401(k) plan approved for some charter school teachers
Some Georgia charter schools will offer a new perk -- a 401(k) retirement plan with immediate coverage -- to hire college graduates, displaced teachers and those transferring to classrooms from business careers.
The Georgia Charter Schools Commission, after consultation with the state Attorney General’s office, will allow the retirement incentive, enabling designated employees to skirt a state mandate that requires public school educators to participate in the Teachers Retirement System and receive a job benefit that they typically would receive only as business professionals.
“It is a tool they can use; it’s their choice,” said Mark Peevy, commission executive director, defending the move. “One of the purposes of the charter schools movement is to provide flexibility.”
Sixteen states currently allow charters to bypass mandatory retirement plans and offer the 401(k) incentive. Four states offer a combination of plans, according to the National Alliance for Public Charter Schools.
Georgia's new retirement opportunity has some teachers considering a classroom return, among themTucker's Diyarna Monroe, who has spent 20 years as a Florida teacher and assistant principal. Monroe also taught at Gwinnett County schools briefly before leaving to pursue a doctorate.
“Often times you have to be vested into the retirement system by working three years or in some states six,”Monroe said. “If you decide to opt out of education altogether you lose those years that the school system may have invested in your retirement. A 401(k) plan can follow you and you have a say over where your money is going.”
Atlanta Heights Charter School made the initial Georgia request to offer a 401(k) plan, something its national affiliate, Michigan-based National Heritage Academies,already uses in its other schools to attract talent.
TRS manages the retirement accounts for 300,000 Georgia public school educators. A member can draw full benefits after 30 years of service or after 10 years of service if 60 and older.
However, there is opposition to this change in school retirement plans.
“All of the other charter schools have to be members of TRS, [so] it is questionable whether or not these individuals should, too,” said Jeff Ezell, TRS executive director. "Some legislation may need to be enacted to clarify that."
The state Board of Education still took no action on the matter last week after learning of the attorney general’s recommendation, suggesting Georgia law doesn't specifically prevent the option for commission charter schools.
Ezell insisted that TRS still provides a secure future for teachers with its retirement benefit plan.
“TRS is a defined benefit plan, which means when someone retires they get a lifetime benefit based upon their years of service and their salary,” Ezell said.
Atlanta Heights board member Keisha Escoffery said paying into a 401(k) plan could be cost effective.
“When we look at our allocation of funds, a 401(k) for our employees is one of the ways we successfully can serve our students and manage our budget," Escoffery said.
