AD96-01 Charter School Self-Assessment Checklist for Participation in STRS

Administrative Directive


All County Superintendents of Schools
District Superintendents of Schools
Community College Districts and
Other Employing Agencies




Administrative Directive 96-01
Charter School Self-Assessment Checklist
for Participation in STRS.


The purpose of this administrative directive is to inform employers of the Charter School Self-Assessment Checklist for Participation in STRS for any charter school which is established as a non-profit corporation.


This directive applies to a Charter School that is a non-profit corporation and has received an operating number from the Department of Education (DOE). The self-assessment must be completed by the charter school and forwarded to STRS prior to submission of employee contribution detail to STRS. Charter schools which do not operate as non-profit corporations are not impacted by this directive.


In 1992, California enacted the Charter Schools Act (See California Education Code sect. 47600 et seq.), which permits a charter school the choice to participate in the State Teachers’ Retirement System. If a charter school chooses to participate in the System, then all employees of that charter school who qualify for STRS membership must be covered under the System and all provisions of Part 13 of the California Education Code (commencing with sect. 22000) apply in the same manner as if that charter school were a public school in the school district that granted the charter.

California Education Code sect. 47611. To facilitate the processing of a charter school’s participation in the System, STRS issued Employer Information Circular. Volume 8, Issue 10, dated January 5, 1993. This circular addressed the relationship a charter school would have under the System if its administration chose to participate.

As an employee benefits plan, STRS has always been considered exempt from the Employee Retirement Income Security Act (ERISA), 29 United States Code sect. 1001 et seq., because STRS is a “governmental plan” as defined under ERISA and the Internal Revenue Code. Furthermore, STRS has always been deemed to have tax exempt status under the Federal Revenue Code.

Prior to the enactment of the Charter Schools Act, these exemptions were never in doubt because the System was established by the California Legislature, maintained by school district that are instrumentalities or political subdivisions of the State of California, and covered only teachers and certain other employees of the various public school districts in California.

After the enactment of the Charter Schools Act, a non-profit public benefit corporation was permitted to operate a charter school by DOE and the county and this school express an interest in participating in STRS. Because that particular charter school did not, on the surface, appear to be a political subdivision nor an agency or instrumentality of the State of California or of any of its political subdivisions, STRS in 1994 sought a ruling opinion from the Internal Revenue Service (IRS) and an advisory opinion from the U.S. Department of Labor (DOL) about whether that charter school’s participation in the System would affect STRS’ exemptions.

The IRS responded by letter dated January 23, 1995, that such participation would not adversely affect the System’s exempt status because the charter school was deemed to be an agency or instrumentality of the State. The rationale provided by the IRS stated, among other things, that the public school district maintained control overthe policies and procedures adopted by the charter school and was responsible for ensuring that the school operated in accordance with its charter.

This control was exercised by the public school district by nominating the charter school, approving the charter school’s governing board, conducting annual financial and programmatic audits, and exercising other controls provided under the Charter Schools Act.

The DOL issued its advisory opinion by letter dated June 16, 1995, stating that the System’s status likewise would not be adversely affected by accepting contributions from a charter school as described above so long as said school’s charter remained in effect. The DOL’s rationale included similar reasons expressed by the IRS. Copies of the aforementioned letters are available from STRS upon request.

At this time the System’s status as a governmental plan exempt from ERISA has not changed. Schools failing under the Charter Schools Act may continue to choose to participate in STRS provided these schools comply with the requirements established under the Act and satisfy the criteria identified by the IRS and DOL.


Employers are required to complete and submit the Charter School Self-Assessment checklist for Participation in STRS, for each Charter School that is a non-profit corporation in their county/district, before submitting employee and employer contribution detail. Mark the applicable statements for your Charter School on the Checklist, and return the original to STRS Reporting Unit, Membership Division.

If additional information or clarification is required, please contact the STRS Membership Reporting Analyst responsible for your county.


Chief Executive Officer

Attachment to AD96-1




Name of Charter School


DOE Operating Number


County Name


District Name


Check if Applicable:

____1. Applicable School District/Authority has granted charter for Charter school.

____2. Approved Charter grants the applicable School District or Authority the power to retain overall control over the Charter School’s policies and procedures while granting Charter School with supervision for day-to-day operations.

____3. Charter School receives average daily attendance state funding.

____4. Revision of Charter School’s charter subject to review and approval of governing board of applicable School District or Authority.

____5. Governing board of applicable School District or Authority has power to revoke Charter School’s charter.

____6. Charter School has elected to participate in STRS pursuant to Education Code Section 47611.

Signature (County/District Superintendent or authorized Deputy)…….Official Title.

Date: ____________