NJ Education Report

There are many arguments against the way we back-load teacher compensation, i.e., awarding small annual salary increases to newer teachers while granting comparatively large salary increases to long-serving teachers. Years on the job becomes a proxy for classroom effectiveness. Extra graduate credits lead to higher pay, despite the lack of any correlation with student outcomes.  Lock-step annual salary increases, negotiated between school boards and local union leaders and codified in “salary guides,” penalize younger teachers and don’t reflect the relatively new career mobility of  younger professionals.

For example, according to the  2012-2015 contract between the Montgomery Township Public Schools Board of Education and the Montgomery Education Association  (Middlesex County), teachers in their first five years of employment receive annual salary increases of about $1,000 per year. But, starting with the 19th of employment, teachers receive annual raises of about $3,000. (See pages 31-32 of the contract.)

And at Cherry Hill Public Schools (Camden County),  teachers in their first few years of employment receive annual salary increases of only about $200 per year, while teachers with more years under their belts receive annual salary increases of as much as $6,000. (See pages 61-62 of the contract.)

Here’s a different lens to view the way we use longevity as the sole  method for salary increases. A new paper by Marguerite Roza and Jessica Jonovski of Georgetown University analyzes the impact of back-loaded  teacher compensation systems on the state pension obligations in California, Illinois, and New Jersey.

From “How Late-Career Raises Drive Teacher-Pension Debt”:

{O]n average, every dollar awarded to a late-term teacher’s final average salary triggers $10 to $16 of new obligations in present day dollars. When a district gives, say, a $3,000 raise in the final years of teaching, that $3,000 extra salary drives up the pension debt by $30,000 or more.  

These late-career raises thus have enormous consequences for a state’s overall pension debt. States worried about pension debt ought to be scrutinizing the pay raises awarded to nearly retiring teachers. But in fact, most seem wholly unaware of the connection. Instead, many states are focusing on other, often politically sensitive or less effective mechanisms to tackle their pension obligations. Since 2008, 40 states have raised employer contribution rates, and 27 have raised teacher contributions… 

While state policymakers burn through political goodwill to make these tough changes with only a modest impact on liabilities, in many states, school districts continue to operate at cross-purposes. Districts award disproportionately large raises to their most senior teachers, driving up the pension bill, yet states appear unaware of the effects. This paper clarifies the relationship between those late-career raises and pension obligations for states and makes suggestions for how policymakers can work together to better manage their pension debt. 

According to the paper, every $1 awarded in annual late-career salary increases triggers $9.66 in New Jersey’s pension obligations.