INDIANAPOLIS — The Next Level Teacher Compensation Commission released its report detailing dozens of recommendations for making teacher pay competitive with surrounding states.
The commission found Hoosier teachers would need an average salary of $60,000 to keep Indiana competitive with surrounding states. In the 2018-2019 school year, the average pay for Indiana teachers was $51,119. That ranked the state 38th for teacher pay.
Teachers in Indiana make less than teachers in all the surrounding states and have a starting salary of $36,498 which is $3,600 below the national average.
State moves in in recent years led to teachers receiving an average raise of $2,215 in the 2019-20 school year. That still had teachers at a significant pay gap compared to surrounding states. Indiana also spends less on each student than all surrounding states.
To increase teacher spending, the commission presented a series of recommendations:
Recommendations to Local School Corporations
Because of different circumstances in each school district, the commission suggests school leaders review the suggestions and implement as many as possible.
Expense Reallocations:
1. Join the state’s pharmacy benefit plan (estimated $25 million in annual savings for school corporations):
- Join the Indiana Aggregate Prescription Purchasing Program (IAPPP)—the state’s pharmacy benefit plan that enables flexible plan design for individual school corporations.
2. Limit working spouses’ participation in district health care plans (estimated $50 million in annual savings for school corporations):
- Join the 54 school corporations that restrict spouses of teachers with access to health insurance through their own employers from joining the district’s healthcare plan, and offer an employee-plus-children healthcare plan option. Repurpose all savings into increasing teacher compensation.
3. Exclude Medicare-eligible retirees from healthcare plans:
- Many school corporations allow retired teachers to participate in school-sponsored health care plans, even if they are eligible for Medicare. This increases healthcare costs and reduces funds available to active teachers.
4. Increase utilization of centralized procurement:
- Take advantage of pre-negotiated cost-savings by making purchases through the K12 Indiana procurement program and help build the Indiana Department of Administration’s strategic sourcing purchasing program by sharing procurement data.
- Utilize existing flexibility to make categorical rather than line-item purchases. Districts can save money by purchasing a variety of goods and services through a single, competitively sourced or negotiated vendor or contract, rather than purchasing different items through separate vendors or contracts.
5. Join a liability risk pool:
- Dozens of school corporations have saved millions of dollars combined through pooled purchasing of property, casualty, and third-party liability insurance.
6. Right-size district teacher and staff ratios where appropriate:
- Strategically reduce employee counts where possible and use savings to raise teacher salaries.
7. Share services with other districts and external organizations:
- Reduce the need for additional employees and overhead expenses by fulfilling service needs through sharing staff with other school corporations, higher education institutions, private organizations, and governmental entities such as libraries, police forces, and health centers.
8. Implement additional best practices:
- Purchase the best value health insurance available and utilize health savings accounts, wellness programs, and tobacco-free discounts. Incentivize higher deductible consumerdriven health plans by providing financial incentives to teachers who select these lower cost plans.
- As many districts have done, privatize or form competitive employment practices for services such as food preparation or custodial maintenance when appropriate.
- Reduce legal costs by increased utilization of arbitration and other alternative dispute resolution processes.
- Divest vacant real estate or unused property to reduce and avoid ownership costs.
- Utilize regional Education Service Centers to save costs on trainings, professional development, large purchases, human resource management systems, and other services.
Additional Revenues:
9. Pass an operating referendum (estimated $80 million in additional annual funding):
- Work with community stakeholders to increase teacher base salaries through a voter-approved operating referendum. If school corporations educating just 10 percent of Indiana’s students pass an operating referendum of the same scale as other referenda currently in place, they would receive an additional $80 million in revenue annually.
10. Increase Medicaid reimbursement claims:
- Many districts forfeit potential funding by not filing for Medicaid reimbursement.
11. Increase private contributions through foundations:
- Most districts do not have an education foundation, which could provide a simple way for private individuals or corporate donors to make tax-advantaged contributions to a school corporation. These districts should set up, and promote, such a foundation.
- School corporations should partner with local community foundations to identify methods for increasing teacher pay at the local level. Tax deductible donations to community foundations can be passed through to designated school corporations.
Policy Changes:
12. Award higher salaries to teachers with high-need students and in teacher shortage subject areas:
- Take advantage of the ability to implement differentiated pay by paying higher salaries to teachers of high-need students and teacher shortage subject areas.
13. Improve flexibility for teachers to control their individual compensation through career ladder systems:
- Implement local teacher career ladder systems as a mechanism for schools to highlight and utilize the instructional and leadership capacity of current school corporation educators to improve teaching and student learning. The career ladder system should allow teacher participants to achieve higher salaries.
Recommendations to State Government
Each of the below recommendations requires legislative action unless otherwise noted.
Expense Reallocations:
14. Pay down pension debt ($50 million in annual savings):
- Once Indiana’s reserves are replenished, the state should codify Governor Holcomb’s plan to use $250 million from the reserves to pay down debt in the pre-1996 teacher retirement fund, resulting in approximately $50 million in annual savings.
- Allow schools to prepay to the Indiana Public Retirement System (INPRS) their required contributions to the ’96 pension fund in exchange for guaranteed interest or a reduction in annual contributions. (administrative)
15. Efficiency funding:
- Use the state’s untapped $5 million School Corporation Efficiency Incentive Grant fund as seed funding to establish an efficiency division within the Indiana Department of Education, to be tasked with helping school corporations save money and setting efficiency standards.
16. Improve procurement practices:
- Expand the K12 Indiana program to include all purchasing contracts through the nine Education Service Centers. Using a dedicated education procurement specialist or team within state government, implement a strategic sourcing program for group purchases based on an analysis of K12 Indiana procurement data. (administrative)
- Require school corporations to purchase goods via joint arrangements unless additional savings can be achieved through independent purchasing.
- Allow school corporations to make purchases through a negotiated bidding process.
- Require multiple bids before purchasing insurance policies, if not part of a trust or cooperative purchasing arrangement.
17. Incentives for expense reallocations:
- Establish a program to financially reward school corporations for developing and implementing expense reallocation measures by providing these districts with additional one-time funding. These funds should be made available to districts that increase the proportion of their funding spent on teacher salaries or achieve certain salary funding levels, with the amount determined in part by the size of the district and the level of increase in teacher compensation. Incremental funds awarded should be required to be used to supplement the compensation of district employees, including teachers. The program could be supported through the use of any excess tuition support funds (the difference between what was appropriated and the amount actually required by the funding formula).
18. Remove barriers to school corporation consolidation:
- Require school boards to evaluate the feasibility of interdistrict consolidation or partnerships upon their superintendents’ announcement of retirement or resignation.
- Exempt districts that consolidate with another district from requirements to sell or lease vacant buildings to charter schools for one dollar.
- Allow consolidating districts to have additional school board members (for a total of up to 11) for a maximum of two years after consolidation.
- Grant consolidating school corporations a two-year deferment period from potential obligations to meet teacher salary requirements (see recommendation nos. 30 and 32).
Additional Revenues:
19. Means-test Indiana’s 529 plan tax credit (estimated $50 million in additional revenue):
- Eliminate Indiana’s 529 plan tax credit—the most generous in the nation—for households earning more than $150,000, and direct the savings to teachers. This would only affect the up-to-$1,000 tax return credit received by high-income earners. All households would still be able to invest in 529 plans and would still receive tax-free investment growth.
20. Expand Medicaid reimbursement:
- Submit a federal Medicaid waiver to allow schools to claim Medicaid reimbursements for medical and special education services provided to students outside of Individualized Education Programs (IEPs). (administrative)
21. Township flexibility:
- Allow townships to financially support school corporations by providing funds for capital projects or other one-time programs.
22. Tax increment financing:
- Increase tax increment financing (TIF) transparency requirements and require that TIF districts pass assessed value through to local government units, including school corporations, in instances when TIF districts have accumulated more funds than necessary to pay for project costs.
23. Allow deficit financing for school corporations with large cash reserves:
- Exempt districts with cash reserves larger than 25 percent of their annual certified budgets from the collective bargaining prohibition on using deficit financing toward teacher salaries.
24. Encourage private donations to schools:
- Allow full state tax deductibility for private donations made directly to schools, and provide a tax credit for donations funding teacher pay programs.
- Create a statewide foundation for receiving private funds that can supplement a state teacher pay program. (administrative)
25. Reduce duration restrictions on referendum tax levies:
- Allow local tax referenda to remain in effect until local citizens or the school board of trustees votes to discontinue them.
26. Establish a teacher pay tax return “check-off”:
- Implement a “High Five for Teachers” tax return check-off, allowing Hoosiers to support increased teacher pay by opting on their tax return filings to donate $5 or more to a state teacher pay fund.
27. Local impact fees:
- Require residential developers in high-growth areas to pay one-time impact fees on a per-unit basis if the population growth would require significant capital investment in school facilities.
28. State revenue increase:
- For Indiana to become a top-three state for teacher pay in the Midwest, it will require hundreds of millions of additional dollars to be invested into teacher compensation. Once it is economically feasible, the General Assembly should consider an increase in revenue through income tax, statewide referendum, per-parcel property fees, or another source.
Policy Changes:
29. Implement a statewide professional pathways compensation model for teachers:
- To ensure substantial additional funding goes to great teachers, Indiana’s Secretary of Education should work with education stakeholders to overhaul the Teacher Appreciation Grant program into a more robust “Professional Pathways” salary program. The state will need to provide substantial additional funding, which the schools should then use to increase teachers’ base salaries above the collectively bargained salary amounts. This additional funding should be made available to teachers in different amounts based on strategically identified categories. Promotions to higher levels could be achieved through different combinations of objective and subjective measures (e.g., evaluations, student achievement gains, National Board certification, etc.).
30. Minimum salary:
- Establish a $40,000 teacher salary minimum by requiring school corporations to pay all full-time teachers at least: $35,000 in 2021-22 and $40,000 by 2022-23. If a district cannot meet this minimum through its tuition support and local funding, it should be required to (1) receive a waiver from the Department of Education by demonstrating that the district cannot achieve the required minimum salary even after utilizing available cost savings measures and (2) work with IDOE’s newly created efficiency division on a plan to close the gap.
31. Teacher Salary Funding Floor:
- Prohibit districts from spending less money on total teacher salaries than they did the prior year (except in certain cases of declining enrollments). When higher-salaried teachers retire, school corporations too often redirect a portion of their compensation costs away from teacher pay; this will help eliminate that practice.
- Increase the total salary “funding floor” for districts that award stipends to a majority of their teachers for two consecutive years, requiring repeated stipend spending to be reassigned into teacher base salaries.
32. Require teacher salaries to constitute at least 45 percent of each district’s tuition support:
- Require the total amount each school corporation spends on teacher salaries to equal at least 45 percent of its tuition support funding amount. If a district cannot achieve this, it must (1) receive a waiver from the Department of Education by demonstrating that the district cannot meet this benchmark even after utilizing available cost savings measures and (2) work with IDOE’s efficiency division on a plan to close the gap.
33. Funding formula changes:
- Increase complexity funding as a percentage of the state’s total tuition support (without reducing other tuition support components) so districts with higher poverty levels can pay teachers more.
- Run a cost analysis on virtual schools and programs to determine the appropriate amount of funding per student they should be receiving. (administrative)
34. Ensure compensation transparency for teachers:
- Require districts to provide individual teachers with a financial breakdown of their total salary, retirement, and health benefits prior to their hiring and any other time at their request.
35. Improve school corporation data accessibility and transparency to the public:
- Create an easily accessible and navigable state website allowing for easy comparisons of school corporation financial, expenditure, and compensation metrics relative to other districts. (administrative)
- Improve data collection around teacher vacancies, school staff and administrator ratios, and administrator pay.
36. Expand efforts to recruit more minority teachers to the profession:
- Increase funding of recruiting efforts to attract minority teachers.
37. Improve non-compensation-related job satisfaction among teachers (administrative):
- Establish a formal initiative to improve teacher recruitment and job satisfaction beyond compensation, including but not limited to promoting teacher residencies and reducing regulations affecting teachers.
The commission did not look at student assessment, school choice or reserve spending as part of its recommendations. To read the full report, click here.
