Improving Educator Workforce Funding Models: Compensation

Background

Teachers across the United States remain chronically underpaid. Starting salaries are low, raises are often below the rate of inflation, and disparities across states fail to match the profession’s societal value.

When accounting for inflation, on average, teachers today are earning 5% less than they did a decade ago.¹

Low salaries undermine teacher morale and contribute to high turnover. Compensation models strategically improve satisfaction and retention. Even modest pay increases significantly reduce turnover, especially among early career teachers, and can attract stronger candidates to high-needs schools.² Strategic salary schedules and subject-specific incentives help align teacher supply with district workforce needs, as opposed to performance-based pay, which shows mixed results. Adjusted salary schedules and additional pay have been shown to be effective—especially for teachers in hard-to-staff areas.³

Compensation models have challenges: budget constraints, union negotiations, and sustaining funding over time. However, effective compensation reforms address these challenges. Pay increases are paired with supportive policies that lead to long-term retention and workforce stability.

Recommendations

The following actions can help states and districts address the educator shortage.

Raise base salaries for teachers. Even a 1% increase in teacher pay can reduce teacher turnover, particularly among early career teachers.⁴ Increased teacher pay is also associated with improved student outcomes.⁵

Adjust teacher salary schedules. Flattening pay schedules with additional opportunities for progression can act as an incentive to attract teachers from outside the district and help retain them.⁶

Provide bonuses or increased pay for in-demand credentials (e.g., National Board Certification), skills (e.g., bilingualism), or hard-to-staff content areas (e.g., math, science, or special education). Student loan forgiveness and bonuses for teachers in hard-to-staff areas have been shown to reduce teacher attrition in these areas.⁷

Compensate teachers who take on leadership roles, such as mentors, coaches, or lead teachers. This may be in alignment with strategic staffing approaches.

Link teacher pay progression and/or bonuses to performance evaluations, which might draw on combinations of classroom observation, student growth, and contribution to school outcomes.

Offer paid clinical experiences through formal training programs, such as apprenticeships or residencies, to reduce the financial burden of tuition and lost wages.

Explore local and recurring revenue strategies—such as tax levies, education bonds, and indexing teacher pay to local revenue growth—as a means to raise and stabilize teachers’ base salaries.

Sustain state-level teacher compensation systems by combining recurring formula-based funding with career advancement opportunities.

Resources

References

¹ Educator Pay Data 2025: Teacher Pay & Per Student Spending (National Educator Association)

² Larger pay increases and adequate benefits could improve teacher retention: Findings from the 2024 State of the American Teacher Survey (Elizabeth D. Steiner, et al.)

³ The Trouble with Teacher Turnover: How Teacher Attrition Affects Students and Schools (Desiree Carver-Thomas, et al.)

⁴ Does it pay to pay teachers more? Evidence from Texas (Matthew D. Hendricks)

⁵ Teachers’ Base Salary and Districts’ Academic Performance: Evidence From National Data (Emma García)

⁶ The Impact of Incentives to Recruit and Retain Teachers in “Hard-to-Staff Subjects” (Li Feng, et al.)

⁷ The Impact of a $10,000 Bonus on Special Education Teacher Shortages in Hawai‘i (Roddy Theobald, et al.)