New York’s charter schools aren’t just innovating in the classroom, they’re also bucking the status quo on pensions — and saving taxpayers money, a new study found.
Just 28 percent of the state’s charter schools participated in the state or city Teachers Retirement Systems in 2008-9, under which employer contributions ran as high as 30.8 percent of members’ annual salaries, according to the Fordham Institute study.
By opting out of traditional plans, charter schools in New York and elsewhere have been able to offer a cheaper model that could help reform pension systems that many view as alarmingly underfunded.
“Charter schools can generally save money by offering an alternative plan rather than opting into the state system,” said Amanda Olberg, a research assistant at the Fordham Institute.
The trend was observed in New York, Arizona, Florida and Michigan — where 401(k)’s or the nonprofit 403(b) retirement plans were the most common alternatives.
City charter-school operators told The Post their retirement packages aren’t just more cost effective, but they also better reflect the needs of the current crop of educators, who are less likely to commit to a lifelong teaching career in one city.
“The incentives in the defined-benefit plan like TRS are back-ended, so you get a huge benefit if you’ve been there 20 years, and you get very little benefit after five years,” said Seth Andrew, founder and superintendent of Democracy Prep public charter schools.
The charter network matches employee retirement contributions of up to 5 percent, with full vesting after five years. Democracy Prep matching grows by 1 percentage point per year after teachers are vested.
At Lighthouse Academies — which runs two charter schools in the Bronx — employee 401(k) contributions are matched up to 4 percent, with immediate vesting, according to Michael Ronan, founder and CEO.
“It’s certainly more cost-effective for the school and we think it’s a better benefit for the workforce population that we have — because it’s portable and it’s something they’re going to hang on to,” he said.