Arizona's charter school teachers could be kicked out of the state retirement system if a proposal rule change by the IRS goes into effect in June.

The IRS is accepting public comment through Monday on the change that would essentially strip charter schools of their status as government groups when it comes to retirement system participation. If that were to happen, teachers at those charter schools who now participate in the Arizona State Retirement System could be forced to find jobs elsewhere where they would qualify or possibly forfeit what they've got invested, said Eileen Sigmund, president and chief executive officer of the Arizona Charter Schools Association.

According to the National Alliance for Public Charter Schools, close to 95,000 charter school teachers nationwide could be impacted.

"My biggest concern is the unknown. If everything were to pass, worst case scenario is it could affect current retirees. It could affect teachers in the system. It could affect all these people who worked believing their retirement benefits are secure then suddenly the rug is pulled out from under them because Arizona has, for this purpose, carved a specific exception. That's my biggest fear," she said.

Arizona charter schools, by law, are independently run public schools that receive state funding. Since 1994, Arizona has allowed charter school teachers to participate in the Arizona State Retirement System.

The national alliance, as well as state charter groups, is asking that the IRS write a specific exception into the new rule that will allow that to stay in place.

Sigmund said this is stomping down on state rights.

Dave Canella, spokesman for the Arizona State Retirement System, said there are 216,000 active participants in the state retirement system today, including state and municipal workers, as well as public district and charter schools.

A decision by the IRS won't come until possibly June - first it collects input then it issues any modifications to the proposed rule changes. Canella said it's too soon to see what the impact to the health of the fund would be if 12,000 people were to withdraw from it. But he did note that, since the contributions by members are set based on a rolling figure of people coming and going - not a mass exodus - there could be a change to how much members must contribute.

For more information about the changes, see the Arizona Charter Schools Association website at or search for "governmental plans under Internal Revenue Code section 401(a)" at

Contact writer: (480) 898-6549 or

(5) comments


Dustbowl11: I think you misunderstand...

Charter Schools in AZ are free, public schools. Private Schools are different. Charter Schools receive public funds the same as 'public' schools. They operate as government institutions, drive vehicles with "G-" prefixes, are subject to the same regulations as public schools, etc...

Many teachers at Charter Schools come from Public Schools because they give them more options (just like how they give parents and students more options), and losing their retirement benefits would be devastating to the men and women who work just as hard as 'public' school teachers do, often putting in longer hours for less pay!!!

Charter Schools in AZ are already the proverbial "red-headed stepchildren" of public education, and the undue amount of grief they get from the Dept. of Education is testament to that. Charter Schools tend to have a shorter lifespan in Arizona, because the state and local municipalities make it hard for them to function because they are seen as a non-revenue-generating burden.

Please, have some sympathy for teachers and staff at charter schools...and give them equal treatment!


I am not anti-union. Pro-union. The decline of the union coincides with the decline of the middle class in my opinion. I just don't believe public school funds should be used for a private school education. Or there should at least be means testing for the students receiving public funds. Not phony sponsorships.


It could affect all these people who worked believing their retirement benefits are secure then suddenly the rug is pulled out from under them because Arizona has, for this purpose, carved a specific exception. That's my biggest fear," she said.

you mean like having medicare and social security age requirements changed.


dustbowl: yes, public paid pensions. You got a problem with that? Compared to most other jobs that require a 4-year college degree, teachers are woefully underpaid. Add in the long days, the stress, lack of respect and some poor working conditions, you'd better find some incentive for anyone to go into teaching. Not to mention that 50% of the contributions to the retirement fund are paid for by the teachers. So what is it? Are you jealous? The reason private companies don't offer pensions like they should and they used to is because of the anti-union attitude of people like you. America needs more, stronger employee unions, then you could all have a nicer life.


Wait a minute. I thought the Az legislature valued charter schools so much because they are run like a private business? Public paid pensions?

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