Thursday, July 30, 2009

School finances: Trimming teacher pay could reduce layoffs, larger classes

Seattle, WA - School districts faced with large budget gaps could avoid some or all teacher layoffs by rolling back salaries.

While this option may not work for all districts, a new analysis shows that district officials and teachers unions could both serve students and teachers by trimming classroom pay.

"For decades," says University of Washington researcher Dr. Marguerite Roza, "various stakeholder groups have campaigned for both higher teacher wages and reduced class sizes. In this new era of fiscal constraints, it is now clear that the two are at odds: increasing wages means class sizes will swell, and vice versa."

Roza based her analysis on the fact that 93 percent of school districts in the U.S. negotiate and structure teacher pay according to a fixed salary schedule, consisting of annual as well as step increases. Step increases average 3.16 percent per year. The annual increase for the salary schedules she calculated at the average Consumer Price Index (CPI) for the 1997-2007 period at 2.87 percent.

The total for the two, at 6.03 percent, may not make sense this year, says Roza.

The analysis considers a hypothetical district that must reduce its teaching expense budget by 5 percent. It could achieve the cut through layoffs, 143 for every 1,000 teaching staff, and larger class sizes, up by almost 17 percent.

Roza discusses her analysis in a brief paper, "The Tradeoff Between Teacher Wages and Layoffs to Meet Budget Cuts." In a simple chart, she provides five possible decision-options showing how, if salaries are rolled back, fewer teachers get laid off and class sizes increase by fewer students.

In a fifth option, Roza indicates no layoffs would be needed and class sizes would not increase were the district to achieve the 5 percent cut in teaching costs by rolling back salaries 8.16 percent, a move that still would allow the teachers to get their annual salary step increase.

This is the fifth "Rapid Response" brief in the SCHOOLS IN CRISIS: MAKING ENDS MEET series, designed to bring relevant fiscal analyses to policymakers amidst the current economic crisis.