humbling harbinger

Squeezed by ballooning pension costs, charters cut programs

A Queens charter school that pays for pension costs directly out of its budget is cutting programs to afford pensions.
A Queens charter school that pays for pension costs directly out of its budget is cutting programs to afford pensions.

Stacey Gauthier at the Renaissance Charter School is worrying a lot these days — about money. This year she’s had to increase class sizes, cut the summer school program, and forgo hiring experienced teachers when an older teacher retires. Yet she still hasn’t cut enough to be able to afford the school’s rising pension costs, which have grown from $12,000 per teacher in 2004 to $21,000 per teacher this year.

Pension costs for city teachers have been rising steadily over the past decade, but for the most part the expenses have been hidden from individual schools, which rely on the city to cover all pension costs. Yet for a small number of charters schools like Renaissance that participate in the Teacher Retirement System (TRS) out of their own budgets, the ballooning price of a comfortable retirement has been acutely felt.

“We have another year to live,” Gauthier said. “We’re dipping into our savings now, which is okay, but if things don’t rebound, we won’t be financially viable.”

Although TRS costs have always been high relative to the private sector, their impact on charter school budgets has become especially burdensome since state lawmakers froze planned increases in charter school funding two years ago. (A breakdown of several charter schools’ pension and 401(k) payments is below the jump.)

The freeze made it harder for schools to pay their TRS contributions, which have increased by 10 percent since 2008. At a loss, schools said their pension payments are often coming at the expense of other school programs — a situation that the district schools could see themselves in if promised budget cuts are approved for next year.

“Our costs are growing astronomically,” said Vicki Zubovic, the managing director of development at the KIPP charter schools. “It’s becoming harder and harder to meet these needs.”

The TRS pension squeeze affects at least 12 charter schools in New York City. The rest offer some sort of 401(k) or 403(b) defined contribution plan in which employees contribute a portion of their salary to a fund and employers agree to match that amount up to a certain percentage.

The difference in cost between the two options is enormous.

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PHOTO: Nicholas Garcia
The more generous public pension plan costs much more per student than a slimmer 401k retirement option.

According to an analysis using the fiscal audits from 2008-2009, on average, non-TRS schools contributed about 2 percent of all payroll expenses to their pension funds. TRS schools contributed around 14 percent of all payroll expenses to the TRS. This comes down to a difference of over $1,400 per student that TRS schools must spend on pensions that other charters are free to direct elsewhere.

Citywide, pensions cost on average $2,000 per pupil — a higher figure than charter schools face because district teachers are generally older and because of the way the TRS accounts for charter school pension costs. Overall, pensions make up $2.1 billion, or 10 percent, of the DOE’s total budget of $21 billion.

Most charter schools in the TRS joined because they are “conversion” schools that transformed into charters from traditional public schools — and as a result were required by the state to keep the same union benefits afforded district school teachers. But a handful of charter schools that belong to TRS opted into the plan on their own.

School leaders said they wanted to offer their employees the same benefits offered by district schools. There is simply no way that a 401(k) plan can offer the benefits that the TRS promises, such as free retiree health care and a guaranteed yearly pension that gets paid whether the market is down or not.

“We knew going in we were going to offer the TRS,” said Leonard Goldberg, the principal of Opportunity Charter School. “It’s hard for a teacher who has five, ten years in a system to try working in a charter school if the charter school doesn’t offer the same benefit.”

Goldberg said that TRS membership has helped Opportunity meet its goal of attracting and retaining experienced teachers. The plan is expensive, he said. But he added, “We believe at the moment it’s worth the investment.”

To compete, some charter schools that don’t participate with TRS have tried to make their 401(k) plans as lucrative as possible.

Take the plan at KIPP S.T.A.R., the only one of the four New York City KIPP schools that is not in the TRS. KIPP S.T.A.R. matches 50 percent of employee contributions up to the federal limit of $16,500 per year. In addition, the school offers employees a partially subsidized health care plan.

Despite all this, KIPP officials conceded that this plan, which is generous by most standards, still can’t compete with the TRS.

Not all unionized charter schools participate in TRS; two that offer 401(k) plans are Amber Charter School in Manhattan and Merrick Academy in Queens.

Even if the TRS schools stop thinking the plan is worth the investment, there’s nothing they can do: According to state law, once a school is in the TRS, it can never leave.

But that hasn’t stopped the schools from asking for relief. Several schools in the plan are pushing to get an increase in state funding to cover the costs. The UFT has proposed pension relief for charter schools that would require the Department Of Education to pay for the schools’ TRS costs. How that would work in practice has yet to be worked out.

But most schools in the plan agree that the simplest option — letting the charter schools opt out of the TRS — would not be a fair resolution.

“I think that there are some ridiculous parts of the pension, but we didn’t set that up,” said Gauthier of Renaissance. “The politicians, traditional public schools, they all have this benefit. Why are charter schools expected to be the sacrificial lambs?”

Here is a breakdown of charter schools’ pension plans and payments, as reported in their 2008-2009 audited financial statements. One note before reading: A small contribution to a school’s pension fund does not necessarily indicate poor policy on the part of the school. Because 401k/403b plans state that an employer must contribute to the plan only if an employee contributes, some schools contribute little to no money to their pension plans due to their employees’ decisions.

first steps

Superintendent León secures leadership team, navigates evolving relationship with board

PHOTO: Patrick Wall
Superintendent Roger León at Tuesday's school board meeting.

As Newark’s new superintendent prepares for the coming academic year, the school board approved the final members of his leadership team Tuesday and began piecing together a roadmap to guide his work.

The board confirmed three assistant superintendents chosen by Superintendent Roger León: Jose Fuentes, the principal of First Avenue School in the North Ward; Sandra Rodriguez, a Hoboken principal who previously oversaw Newark Public Schools’ early childhood office; and Mario Santos, principal of East Side High School in the East Ward. They join three other assistant superintendents León selected for his team, along with a deputy superintendent, chief of staff, and several other officials.

The three assistant superintendents confirmed Tuesday had first come before the board in June, but at that time none of them secured enough votes to be approved. During last month’s meeting, the board assented to several of León’s leadership picks and to his decision to remove many people from the district’s central office, but it also blocked him from ousting several people.

This week, Board Chair Josephine Garcia declined to comment on the board’s reversal, and León did not respond to a request for comment.

What is clear is that the board and León are still navigating their relationship.

In February, the board regained local control of the district 22 years after the state seized control of the district due to poor performance and mismanagement. The return to local control put the board back in charge of setting district policy and hiring the superintendent, who previously answered only to the state. Still, the superintendent, not the board, is responsible for overseeing the district’s day-to-day operations.

During a board discussion Tuesday, Garcia hinted at that delicate balance of power.

“Now that we’re board members, we want to make sure that, of course, yes, we’re going to have input and implementation,” but that they don’t overstep their authority, she said.

Under state rules, the board is expected to develop district goals and policies, which the superintendent is responsible for acting on. But León — a former principal who spent the past decade serving as an assistant superintendent — has his own vision for the district, which he hopes to convince the board to support, he said in a recent interview on NJTV.

“It’s my responsibility as the new superintendent of schools to compel them to assist the district moving in the direction that I see as appropriate,” he said.

Another matter still being ironed out by the board and superintendent is communication.

León did not notify the full board before moving to force out 31 district officials and administrators, which upset some members. And he told charter school leaders in a closed-door meeting that he plans to keep intact the single enrollment system for district and charter schools — a controversial policy the board is still reviewing.

The district has yet to make a formal announcement about the staff shake-up, including the appointment of León’s new leadership team. And when the board voted on the new assistant superintendents Tuesday, it used only the appointed officials’ initials — not their full names. However, board member Leah Owens stated the officials’ full names when casting her vote.

The full names, titles and salaries of public employees are a matter of public record under state law.

Earlier, board member Yambeli Gomez had proposed improved communication as a goal for the board.

“Not only communication within the board and with the superintendent,” she said, “but also communication with the public in a way that’s more organized.”

The board spent much of Tuesday’s meeting brainstorming priorities for the district.

Members offered a grab bag of ideas, which were written on poster paper. Under the heading “student achievement,” they listed literacy, absenteeism, civics courses, vocational programs, and teacher quality, among other topics. Under other “focus areas,” members suggested classroom materials, parent involvement, and the arts.

Before the school year begins in September, León is tasked with shaping the ideas on that poster paper into specific goals and an action plan.

After the meeting, education activist Wilhelmina Holder said she hopes the board will focus its attention on a few key priorities.

“There was too much of a laundry list,” she said.

early dismissals

Top Newark school officials ousted in leadership shake-up as new superintendent prepares to take over

PHOTO: Patrick Wall
Incoming Newark Public Schools Superintendent Roger León

Several top Newark school officials were given the option Friday to resign or face termination, in what appeared to be an early move by incoming Superintendent Roger León to overhaul the district’s leadership.

The shake-up includes top officials such as the chief academic officer and the head of the district’s controversial enrollment system, as well as lower-level administrators — 31 people in total, according to documents and district employees briefed on the overhaul. Most of the officials were hired or promoted by the previous two state-appointed superintendents, Cami Anderson and Christopher Cerf, a sign that León wants to steer the district in a new direction now that it has returned to local control.

The officials were given the option to resign by Tuesday and accept buyouts or face the prospect of being fired by the school board at its meeting that evening. The buyouts offer a financial incentive to those who resign voluntarily on top of any severance included in their contracts. In exchange for accepting the buyouts, the officials must sign confidentiality agreements and waive their right to sue the district.

Earlier this week, León submitted a list of his choices to replace the ousted cabinet-level officials, which the board must approve at its Tuesday meeting. It’s not clear whether he has people lined up to fill the less-senior positions.

It’s customary for incoming superintendents to appoint new cabinet members and reorganize the district’s leadership structure, which usually entails replacing some personnel. However, many staffers were caught off guard by Friday’s dismissals since León has given little indication of how he plans to restructure the central office — and he does not officially take the reins of the district until July 1.

A district spokeswoman and the school board chair did not immediately respond to emails on Friday about the shake-up.

Some staffers speculated Friday that the buyout offers were a way for León to replace the district’s leadership without securing the school board’s approval because, unlike with terminations, the board does not need to sign off on resignations. However, it’s possible the board may have to okay any buyout payments. And it could also be the case that the buyouts were primarily intended to help shield the district from legal challenges to the dismissals.

León was not present when the staffers learned Friday afternoon that they were being let go, the employees said. Instead, the interim superintendent, Robert Gregory, and other top officials broke the news, which left some stunned personnel crying and packing their belongings into boxes. They received official separation letters by email later that day.

The people being ousted include Chief Academic Officer Brad Haggerty and Gabrielle Ramos-Solomon, who oversees enrollment. Also included are top officials in the curriculum, early childhood, and finance divisions, among others, according to a list obtained by Chalkbeat.

In addition to the 31 being pushed out, several assistant superintendents are being demoted but will remain in the district, according to the district employees.

There was concern among some officials Friday about whether the turnover would disrupt planning for the coming school year.

“I don’t know how we’re going to open smoothly with cuts this deep,” one of the employees said. “Little to no communication was provided to the teams about what these cuts mean for the many employees who remain in their roles and need leadership guidance and direction Monday morning.”