Increasing Teacher Salaries is a School Funding Issue

In his recent State of the Union address, President Biden made only one proposal to improve K-12 education: “Let’s give public school teachers a raise.” It’s a popular, bipartisan idea in a time when teacher shortages are plaguing public schools in many parts of the country. Senator Bernie Sanders has proposed legislation that would set a minimum teacher salary of $60,000 nationwide. Lawmakers in states including Oklahoma, Georgia, Arizona, and Arkansas have proposed significant teacher pay bills.

But while teachers may open the newspaper and read about a raise, the real test is what they read on their paychecks – and in the fine print. Lawmakers can promise increases, but how they ultimately play out for teachers will depend on the other state and local policies already governing school funding.

School districts spend more than 60 percent of their budgets on teacher compensation. So it matters a lot how a proposed pay raise would interact with the rest of the school finance system: whether it would be state- or federally-funded or an unfunded mandate for school districts; if new salary dollars will flow through the state’s primary formula for school funding or be handed out on the side; and what other rules might require or limit spending on staff. A scan of some current state policy proposals reveals the quirks and pitfalls of different approaches.

Oklahoma: Mandating a specific boost

One Republican proposal making its way through the Oklahoma legislature takes a direct approach to raising pay. This bill, which has passed the House, simply requires that every teacher in a public school see a salary increase of $2,500 next year, assuming they remain in the same district and have not seen reduced hours or duties. The bill appropriates funding to support the increase. If the dollars are sufficient, this bill would truly result in a fully state-funded $2,500 raise. However, all of this—both the requirement and the money—is specific to the 2023-24 school year. By not working the raise through the broader state school finance system, the bill’s authors limited its potential impact. Absent further legislation, teacher salaries would drop again in 2025.

Georgia: Increasing the state teacher salary schedule

One hurdle to states increasing teacher pay is that states don’t pay teachers; school districts do. However, about a quarter of states have salary schedules written into state law that set minimum pay rates for teachers at different levels of training and experience. The pending budget bill in Georgia would increase that state’s salary schedule by $2,000 at all levels. In most states, that wouldn’t actually send districts more money. Typically, the state salary schedule functions only as a lower bound for teacher pay; it doesn’t drive the distribution of any funding. But unusually, Georgia’s school funding formula allocates a significant portion of districts’ state aid based on the salaries their teachers are guaranteed by the state salary schedule. Because of the way this budget bill interacts with that formula, it would actually push more money to school districts. There is a big asterisk on this increase, though. Since the state salary schedule is a minimum, not a mandate, nearly all districts already pay teachers more than the state mandates, and many already exceed the new “increases” in this legislation. Atlanta, for instance, already pays teachers well over $10,000 above required rates. Since the district already meets the new requirements, this budget would send Atlanta $2,000 more per teacher without any binding obligation to actually raise teacher pay. The state’s intentions may be clear, but for many school systems, the money comes with no formal strings attached. In the recent past, districts have generally reacted to similar increases by issuing the raises, but teachers should be warned: There are no guarantees.

Teachers should be warned: There are no guarantees.

Arizona: Requiring Increases in District Pay Scales

Most states don’t have a state salary schedule, so lawmakers must use other tools. One Republican proposal in Arizona would require districts to permanently increase all local salary schedules—whatever their current levels—by $10,000: $5,000 in 2023-24 and an additional $5,000 the next year. To power the increase, the bill includes a fund that would give districts money to cover the raises, with $700 million to be allocated annually. If this bill worked as intended, it would amount to a $10,000 salary increase for all full-time teachers, and not just for a single year. But there’s a catch. The Arizona Constitution caps how much school districts, as a group, may spend each year. Districts have repeatedly bumped up against this limit, and the state legislature had to officially waive it this year to allow districts to avoid mass layoffs. This proposed teacher pay increase may suffer from a failure to consider the bigger school funding picture. The new increases could push districts over the constitutional line, setting up another crisis.

Arkansas: Raises, Incentives, and a Salary Floor

Arkansas Governor Sarah Huckabee Sanders just signed a hefty new education law that includes four important changes to teacher pay. First, the law repeals the existing state salary schedule; there will no longer be state-mandated minimum pay rates for teachers at different levels of training and experience. Second, the law requires that all teachers receive a $2,000 raise next year—a one-time boost. Third, it provides a new “incentive fund” to provide annual bonuses for teachers who fill hard-to-staff roles or whose students see outstanding academic growth. Fourth, and most impactfully, it sets a new salary floor of $50,000 for all teachers going forward. That standard is currently met by only one district in the state, so this really would mean pay increases for many Arkansas educators. Alongside these changes, the law contains a number of other initiatives, including a new voucher program that would allow students to use public funds for private school expenses, which could take a substantial chunk out of the state’s education budget. These initiatives come in a state that has historically funded education at levels well below the national average, raising the question of whether there will be enough money for all of these priorities going forward—and if not, which will win out.

It’s clear that schools around the country are facing serious problems finding and retaining qualified teachers. It’s no wonder that policymakers from across the political spectrum are talking about improving teacher pay, from a Democratic president to deep-red state legislators. But teacher compensation looms so large in district budgets that we can’t address it without considering the rest of the school finance picture. Because the authors of Oklahoma’s bill are planning a side-pot for salary increases instead of a systemic change, they are proposing only a temporary boost. The Georgia budget bill embeds new teacher funding in its core education budget, but because of the way district and state teacher salary schedules interact, it might or might not actually yield raises for all teachers. Arizona’s proposed large salary increase could run afoul of other spending limits in education law. And Arkansas’s new law, which raises teacher pay alongside a host of other education policy changes, raises questions about priorities and sustainability in a low-funded state.

If lawmakers are going to keep their promises to teachers, they can’t just turn on the spigot. They have to understand how the money flows.

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