Teacher Benefits Are Eating Away at Salaries

The big news out of the latest is official confirmation that school districts spent less money per student in 2010-11 than they had the year before, the first one-year decline in nearly four decades. It’s worth taking some time to reflect on that fact, but the full report is also a valuable source of data on state and district revenues and expenditures and the entirety of the $600 billion public K-12 education industry. One key takeaway is that employee benefits continue to take on a rising share of district expenditures.

The table below uses 19 years of data (all years that are available online) to show total current expenditures (i.e. it excludes capital costs and debt), expenditures on base salaries and wages, and expenditures on benefits like retirement coverage, health insurance, tuition reimbursements, and unemployment compensation. Although it would be interesting to sort out which of these benefits have increased the most, the data don’t allow us to draw those granular conclusions. But they do tell us that teachers and district employees are forgoing wage increases on behalf of benefit enhancements.

From 2001 to 2011 alone, public education spending increased 49 percent, but, while salaries and wages increased 37 percent, employee benefits increased 88 percent. Twenty years ago, districts spent more than four dollars in wages to every one dollar they spent on benefits. Now that ratio has dropped under three-to-one.  Benefits now eat up more than 20 percent of district budgets, or $2,262 per student, and those numbers are climbing.

This trend coincided roughly with a teacher hiring boom here in the United States, meaning these changes happened despite districts’ employing more teachers, and it’s likely to continue as states and districts continue to feel the pressure from unfunded pension and health care promises, which totaled $1.38 trillion at last count. This is not a good trend. Instead of hiring even more teachers or paying them more money, districts are devoting an increasing share of finite resources to employee benefits. Workers value compensation that shows up in their paychecks more than they do hidden benefits, and districts should make conscious efforts to slow this change and put more money directly into teachers’ pockets.

-Chad Aldeman

This blog entry first appeared on the Quick and the Ed.

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