When school funding rises, where does the money go?

Not to teacher salaries

In his State of the Union address this year, President Biden included an applause line that he wants, “to give public school teachers a raise.” He included a nearly identical line in 2023.

The problem is that he has no serious plan to make this happen. And most state leaders don’t either. I suspect many people, including most policymakers, assume that this is an easy problem to solve. If we spent more money on schools, then teachers would get a corresponding raise. Right?

Except it’s not that simple. As the Reason Foundation showed in a new report last month, teacher salaries have not kept pace with increased spending on public education. The graph below, from the Reason report, shows the national trend. Over the last two decades, per-pupil spending has risen 25% in real, inflation-adjusted terms. Meanwhile, average teacher salaries have actually lost ground to inflation (a decline of 0.6%).

In fact, Reason found that these trends are happening to some degree in all 50 states. Let me say that another way: Over the last two decades, there is not a single state that has prioritized teacher salaries over other education investments.

Here are some of the bigger state examples (all numbers are inflation-adjusted):

• In New York, per-pupil spending rose 70% but teacher salaries rose just 16%

• In Illinois, per-pupil spending rose 55% but teacher salaries fell by 5%

• In Pennsylvania, per-pupil spending rose 49% as salaries fell 4%

So what are schools spending their money on? When I looked at this question last summer, I found that new spending in education is going toward higher staffing levels (more staff overall), a more expensive mix of staff (more full-time staff), and rising benefit costs (especially pensions).

Are these good trades? I’ll leave that question for others to weigh in on. But the evidence from the last two decades suggests that teacher salaries won’t rise in a meaningful way unless state and local policymakers start making it more of a priority.