Frozen Assets: Rethinking Teacher Contracts Could Free Billions for School Reform

Reports & Briefs | December 22, 2006
Related Issue(s): Education Finance, Teachers Unions

State and federal accountability systems are putting immense pressure on public schools to improve the performance of low-achieving students. To respond, schools must be able to recruit and retain high-quality teachers, strengthen curricula, and take other steps to provide struggling students with the help they need.

But such efforts are expensive and, as the nation faces the cost of caring for an aging population and other challenges in the years ahead, it is unlikely that education will receive a great deal of new funding. Education leaders, as a result, will increasingly have to scrutinize their existing budgets to find ways to fund their reform initiatives. One potentially valuable source of funds for reform are common provisions in teacher contracts that obligate schools to spend large amounts of money on programs that lack a clear link to student achievement.

Education is a labor-intensive business—an estimated 60 percent to 80 percent of the more than $500 billion per year spent operating the nation’s public schools goes directly to paying and supporting school employees, and teacher contracts play a big role in determining where such resources are deployed. Much of the money is directed to basic salary costs. But many common provisions of teacher contracts require school districts to spend substantial sums to implement policies which research has shown have a weak or inconsistent relationship with student learning.

This report examines eight such provisions:

  •  Increases in teacher salaries based on years of experience;
  •  Increases in teacher salaries based on educational credentials and experiences;
  •  Professional development days;
  •  Number of paid sick and personal days;
  •  Class-size limitations;
  •  Use of teachers’ aides;
  •  Generous health and insurance benefits; and
  •  Generous retirement benefits.

The report estimates the total spending on these provisions in public education, examines studies on the provisions’ effects on student achievement, and explores how these “frozen assets” might be put to different use. Our analysis estimates that an average of 19 percent of every school district’s budget is locked up by these eight provisions. That translates to roughly $77 billion in annual public school spending nationally.

This is not excess money that could be withdrawn from the public education system with no impact on student learning, but rather money that might be spent differently and with greater effect. Some schools and school districts, particularly those that serve disadvantaged students, are likely to require significant increases in total funding in order to improve their performance. But with such monies in short supply it surely makes sense to put existing resources to the best possible use.

Money spent on seniority-based raises and generous health plans for more veteran teachers might be better used for raising minimum salaries to recruit younger educators who meet high teaching standards. Resources spent meeting mandatory class-size targets or hiring a prescribed number of classroom aides might be better used to hire teachers to provide after-school tutoring to low-performing children. Teacher contracts often deny school leaders the flexibility to make such trade-offs in the eight key areas the report examines.

Teachers also pay a price for the rigidity of the provisions, at least indirectly. Restricting resources that could be better used elsewhere diminishes the quality of schools and, as such, the professional lives of teachers. Conversely, teachers as well as students would benefit if resources were used more effectively.

It is important to note that teachers unions are not solely responsible for contract provisions that contribute little to student achievement. Every teacher contract requires two signatures, one from labor and one from management, a fact that is sometimes lost in debates about the impact of unions on public schools.

Another indication that school administrators bear responsibility for many unquestioned expenditures is the fact that many of the policies and practices mandated by collective-bargaining contracts also exist in states and school districts where teachers do not have collective-bargaining rights. For instance, salary schedules in states without collective bargaining compensate teachers for longevity and education levels in much the same way that salary schedules specified by labor contracts do.

The Joyce Foundation provided funding for this report. The findings and conclusions are those of the author alone and do not necessarily represent the opinions of the foundation.