Arizona State Funding Project: Addressing the Teacher Labor Market Challenge Executive Summary Research conducted by Education Resource Strategies
Key findings 1. Student outcomes in Arizona lag behind the rest of the nation. 2. Arizona struggles to attract and retain a strong and effective teacher workforce. 3. Low teacher salaries are a primary challenge leading to this unhealthy teacher labor market. 4. Arizona per pupil funding and state commitment to K-12 funding is low and declining. 5. Addressing the teacher workforce challenge will require new and strategic investments. 6. Arizona districts may have some limited opportunities to shift current spending, but the state will need to generate additional revenue for teacher salary investments. 2
Student outcomes in Arizona lag behind the rest of the nation Key Findings
Arizona students have made some recent gains on the NAEP assessment in reading Source: Funding PreK-12 Education, 110 th Arizona Town Hall Final Report 4
But overall Arizona performance remains at the bottom end of all states on the recent NAEP assessment 240 235 230 2015 NAEP Average Scale Score, 4th Grade Reading 235 Average Scale Score 225 220 215 210 205 207 215 National average = 223 200 195 190 New Mexico Alaska California Nevada Mississippi Arizona Hawaii West Virginia Louisiana Michigan Alabama South Carolina Arkansas Texas Tennessee South Dakota Oregon Kansas Illinois Idaho Georgia Oklahoma Maryland Minnesota Wisconsin Missouri New York Delaware Maine Colorado Iowa Ohio North Dakota Montana Rhode Island Utah North Carolina Washington Pennsylvania Nebraska Indiana Florida Wyoming Kentucky Connecticut New Jersey Virginia Vermont New Hampshire Massachusetts Source: ERS analysis based on NAEP Data Explorer 5
where it has been for over a decade 2015 NAEP Average Scale Score, 4th Grade Reading, Arizona vs. U.S., 2003-2015 240 235 230 Arizona U.S. Average scale score 225 220 215 210 205 209 218 219 207 221 221 221 222 223 215 212 213 210 210 200 195 190 2003 2005 2007 2009 2011 2013 2015 Arizona NAEP 4 th grade reading rank 43/50 47/50 47/50 47/50 45/50 45/50 44/50 Source: ERS analysis based on NAEP Data Explorer; NAEP reading rank based on average scale score 6
Arizona struggles to attract and retain a strong and effective teacher workforce Key Findings
However, as a result of high turnover and attrition, Arizona students are unlikely to have a highly effective teacher three years in a row Research shows that teachers become more effective in producing student achievement gains after the first two years of teaching, with continued increases in gains as experience increases. Student Year 1 Likelihood of student assignment to a novice or uncredentialled teacher in Arizona A B C E G H I D F J Additionally, research shows that teachers without certification are significantly less likely to produce gains in student achievement. Year 2 Year 3 Novice/uncredentialled teacher or long-term sub Source: ERS analysis using data from A coming crisis in teaching? Teacher supply, demand, and shortages in the U.S., Learning Policy Institute; NCES Full-Time Equivalent (FTE) Teachers [State] 2014-15; Finding and Keeping Educators for Arizona s Classrooms, Morrison Institute for Public Policy 2017; Superintendent Annual Financial Report FY17; Does Teacher Preparation Matter? Evidence about Teacher Certification, Teach for America, and Teacher Effectiveness, Linda Darling Hammond, Deborah J. Holtzman, Su Jin Gatlin & Julian Vasquez Heilig, 2005; Does teaching experience increase teacher effectiveness? A review of the research, Learning Policy Institute 2016 8
Arizona teachers leave the teaching profession at the highest rate in the country, nearly 3x higher than the national median 20% 18% 16% 14% 12% 10% Rate of Teacher Attrition (Leavers) 2013 19% 8% 6% National median = 7% 4% 3% 2% 0% Massachusetts Ohio Pennsylvania Arkansas California Illinois Georgia North Carolina Oklahoma Missouri Connecticut Colorado Florida Alabama Iowa Washington Virginia Kansas New York New Jersey Indiana Louisiana Michigan Minnesota Wisconsin South Carolina Kentucky Texas Arizona Source: ERS analysis using data from A coming crisis in teaching? Teacher supply, demand, and shortages in the U.S., Learning Policy Institute 2016. Note: data is only available for 29 states 9
Considering all teachers who leave their schools, AZ has the highest turnover in the U.S., with close to a quarter of teachers leaving their schools annually, nearly double the national median of 14% 30% Rate of Teacher Turnover (Movers & Leavers) 2013 25% 20% 15% 10% 5% 0% 7% National median = 14% Rhode Island Utah West Virginia New Jersey Pennsylvania Illinois New Hampshire Washington Vermont Maine Nebraska Wyoming California Connecticut New York Maryland Oregon South Dakota Michigan Georgia Ohio Idaho Tennessee Iowa Massachusetts Arkansas Alabama Missouri Florida North Dakota Virginia Colorado Kansas Indiana Kentucky Minnesota Wisconsin Alaska South Carolina Delaware Mississippi North Carolina Oklahoma Montana Nevada Hawaii Texas Louisiana New Mexico Arizona 24% Data from the Arizona Department of Education shows that since 2013, 42% of Arizona teachers left within 3 years of being hired. 22% of the teachers hired from 2013-2015 lasted only one year. Source: ERS analysis using data from A coming crisis in teaching? Teacher supply, demand, and shortages in the U.S., Learning Policy Institute 2016; Finding and Keeping Educators for Arizona s Classrooms, Morrison Institute for Public Policy 2017 10
Arizona is in the bottom five of all states for percent of teachers within their first two years in the classroom 35% 30% 25% 20% 29% Percent Novice Teachers, 2013-14 High turnover and attrition means more inexperienced teachers. But research shows that teachers become more effective in producing student achievement gains after the first two years of teaching, with continued increases in gains as experience increases. 15% 15% National median = 12% 10% 5% 6% 0% Florida Colorado Utah Indiana Arizona Wisconsin Hawaii Idaho Nevada New Mexico Texas Maryland Massachusetts Nebraska Wyoming Mississippi Oklahoma Louisiana Kansas North Dakota North Carolina Arkansas Illinois South Dakota Missouri South Carolina Alabama West Virginia Montana Delaware Minnesota New Jersey Alaska Virginia Kentucky Ohio Tennessee Oregon Iowa Michigan Maine California Vermont Connecticut New York Pennsylvania Washington Rhode Island New Hampshire Georgia Source: ERS analysis using data from A coming crisis in teaching? Teacher supply, demand, and shortages in the U.S., Learning Policy Institute 2016; Does teaching experience increase teacher effectiveness? A review of the research, Learning Policy Institute 2016 11
High turnover and attrition in Arizona contributes to the impact of the ongoing (national) teacher shortage 6 Count of Statewide Teacher Shortages in Easiest to Staff Areas (2017-18) 5 4 3 2 1 National median = 1 4 5 Arizona reports more teacher shortages in easy to staff areas than all but four states. In a recent survey, 81% of administrators reported difficulty hiring new teachers. 0 Washington Vermont Utah Texas Pennsylvania Oregon North Carolina New York New Jersey Mississippi Michigan Maine Kansas Iowa Indiana Illinois Georgia Connecticut New Mexico New Hampshire Massachusetts Kentucky Hawaii Florida Delaware Colorado Arkansas Alaska Wisconsin Tennessee Montana Missouri Minnesota California Alabama Wyoming Virginia South Dakota South Carolina Rhode Island Ohio North Dakota Nebraska Maryland West Virginia Arizona Oklahoma Nevada Louisiana Idaho Source: ERS analysis using data from U.S. Department of Education Teacher Shortage Areas Nationwide Listing June 2017; Finding and Keeping Educators for Arizona s Classrooms, Morrison Institute for Public Policy 2017; Easiest to staff areas are defined here as the arts, early childhood, elementary education (general), English language arts, Social studies/humanities; For AK 2016-17 is most recent year of data 12
Low teacher salaries are a primary challenge leading to this unhealthy teacher labor market Key Findings
Just since the 2008 recession, real inflation-adjusted teacher salaries in Arizona have declined 10%, more than in all but 5 states 15% Percent Change in Inflation-Adjusted Teacher Salaries, 2009-10 to 2016-17 10% 10% 5% 0% -5% National median = -6% -10% -15% -20% -16% -10% Mississippi Colorado Oklahoma Illinois West Virginia Arizona Indiana Ohio Virginia Washington Louisiana South Carolina Idaho New Mexico Alabama Georgia Kansas Utah Arkansas Maryland Tennessee Hawaii Wyoming Delaware Kentucky Florida North Carolina Missouri New Jersey Wisconsin Michigan Texas Minnesota South Dakota Maine New York New Hampshire Pennsylvania Nevada Rhode Island Oregon Iowa Massachusetts Montana Connecticut Nebraska Alaska California North Dakota Vermont Source: ERS analysis based on NCES Table 211.60 Estimated average annual salary of teachers in public elementary and secondary schools, by state: Selected years, 1969-70 through 2016-17 14
Reaching the point where Arizona now has the sixth-lowest teacher salary in the U.S. $80,000.00 Average Teacher Salary, 2016-17, Adjusted for Geography $70,000.00 $60,000.00 $50,000.00 $43K $40,000.00 $30,000.00 $20,000.00 $10,000.00 $- $47K National median = $55K Virginia Colorado Mississippi Texas Utah Arizona Oklahoma New Mexico Washington North Carolina Tennessee West Virginia Florida South Dakota Alabama South Carolina Louisiana Missouri Georgia Kansas North Dakota Nevada Idaho Arkansas Indiana Kentucky Wisconsin Delaware Illinois Hawaii Maine Ohio Minnesota New Hampshire Maryland New Jersey Nebraska Montana Wyoming Rhode Island Iowa Pennsylvania Oregon Connecticut Vermont Michigan New York Alaska California Massachusetts $65K In a recent survey, more than 80% of AZ teachers reported increased pay as the top way to attract new teachers, with a similar percentage reporting low pay as the main reason teachers leave the profession Source: ERS analysis based on NCES Table 211.60 Estimated average annual salary of teachers in public elementary and secondary schools, by state: Selected years, 1969-70 through 2015-16; NCES Comparable Wage Index 15
The average teacher salary in Arizona is 19% less than what is required for a family living wage in the state, the third largest gap in the nation 30% 20% 10% 0% -10% -20% -30% -25% -19% Gap From Average Teacher Salary to Family Living Wage, 2017 National median = -3.9% To reach the family living wage in the state, average teacher salaries in AZ would need to increase by 23% Colorado Virginia Arizona South Dakota Hawaii Utah Mississippi Oklahoma New Mexico Idaho Florida Missouri West Virginia Washington Montana Kansas South Carolina Maine North Carolina Alabama Louisiana Arkansas Indiana Tennessee North Dakota Nebraska Texas Kentucky Minnesota Georgia New Hampshire Wisconsin Oregon Nevada Maryland Delaware Vermont Illinois Iowa Wyoming New Jersey Ohio Alaska California Rhode Island Michigan Connecticut New York Pennsylvania Massachusetts 25% Based on the MIT Living Wage calculator, the family living wage is defined here as the minimum income needed to cover the basic needs and all relevant taxes for a family with one working adult, based on local costs. Source: ERS analysis based on NCES Table 211.60 Estimated average annual salary of teachers in public elementary and secondary schools, by state: Selected years, 1969-70 through 2016-17; MIT Living Wage Calculator; Analysis compares average teacher salary for each state in 2016-17 to family living wage 16
Teachers in Arizona with 10 years of experience who head families of four qualify for the most public assistance programs of all states 8 7 The Number of Benefit Programs For Which Teachers With Bachelor s Plus 10 Years Experience Qualify If They Head a Family of Four, 2014 7 6 5 4 3 2 1 0 National median = 5 Louisiana California Delaware Alaska Wyoming Michigan Rhode Island North Carolina New Mexico New Hampshire Nevada New Jersey Illinois Pennsylvania Maryland Oregon Vermont Kentucky Connecticut Ohio Massachusetts Texas Mississippi Tennessee Wisconsin Indiana Virginia West Virginia Idaho Kansas Nebraska Missouri Alabama South Carolina Iowa Georgia Arkansas Utah Washington New York Florida Oklahoma South Dakota Montana Maine Colorado North Dakota Minnesota Arizona If they head four-person households, more than half of teachers in Arizona would qualify for The Emergency Food Assistance Program (TEFAP). Source: ERS analysis based on data from Mid- and Late-Career Teachers Struggle With Paltry Incomes, Center for American Progress (July 2014); NCES Table 211.40 Average base salary for full-time public elementary and secondary school teachers with a master's degree as their highest degree, by years of full-time teaching experience and state: Selected years, 1993-94 through 2011-12; Arizona Department of Economic Security; Arizona Department of Education School District Employee Report. Data not available for Hawaii; Analysis of TEFAP eligibility based on AZ DoE School District Employee Report of statewide distribution of teacher experience and uses average teacher salaries from 2011-12 (adjusted for inflation to 2016-17 dollars) for teachers with Master s degrees and experience ranges of 5 years, 6-10 years, and 11-20 years 17
Arizona teachers cite pay as the main reason for leaving the profession in far greater rates than the national average In a recent survey, more than 80% of Arizona teachers reported low pay as the main reason they leave the profession, with a similar percentage reporting increased pay as the top way to attract new teachers. In contrast, in a national survey, less than 10% of teachers who voluntarily left the profession cited salary or other benefits as their reason for leaving. United States <10% Arizona 80% Source: ERS analysis based on data from Finding and Keeping Educators for Arizona s Classrooms, Morrison Institute for Public Policy 2017 ; NCES Table 5. Percentage distribution of public school teacher leavers who left teaching involuntarily or who rated various reasons as the most important in their decision to leave the position of a K 12 teacher: 2012 13, (based on data from U.S. Department of Education, National Center for Education Statistics, Teacher Follow-up Survey (TFS), "Former Teacher Data File," 2012-13) 18
Arizona per pupil funding and state commitment to K-12 funding is low and declining Key Findings
While Arizona per-pupil funding was once close to the national median, the gap has grown significantly in recent years $14,000 Arizona Per-Pupil Revenue Compared to National Median, Selected Years 1989-90 to 2014-15 National median Arizona Per pupil revenue in 2014-15 dollars $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 1990-91 1994-95 1998-99 2002-03 2006-07 2010-11 2014-15 AZ funding rank 33/50 24/50 44/50 36/50 43/50 44/50 47/50 Source: ERS analysis based on NCES Revenue per pupil by source 1987-88 through 2013-14; NCES Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2014 15 (Fiscal Year 2015) ; NCES Comparable Wage Index, Bureau of Labor Statistics Inflation Index 20
Arizona students are funded at 71% of the national median and only 42% of the highest funded state $25,000 $20,000 $15,000 Total K12 Per-Pupil Revenue, 2014-15, Adjusted for Geography This includes funds raised from Prop 301, passed in 2000 to increase education revenue, which contributed $492M ($453 per pupil) in FY15 and $547M (or $495 per pupil) in FY17. National median = $12,651 $21,589 $10,000 $8,094 $8,995 $5,000 $0 Utah North Carolina Idaho Arizona Nevada Texas Tennessee Oklahoma Florida California Mississippi Georgia Alabama Virginia Colorado Kentucky Washington New Mexico Arkansas Illinois South Carolina Indiana Missouri South Dakota Louisiana Oregon Wisconsin Michigan Kansas West Virginia Iowa Minnesota Ohio Maryland Delaware Hawaii Montana Nebraska North Dakota Massachusetts Rhode Island Pennsylvania New Hampshire Maine New Jersey Connecticut New York Alaska Wyoming Vermont Source: ERS analysis based on NCES Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2014 15 (Fiscal Year 2015); NCES Comparable Wage Index; Funding PreK-12 Education, 110 th Arizona Town Hall Final Report; Arizona Joint Legislative Budget Committee Non-Capital Funding Report August 2017 21
Inflation-adjusted per-pupil funding in Arizona has actually declined 12% in recent years, more so than all but one state 20% 15% 10% 5% Percent Change in Real Inflation-Adjusted Dollar Per Pupil Revenue, 2009-10 to 2014-15 15% 0% -5% National median = -2% -10% -15% -20% -25% -19% -12% Indiana Arizona Idaho Nevada Florida Illinois Wisconsin Arkansas North Carolina Georgia South Dakota Utah Nebraska Mississippi Colorado Alabama Virginia West Virginia Texas Hawaii New Mexico Oklahoma Louisiana Maryland Wyoming Kentucky Michigan Missouri Tennessee Maine Kansas South Carolina Montana Delaware New Jersey Ohio Rhode Island Washington Massachusetts New York Minnesota North Dakota Vermont Pennsylvania Iowa New Hampshire California Oregon Connecticut Alaska Source: ERS analysis using data from NCES Revenue per pupil by source 1987-88 through 2013-14; NCES Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2014 15 (Fiscal Year 2015); Bureau of Labor Statistics 22
Prop 123 and Results-Based Funding together result in an additional $330M annually, or $298 per pupil, which still leaves Arizona investing less per pupil than most states $25,000 Total K12 Per Pupil Revenue, 2014-15, Adjusted for Geography $20,000 $15,000 $10,000 $5,000 $0 Additional per-pupil revenue generated from Prop 123 and Results-Based Funding National median = $12,651 Utah North Carolina Idaho Nevada Arizona Texas Tennessee Oklahoma Florida California Mississippi Georgia Alabama Virginia Colorado Kentucky Washington New Mexico Arkansas Illinois South Carolina Indiana Missouri South Dakota Louisiana Oregon Wisconsin Michigan Kansas West Virginia Iowa Minnesota Ohio Maryland Delaware Hawaii Montana Nebraska North Dakota Massachusetts Rhode Island Pennsylvania New Hampshire Maine New Jersey Connecticut New York Alaska Wyoming Vermont While some of this additional revenue has been targeted for teacher compensation, this amount isn t enough to address the labor market challenge. Source: ERS analysis based on NCES Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2014 15 (Fiscal Year 2015); NCES Comparable Wage Index; Funding PreK-12 Education, 110 th Arizona Town Hall Final Report; Arizona Joint Legislative Budget Committee Non-Capital Funding Report August 2017.; Arizona Department of Education FY 2018 Results-Based Funding Allocation File; Uses estimated FY17 student enrollment from JLBC report of 1,104,753 23
State effort for K-12 in Arizona is low, even when compared with a group of conservative states with similar wealth 5% State and Local K-12 Revenue as Percent of State GDP, 2014-15 4% 3% National median = 3.3% 2% 1% 2.7% 2.9% 3.3% 3.4% 3.5% 4.0% 0% Florida Arizona Alabama Kentucky Montana South Carolina Per-pupil revenue 2014-15 (adjusted for geography) $9,857 $8,995 $10,293 $11,373 $14,497 $12,207 K-12 revenue per taxpayer 2014-15 $2,451 $2,975 $3,214 $3,454 $3,181 $3,704 Per capita GDP 2016 $39,543 $38,590 $37,261 $37,261 $38,985 $37,063 Change in per capita GDP 2009-2016 2.1% 2.0% 5.7% 7.5% 8.4% 6.1% Source: ERS analysis based on data from NCES Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2014 15 (Fiscal Year 2015); NCES Comparable Wage Index; Internal Revenue Service; Bureau of Economic Analysis, Gallup Ideology by State 2016 24
Every state that is poorer, invests more and spends more of their GDP on K-12 education 5% State and Local K-12 Revenue as Percent of State GDP, 2014-15 4% National median = 3.3% 3% 2% 1% 2.9% 3.1% 3.3% 3.6% 3.9% 4.0% 4.3% 0% Arizona Idaho Alabama Mississippi Arkansas South Carolina West Virginia Per-pupil revenue 2014-15 (adjusted for geography) $8,995 $8,870 $10,293 $10,036 $12,015 $12,207 $13,531 K-12 revenue per taxpayer 2014-15 $2,975 $2,825 $3,214 $3,116 $3,803 $3,704 $4,050 Per capita GDP 2016 $38,590 $35,466 $37,261 $31,881 $36,368 $37,063 $36,315 Change in per capita GDP 2009-2016 2.0% 4.0% 5.7% 1.4% 7.9% 6.1% 4.9% Source: ERS analysis based on data from NCES Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2014 15 (Fiscal Year 2015); NCES Comparable Wage Index; Internal Revenue Service; Bureau of Economic Analysis, Gallup Ideology by State 2016 25
State commitment to education funding in Arizona has lagged the nation since 1990 and is at one of the lowest points of the last three decades State and Local K-12 Revenue as Percent of State GDP, 1986-87 to 2014-15 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 3.2% 2.7% 3.8% National median Arizona 3.6% 3.5% 3.6% 3.5% 3.4% 3.3% 3.4% 3.3% 3.1% 3.2% 2.9% 2.9% 0.0% 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Source: ERS analysis using data from NCES Revenue per pupil by source 1987-88 through 2013-14; NCES Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2014 15 (Fiscal Year 2015); Bureau of Economic Analysis 26
Addressing the teacher workforce challenge will require new and strategic investments Key Findings
Currently, it takes the average Arizona teacher more than 25 years just to earn a family living wage Calculated Average Teacher Salary by Years of Experience, 2016-17 $80,000 $60,000 $57.1K $40,000 $35.5K $20,000 Family living wage 2017: $58.2K National median teacher salary 2017: $54.7K Calculated AZ teacher salary trajectory 2017 Gov. Ducey proposed 20% salary increase 2018 $0 1-2 3-4 5-6 7-8 9-10 11-12 13-14 15-16 17-18 Teacher Years of Experience 19-20 21-22 23-24 25-26 27-28 29-30 Maximum salary Source: ERS analysis based on NCES Schools and Staffing Survey Public Teachers and District Data Files 2011-12; Arizona Department of Education Teacher Experience Report FY17; Superintendent Annual Financial Report FY17; Expect More Arizona Progress Meter; Bureau of Labor Statistics Inflation Index; MIT Living Wage Calculator; US Census Bureau; Pew Research Center. This analysis uses average salaries based on teacher experience from 2011-12, adjusted for inflation to 2016-17 dollars. Due to data availability, salary data beyond year 14 is estimated based on the reported 15+ year average and reported maximum salary. 28
Enabling teachers to reach the family living wage by mid-career would cost about $900M-$1.1B annually $80,000 $60,000 Calculated Average Teacher Salary by Years of Experience, 2016-17 $77.5K Improving compensation should lead to improved retention, which will add additional costs over time as more teachers stay in the system. $48.2K $57.1K $40,000 $20,000 $35.5K Family living wage 2017: $58.2K National median teacher salary 2017: $54.7K Calculated AZ teacher salary trajectory 2017 Proposed increase to reach family living wage in 11-12 years Gov. Ducey proposed 20% salary increase 2018 $0 1-2 3-4 5-6 7-8 9-10 11-12 13-14 15-16 17-18 Teacher Years of Experience 19-20 21-22 23-24 25-26 27-28 29-30 Maximum salary Source: ERS analysis based on NCES Schools and Staffing Survey Public Teachers and District Data Files 2011-12; Arizona Department of Education Teacher Experience Report FY17; Superintendent Annual Financial Report FY17; Expect More Arizona Progress Meter; Bureau of Labor Statistics Inflation Index; MIT Living Wage Calculator; US Census Bureau; Pew Research Center. This analysis uses average salaries based on teacher experience from 2011-12, adjusted for inflation to 2016-17 dollars. Due to data availability, salary data beyond year 14 is estimated based on the reported 15+ year average and reported maximum salary. Total investment based on 2016-17 teacher FTE for both district and charter; includes estimated teacher salary investment of ~$745M-$893M and benefits investment of ~$149M-$179M (assumes 20% benefits rate excluding fixed costs of health, dental, and life insurance, based on data from Arizona School Boards Association) 29
But Arizona cannot afford to funnel so many resources into an outdated system that does not attract and retain the best teachers or incentivize teachers to improve and contribute Goals and Principles of a Strategic Teacher Compensation System Source: Misfit Structures & Lost Opportunities, Education Resource Strategies (2013) 30
Arizona districts could use that $900M-$1.1B investment to frontload pay raises to help teachers reach the family living wage sooner and minimize the high rates of attrition for new teachers $80,000 Calculated Average Teacher Salary by Years of Experience, 2016-17 $77.5K $60,000 $63.9K $57.1K $48.2K $40,000 $40.8K $20,000 $35.5K Family living wage 2017: $58.2K National median teacher salary 2017: $54.7K Calculated AZ teacher salary trajectory 2017 Proposed increase to reach family living wage in 11-12 years Proposed increase to reach family living wage in 5-6 years $0 1-2 3-4 5-6 7-8 9-10 11-12 13-14 15-16 17-18 Teacher Years of Experience 19-20 21-22 23-24 25-26 27-28 29-30 Maximum salary Source: ERS analysis based on NCES Schools and Staffing Survey, Public Teachers and District Data Files 2011-12; Arizona Department of Education Teacher Experience Report FY17; Superintendent Annual Financial Report FY17; Expect More Arizona Progress Meter; Bureau of Labor Statistics Inflation Index; MIT Living Wage Calculator; US Census Bureau; Pew Research Center. This analysis uses average salaries based on teacher experience from 2011-12, adjusted for inflation to 2016-17 dollars. Due to data availability, salary data beyond year 14 is estimated based on the reported 15+ year average and reported maximum salary. Total investment based on 2016-17 teacher FTE for both district and charter; includes estimated teacher salary investment of ~$745M-$893M and benefits investment of ~$149M-$179M (assumes 20% benefits rate excluding fixed costs of health, dental, and life insurance, based on data from Arizona School Boards Association) 31
Alternately, districts could use that $900M-$1.1B investment to differentiate salary based on contribution to improve recruitment and retention of the most effective teachers $80,000 Calculated Average Teacher Salary by Years of Experience, 2016-17 $71.0K $60,000 $63.9K $59.6K $57.1K $42.3K $40.8K $40,000$39.8K $36.4K $35.5K $20,000 $46.0K Family living wage 2017: $58.2K National median teacher salary 2017: $54.7K Calculated AZ teacher salary trajectory 2017 Proposed increase for highly effective teachers Proposed increase for effective teachers Proposed increase for minimally effective teachers Proposed increase for ineffective teachers $0 1-2 3-4 5-6 7-8 9-10 11-12 13-14 15-16 17-18 19-20 Teacher Years of Experience 21-22 23-24 25-26 27-28 29-30 Maximum salary Source: ERS analysis based on NCES Schools and Staffing Survey, Public Teachers and District Data Files 2011-12; Arizona Department of Education Teacher Experience Report FY17; Superintendent Annual Financial Report FY17; Expect More Arizona Progress Meter; Education Sector Inside IMPACT: D.C. s Model Teacher Evaluation System; Bureau of Labor Statistics Inflation Index; MIT Living Wage Calculator; US Census Bureau; Pew Research Center. This analysis uses average salaries based on teacher experience from 2011-12, adjusted for inflation to 2016-17 dollars. Due to data availability, salary data beyond year 14 is estimated based on the reported 15+ year average and reported maximum salary. Due to lack of AZ effectiveness data, analysis uses effectiveness breakdown from DCPS (selected because of history of strong teacher evaluation system and aligned compensation model) of 2% ineffective, 16% minimally effective, 67% effective, and 15% highly effective. Total investment based on 2016-17 teacher FTE for both district and charter; includes estimated teacher salary investment of ~$745M-$893M and benefits investment of ~$149M-$179M (assumes 20% benefits rate excluding fixed costs of health, dental, and life insurance, based on data from Arizona School Boards Association) 32
Arizona districts may have some limited opportunities to shift current spending, but the state will need to generate additional revenue for teacher salary investments Key Findings
To effectively improve the teacher workforce, Arizona would need to invest about $900M-$1.1B annually, or ~$970 per pupil Estimated Average Per-Pupil Revenue Required for Teacher Salary Investment Federal revenue $10,000 $9,000 $8,000 $7,000 $6,000 $1,215 $970 This equals a total increase of 11.6% per pupil on average, and an 13.6% increase in state/local funds only. State and local $5,000 revenue $4,000 $8,361 $8,361 $7,145 $3,000 $9,331 $2,000 $1,000 $- 2016-17 average per-pupil revenue (non-capital) Additional average per-pupil investment for teacher salary increase Source: ERS analysis of data from Arizona Joint Legislative Budget Committee Non-Capital Funding Report 2017; ERS analysis of teacher salary investments. Uses estimated FY17 student enrollment from JLBC report of 1,104,753; Analysis assumes high end of teacher compensation investment, $1.1B 34
Compared to the lowest-spend conservative states, Arizona districts spend slightly more on support services Per-Pupil Expenditure by Use, 2013-14, Adjusted for Geography $12,000 $10,000 $484 $8,000 $6,000 $4,000 $2,000 $3,932 $6,319 $458 $2,907 $5,031 $394 $3,026 $4,037 Non- Instruction Support Services Instruction $0 United States median Median of lowest spend conservative states Arizona Source: ERS analysis of data from NCES Instruction Expenditures per pupil [State Finance] 2013-14, Support Services Expenditures per pupil [State Finance] 2013-14, Non- Instruction Expenditures per pupil [State Finance] 2013-14; NCES Comparable Wage Index; Gallup Ideology by State 2016; Lowest spend conservative states are (excluding AZ): CO, FL, GA, ID, MS, NC, NV, OK, TN, TX, UT, VA 35
There may be an opportunity to reallocate some resources from student support and O&M to help fund this teacher salary investment Compared to the median of the other lowest spend conservative states: Within student support services, Arizona spends an additional 0.8% per pupil on purchased services and 0.8% per pupil for compensation (due to low student support staffing ratios) Within operations and maintenance, Arizona spends an additional 2.0% per pupil on purchased services and 0.4% per pupil on supplies Source: ERS analysis of data from NCES Student Support Services Subtotal [State Finance] 2013-14, Instruction Support Services Subtotal [State Finance] 2013-14, General Administration - Subtotal [State Finance] 2013-14, School Administration - Subtotal [State Finance] 2013-14, Operations & Maintenance - Subtotal [State Finance] 2013-14, Student Transportation - Subtotal [State Finance] 2013-14, Other Support Services - Subtotal (STE28) [State Finance] 2013-14 ; Fall Membership (MEMBR) [State Finance] 2013-14; Gallup Ideology by State 2016; NCES Comparable Wage Index; Lowest spend conservative states are (excluding AZ): CO, FL, GA, ID, MS, NC, NV, OK, TN, TX, UT, VA 36
Together, these savings opportunities are not enough to meet the teacher investment revenue gap $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 Estimated Average Per-Pupil Revenue Required for Teacher Salary Investment $9,331 $8,997 $970 $636 $334 Remaining gap to fund teacher salary investment Potential savings opportunities from existing resource reallocation $4,000 $8,361 $8,361 $8,026 $3,000 $2,000 $1,000 $0 Average per-pupil revenue 2016-17 (non-capital) Additional average per-pupil investment for teacher salary increase Average per-pupil revenue accounting for potential savings and reinvestments Source: ERS analysis based on data from NCES Student Support Services Subtotal [State Finance] 2013-14, Instruction Support Services Subtotal [State Finance] 2013-14, General Administration - Subtotal [State Finance] 2013-14, School Administration - Subtotal [State Finance] 2013-14, Operations & Maintenance - Subtotal [State Finance] 2013-14, Student Transportation - Subtotal [State Finance] 2013-14, Other Support Services - Subtotal (STE28) [State Finance] 2013-14 ; Fall Membership (MEMBR) [State Finance] 2013-14; NCES Comparable Wage Index; Arizona Joint Legislative Budget Committee Non-Capital Funding Report 2017; ERS analysis of teacher salary investments; $334 per pupil savings based on previous savings calculations totaling 4% of total expenditure in 2013-14, and applying that 4% savings to a per pupil revenue of $8,361 in 2016-17; Analysis assumes high end of teacher compensation investment, $1.1B 37
After reallocating half of these resources, Arizona could fund the remaining teacher salary investment by increasing state effort for education to 3.2% $9,000,000,000 $8,000,000,000 $7,000,000,000 $6,000,000,000 $5,000,000,000 AZ Total State and Local Revenue 2016-17 (Non-Capital) and Projected, Based on Effort State and local revenue Savings from reallocation shifts Additional revenue required $1.1B $887M $703M $184M $369M $4,000,000,000 $7.9B $7.9B $7.7B $7.5B $3,000,000,000 $2,000,000,000 $1,000,000,000 $0 Current AZ effort (2.9%) Raising effort to generate increased teacher compensation investment (3.3%) Raising effort to generate increased teacher compensation investment after making 50% of reallocation shifts (3.2%) Raising effort to generate increased teacher compensation investment after making 100% of reallocation shifts (3.1%) Source: ERS analysis based on Arizona Joint Legislative Budget Committee Non-Capital Funding Report 2017; Bureau of Economic Analysis; ERS analysis of teacher salary investments; Savings estimates based on previous per pupil calculations totaling 4% of total expenditure in 2013-14, and applying that 4% savings to a per pupil revenue of $8,361 in 2016-17; total estimated saving shown here based on applying those per pupil savings to estimated FY17 student enrollment from JLBC report of 1,104,753; additional revenue required based on estimate of $1.1B investment for increasing teacher salaries 38