reining in these costs; almost all districts are tethered by statute to state pension systems (or, sometimes, their own local pension systems). It turns out, though, that some states allow their public charter schools to opt out of those systems. How they handle this opportunity bears scrutiny?and may suggest some lessons for the larger public-education system.

Nationally, teacher compensation comprises 55 percent of current expenditures in K-12 education. (That figure rises to 81 percent when all school staff are included.) A large and growing share of these costs goes to help fund retirement benefits. Between 2004 and 2010, for example, district pension costs (not counting retiree health insurance) increased from 12 percent to over 15 percent of salaries. A recent report from the Pew Center on the States estimated that unfunded public employee pension liabilities in the U.S. grew to $1.26 trillion during the 2009 fiscal year; other studies estimate that the true liability is even higher. Even as states attempt to pay down this liability, pension...

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Leave it to Rick Hess to find the current lightening rod issue. The other day it was an interview with KIPP CEO Richard Barth, who was discussing the recent study of the network's success in getting kids through college: 33% of KIPP students who had completed eighth grade ten or more years ago (this was the early days) finished college within six years.? Rick's Q&A is worth the read to hear Barth talk about the challenges of tracking KIPP kids through college ?(something that the Christian Brothers (see here) have been doing for a while); about the lessons KIPP has learned (better expand to K?12); and, especially, about transparency (why would you sponsor a study that could make you look bad?). ?As Barth notes, in answer to the transparency question, one of the good things about funding studies like this is to remind their teachers ?how difficult this is?.? [T]his is the mountain we're climbing.? (No miracles here.)

But the issue that caught my eye was that of whether KIPP has anything to crow about.? In an early question to Barth, Rick says, ?some critics have asked? whether KIPP's long-term college graduation rates are ?really four times the comparable cohort, given that KIPP students have chosen to attend.? ?The key phrase here, of course, is ?chosen to attend.? And Hess is asking the question that has dogged charters from the beginning.? Do they succeed because they do a better job educating kids or because they select better,...

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There has been a lot of controversy in Ohio in recent weeks around House-proposed legislative changes to the state's charter law that would decimate an already weak charter school accountability system (see here, here, and here). Fordham has not been shy about commenting publicly on what's wrong with the House language, nor have we shied away from arguing for stronger charter accountability and transparency. Those who know us understand our advocacy for strong charter accountability provisions are not new.

In fact, we have been a strong voice for charter school quality for more than a decade and played a critical role in the production of Turning the Corner to Quality: Policy Guidelines for Strengthening Ohio's Charter Schools. This report, released collaboratively with the National Alliance for Public Charter Schools and the National Association of Charter Schools Authorizers in October 2006, recommended a ???housecleaning??? to close down Ohio's poorest performing schools. Partly in response, the General Assembly passed a law in December 2006 to force failing schools to improve or face automatic closure.

Because we have been such outspoken and visible critics of the recent House language, many who disagree with us are raising questions publicly and behind the scenes about our motivations. Some have accused Fordham???in its advocating for a statewide authorizing entity that would merge the portfolios of existing sponsors, including Fordham???of trying to give birth to a ???super- sponsor??? in order to orchestrate some form of a charter school power grab. Still...

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Pennsylvania is trying to fix a thorny problem with virtual schools. If two kids attend a virtual school, one from a high spending district that sends along $10,000 in their backpack to the virtual school, and another from low spending district that sends $6,000, the former child's district is subsidizing the latter's education. It's a tough issue.

The solution proposed on Monday by Rep. James Roebuck (D-Phila.) is extreme, however. He proposes that the state pay the entire bill for virtual-school students, as well as youngsters in traditional charter schools, leaving more resources to educate fewer kids in district schools. Since there's on a finite amount of money available for public education in the state, this short-changes children who attend schools of choice.?The proposal also defeats one of the purposes of school choice: competition for students and the resources to educate them.

Virtual schools present some unique governance and school-finance challenges, but rewarding districts for failing to serve kids effectively is not a good solution. Instead, Pennsylvania legislators should develop a financing system where the state steps in to correct disparities but still allows as much local funding as possible to follow a child wherever he or she goes in the education system. Pennsylvania's citizens are taxed to provide resources for all children in public schools, not to preserve buildings and jobs in the traditional system of district schools.

?Chris Tessone...

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First came the recruitment of State Superintendent Deborah Gist; next came winning $75 million in Race to the Top (RTTT) funds. Rhode Island has been on a whirlwind track toward education reform over the past couple years. And?as one with boatloads of Ocean State pride (who doesn't love coffee milk, water fire, and Dels lemonade?)?it's been fun to watch.

Of course, no reform effort is without its drama. Parents erupted when Central Falls Superintendent Frances Gallo announced a turnaround effort at the city's high school. Currently, organized pushback is being targeted against the expansion of Achievement First (AF) into Rhodey.

AF is a proven high-quality charter-school network, currently operating nineteen charters in New York and Connecticut. In 2007, one of its campuses was highlighted by the US DOE as a model for closing the achievement gap; it was one of seven such schools in the country. In 2009, fourth graders at AF's two oldest campuses (both in New York) demonstrated 93 percent proficiency in English language arts and 99 percent proficiency in math.

Since Rhode Island submitted its RTTT application, there have been tentative plans to expand AF the Ocean State. These plans?and the vocal opposition of them?recently solidified, as Cranston Mayor Alan Fung invited Achievement First to his district.

Why the backlash? Former Fordham colleague (now with the New Jersey Department of Education), Andy Smarick called it in March 2010 when discussing the Central Falls out:

We all know about the plans to

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