by Dr. Terry Stoops
Director of the Center for Effective Education, John Locke Foundation
On Monday, the National Education Association (NEA) released their annual Rankings and Estimates report. According to the report, North Carolina’s average teacher salary for 2018, estimated by NEA researchers to be $50,861, ranked 37th out of 50 states and Washington, D.C., an improvement of two spots since last year (based on revised figures).
But the NEA ranking does not include benefits or deferred compensation, account for differences in the experience level of teachers and, most importantly, adjust for cost of living. Using C2ER cost-of-living indices for 2017, I found that North Carolina’s national rank jumps to 29th in the nation due to the state’s relatively low cost of living. Last year, North Carolina’s average adjusted salary was 33rd.
For those who believe rankings are an important measure, the state has come a long way. In 2014, North Carolina ranked 47th in teacher pay due to a slow rebound in tax revenue, which had plummeted during the Great Recession, and the need to address massive overruns in Medicaid, a program that provides funding for health care services for low-income individuals. Between 2010 and 2014, the General Assembly was obligated to direct approximately $1.8 billion in additional taxpayer dollars to address Medicaid shortfalls. It’s easy to forget that the 2010-11 budget featured a Medicaid funding gap topping $600 million or that, two years later, officials at the N.C. Department of Health and Human Services discovered a “forecasting error” that just happened to add $135 million to the existing shortfall for that year.
With Medicaid spending under control, the Republican-controlled legislature had access to sufficient revenue to resume the practice of awarding salary and experience-based or “step” increases, enacting targeted bonus programs, and keeping up with the rising costs of employee benefits. And that is what they did.
According to the nonpartisan Fiscal Research Division of the N.C. General Assembly, it started with an average 7 percent increase in the education budget for the 2014-15 school year. A year later, teachers received an average 2.2 percent increase and a $750 bonus. For 2016-17, lawmakers raised average teacher salaries by 4.7 percent. For the current school year, the average increase was 3.3 percent. After four consecutive years of teacher salary increases, North Carolina’s average teacher salary rose from $44,990 in 2014 to its current level of $51,214. Although likely to change when the legislature convenes in May, the budget for the second year of the biennium includes a 6.2 percent increase in teacher salaries.
Employee benefit expenditures have also increased. Between 2011 and 2018, retirement contributions surged from $4,458 to $8,057 per teacher, while Social Security contributions increased from $3,245 to $3,598. At the same time, health insurance outlays rose from $4,929 to $5,869 per employee and is expected to increase to $6,104 next school year.
Of course, it is difficult to determine the return on those investments in teacher salaries and benefits. There was no significant change in fourth- and eighth-grade reading scores on the National Assessment of Educational Progress (NAEP) between 2013 and 2017. During the same period, North Carolina had a statistically significant decrease in fourth- and eighth-grade mathematics scores, dropping 4 points on both NAEP exams. On the other hand, graduation rates have increased every year, reaching the all-time high of 86.5 percent in 2017. That said, the NAEP scores are a more reliable indicator of student achievement than the graduation rate, given that the latter is more susceptible to mischief.
When lawmakers return to Raleigh on May 16 for this year’s legislative session, I’m confident that the budget adjustments will include an increase in teacher compensation. The size of that increase will depend on revenue figures and decisions about the appropriate level of funding for additional school safety initiatives and other spending priorities.