BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1819 (Ammiano) - Charter Schools
Amended: July 2, 2012 Policy Vote: PE&R 3-1
Urgency: No Mandate: No
Hearing Date: August 16, 2012
Consultant: Maureen Ortiz
SUSPENSE FILE.
Bill Summary: AB 1819 requires charter schools to make the
California State Teachers' Retirement System (CalSTRS) and the
California Public Employees' Retirement System (CalPERS)
available to all qualified employees.
Fiscal Impact:
Charter schools that do not currently participate in
CalPERS for school employees will be required to contribute
11.417% of salary for those employees annually, and will
also incur unknown, but substantial administrative expenses
for reporting requirements. (General)
Unknown, potentially significant administrative costs to
CalPERS (Special)
Charter schools that do not currently participate in
CalSTRS for qualified employees will be required to
contribute 8.25% of salary, which will be partially offset
by not making the current contribution of 6.2% for Social
Security. (General)
There are approximately 90 charter schools that do not currently
offer membership in CalSTRS and CalPERS to qualified employees.
Assuming there are 16 certificated employees at each school who
will now be participating in CalSTRS, and assuming an average
salary of $68,000, new employer costs (the difference between
the CalSTRS contribution rate of 8.25% and the existing
contribution to Social Security of 6.2%) would be $1,394 per
teacher or $22,304 per charter school, and approximately $2
million statewide annually.
For employees that will now become members of CalPERS, assuming
16 employees at each charter school with an average salary of
$50,000, new employer costs at the contribution rate of 11.417%
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will be $5,708 per employee, $91,336 per school, and about $8.2
million statewide annually.
Background: The creation of charter schools was authorized in
1992 (SB 1448, Hart, Chapter 781/1992) to allow alternative
teaching and educational administrative models to be developed
and tested outside of the traditional public school system. The
Legislature established a charter approval process, a funding
process that has been refined over the years, and imposed
several levels of reporting and accountability.
Existing law authorizes charter schools, as an option, to cover
employees under CalSTRS and CalPERS. If a charter school
chooses to make CalSTRS and/or CalPERS available, all employees
of the charter school who qualify for membership in the system
are entitled to coverage. Consequently, if a charter school
elects to offer coverage in CalSTRS, all provisions of the
Teachers' Retirement Law apply in the same manner that they do
to other California public schools including participating in
the Defined Benefit Plan and optional coverage in the Cash
Balance Plan. If a charter school elects to participate in
CalPERS, its employees are treated like school district
employees and typically enroll in CalPERS through the County
Office of Education. CalPERS enrolls almost 425,000 school
members who are eligible for a retirement benefit of 2% at age
55 combined with a Social Security benefit. Currently, the
employee contribution rate is 7%, and the 2012-13 employer
contribution rate is 11.417% of salary.
The charter schools must inform all applicants for employment of
the retirement options for employees of the charter school.
Exiting law requires a charter school to provide Social Security
coverage for employees if it does not provide CalSTRS or CalPERS
coverage.
Proposed Law: AB 1819 requires charter schools to offer
participation in the CalSTRS pension system to its teachers, and
to offer participation in the CalPERS pension system to
qualified employees in the same manner as the employees of the
school district that granted the charter.
The provisions of AB 1819 will not be applicable to charter
schools and their employees if participation in CalSTRS and
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CalPERS would create adverse tax consequences under federal law.
Staff Comments: There are currently approximately 989 active
charter schools operating in California, and about 908 of those
schools participate in CalSTRS.