- House and Senate budget proposals stoke the endless debate over teacher pay
- Current discussion over teacher pay continues to focus on salary and largely ignore benefits.
- The value of teacher benefits continues to rise; as does the percentage value of teacher benefits relative to average teacher salary
Teacher pay is once again in the news, this time as the House and Senate roll out their proposals for teacher pay for the upcoming year. While this discussion oftentimes seems endless, one aspect that seldom finds its way into the conversation is employee benefits.
In North Carolina, basic benefits for teachers usually consist of hospitalization ( i.e. enrollment in the State Health Plan), retirement benefits and social security. Currently, the state pays $6,104 for hospitalization benefits for each teacher. Teachers also receive retirement benefits, in which the state pays 18.86 percent of a teacher’s salary and sets it aside for retirement. In addition, the state will also pay 7.65 percent of a teacher’s salary for social security.
Under the proposed House and Senate budget plans, the figures for retirement and hospitalization would increase. The House budget plan increases hospitalization costs to $6,262 and raises retirement benefits to 19.66 percent of total salary. The Senate budget goes even further, raising the costs of hospitalization to $6,349 and retirement benefits to 19.75 percent of total salary. Both proposals hold the percentage of employee salary devoted to the cost of social security constant at 7.65 percent.
So, what impact might these proposals have on the direction of benefits?
While we don’t know the exact figures that will be included in the final budget, we can develop estimates.
Assuming a spirit of compromise prevails, and the two chambers split the differences for hospitalization and retirement, a final budget would increase hospitalization benefits to $6,305 per employee. Likewise, the percentage paid for retirement benefits would increase to 19.70 percent of total salaries.
We don’t know what the average teacher salary will be next year. However, if we make some assumptions, we can arrive at ballpark figure.
Again, if the chambers split the difference in pay raises, teachers would receive an average 4.1 percent pay increase. For the sake of the analysis, let’s say there is no increase in all the other categories used to develop average teacher salary (i.e., local salary supplement, performance bonuses, annual leave etc. etc.). A 4.1 percent raise combined with all other pay categories being held constant would produce an average teacher salary of $55,960.
Plugging in the numbers for hospitalization, retirement and social security yields $21,610 in total teacher benefits for 2020, or approximately 38.6 percent of the average teacher salary.
Contrast that figure to 10 years earlier in 2010 when the average teacher salary was $45,850 and the total value of benefits was only $12,210 or 26.0 percent of the average teacher salary.
If you do the simple math you can see that as recently as 2015, the value of teacher benefits was $15,336, or 34.0 percent of average teacher salary. So, the last 10 years marks a steady increase in the value of benefits.
According to the Statistical Profile of Public Schools of North Carolina, the cost to the state for benefits for all school employees has increased about $911 million over the last decade (2009-2018 -the latest ten year period where data is available) even considering that over the same period North Carolina has approximately 4,100 fewer state-funded public-school teachers and almost 11,400 fewer state-funded public-school employees. [i]
Isn’t it time we start including the cost and value of benefits in discussions over teacher pay?
[i] Information from Statistical Profile of Public Schools of North Carolina. Available online at: http://apps.schools.nc.gov/ords/f?p=145:32:::NO:::