What's often missing in discussion of teacher pay

by Bob Luebke, Civitas Institute, December 5, 2017.

• Discussions over teacher pay often overlook an important factor
• Rising benefit costs have been crowding out funds for salary increases
• Total compensation has been rising faster than just salary figures

The debate over teacher pay in North Carolina seems endless. It’s important to realize that none of these discussions occur in a vacuum.  Like all expenditures, the dollars available to pay teachers are dependent on such things as the state of the economy, the tax burden and other competing priorities for funding. One of those priorities frequently left out of these discussions is the rising cost of employee benefits.

Employee benefits for North Carolina teachers include health insurance, retirement and social security. Table I shows changes in the rate or cost of employee benefits from 2010 -2017.  As you can see, the percentage allotted for Social Security benefits remained unchanged (7.65 percent of an employee’s salary) over that period. The cost of health insurance and retirement benefits however, both experienced significant increases.  The cost the state paid for individual employee health insurance increased from $4,527 (2010) to $5,754 (2017), an increase of 27 percent over seven years.  However, the percentage charged for retirement benefits saw even larger increases, expanding from 8.75 percent in 2010 to 16.54 percent in 2017, an increase of 89 percent (All data from Highlights of the North Carolina Public School Budget for appropriate years and Statistical Profile Public Schools of North Carolina, financial tables.)

These changes translate into real numbers for employees. In 2010 the value of employee benefits totaled $11,550. By 2017, the same total had surged to $16,903, an increase of 46 percent.  With an average teacher salary of $45,970 and $16,903 in benefits, total average compensation for North Carolina teachers is $62,873. It is also important to note this total does not include local pay supplements (in 2017 average local supplement was $4,200) or other forms of pay such as longevity pay, or mentor pay. If you only include the average local pay supplement, total average teacher compensation in 2017 totals more than $67,000.

According to data from the North Carolina Department of Public Instruction, in 2010 North Carolina spent approximately $2 billion on employee benefits. By 2017 that figure had increased to about $2.8 billion. How did that change impact per student expenditures? In 2010, North Carolina spent $1,467 on employee benefit per student. By 2017, the figure had increased to almost $2,000 ($1,970) per student. The percentage of all expenditures dedicated to employee benefits rose from 17.4 percent to 21.5 percent over the time period.

The rising cost of employee benefits is an important factor in determining how teachers are paid. We’d do well to do all we can to contain their costs and include employee benefits in future discussions on teacher pay.

https://www.nccivitas.org/2017/teacher-pay-whats-often-missing-discussion/