California pensions facing hit as charter schools consider leaving the system

One of the state’s largest charter school organizations is exploring whether it wants to withdraw from CalPERS, raising alarms among unions and public pension officials who fear a gradual weakening of the fund.

Aspire Public Schools, which operates 36 schools in California, opened talks with the California Public Employees’ Retirement System after the charter school organization’s board of directors unanimously voted in November to consider leaving the $345 billion pension fund.

Aspire has three schools in Sacramento, three in Modesto and eight in Stockton. It also has campuses in the Bay Area and in Los Angeles. Its representatives did not return multiple calls and e-mail messages seeking comment.

Wayne Davis, a CalPERS spokesman, confirmed that Aspire had contacted the agency to request information about how it can terminate its participation in the fund. Organizations that leave CalPERS pay hefty termination fees that are invested into low-risk pools to support pensions owed to their retirees and workers.

Minutes from Aspire’s recent board meetings show that its leadership had grown concerned about the rising ongoing cost of funding pensions. California’s public pension funds have been raising those charges since 2012 while they try to catch up with their recession losses.

Aspire’s annual financial reports show that its spending on pensions doubled since 2014. Last year, it spent $12.2 million on bills to CalPERS and the California State Teachers’ Retirement System.

Aspire has not taken steps to separate from CalSTRS, the $225 billion fund that pays pensions to teachers. Aspire’s classified employees belong to CalPERS, while its teachers participate in CalSTRS.

One school district on its own choosing to break from CalPERS would not worry the pension fund or the unions that advocate for public employees. About 900,000 people are enrolled in CalSTRS, and 1.9 million workers and retirees are in CalPERS.

But Aspire’s inquiry about leaving CalPERS comes at a moment when a rising share of new charter schools are declining to enroll their employees in CalPERS and CalSTRS. Instead, they’re offering alternative retirement plans.

Until 2014, about 90 percent of new California charter schools offered retirement benefits through CalSTRS. That ratio dropped to 80 percent four years ago and 67 percent in 2015, according to CalSTRS.

Today, California’s 1,243 charter schools teach about 10 percent of the state’s K-12 students, up from 2 percent in 2000.