Algiers Charter Schools Association ends retirement benefit
17th October 2011 · 0 Comments
By Jessica Williams
thelensnola.org
Faced with sharply rising costs, the Algiers Charter School Association recently canceled retirement benefits for 454 teachers at five of its eight schools.
Instead, the association will set up a retirement plan, called a 403B, where teachers can get out what they put in.
The change hits teachers at: Martin Behrman Charter Academy For Creative Arts And Sciences, Dwight D. Eisenhower Academy Of Global Studies, William J. Fischer Accelerated Academy, McDonogh No. 32 Literacy Charter School, Algiers Technology Academy, O. Perry Walker College and Career Prep High School.
It does not affect teachers at Edna Karr Charter High or Alice Harte Charter School, which were chartered through the Orleans Parish School Board. They continue to be covered by the statewide teacher’s pension system. Algiers Technology Academy is also unaffected because its charter was not up for renewal last year and so BESE was not petitioned to remove it from the retirement plan.
The decision, finalized by the association’s charter board at its Sept. 29 meeting, cut ties with the Teachers Retirement System of Louisiana after the system announced an increase in employer contributions.
In 2010, the employer paid 15 percent of the costs. It rose to 20 percent for 2011 and is set to increase again to 24 percent for 2012.
The increases are intended to offset a more than $18 billion deficit that is shared by four statewide retirement systems. This debt has been accumulating since 1987, and it isn’t required to be paid off until 2029, according to a May legislative auditor’s report. The debt built up largely because early payments were not large enough to combat accumulating interest, and from investment losses.
Gov. Bobby Jindal shot down legislation that aimed to reduce the deficit by forcing schools that leave the retirement system to repay their share of retirement debt. Jindal’s veto took into consideration that the public schools that choose to opt out of the system are likely to be independent charters, like the Algiers group, saying that such a bill would hurt charter schools’ autonomy.
Additional legislation, pending approval by voters in the upcoming Oct. 22 elections, offers another opportunity to get the massive debt paid down. The Jindal-backed Constitutional Amendment No. 2 would let the state use state budget surpluses to plug the gap.
But until such a measure is passed, bodies such as the Algiers charter group face tough budgeting decisions. Jackson said Monday that the contribution by the employer varies based on market conditions and that the association had no idea that the rate would get so high this year.
“If we continue to pay that rate, and it goes up again the following year, we are going to have to lay off 120 people,” he said.
Jackson said that the change could free money for pay raises.
Faculty reaction to the news has run the gamut, Jackson said, with some teachers excited about possible raises, and veteran teachers concerned about the change. The state pension system is still an option for those who want it, Jackson said, though their employer will not longer pay anything toward it.
“At the end of this month, we will have financial advisers come to speak to teachers (to determine) what their options are,” he said.
This article was originally published in the October 17, 2011 print edition of The Louisiana Weekly newspaper
