| June 1, 2015

Oklahoma Is Not 49th in Teacher Pay

We’ve all been told that Oklahoma’s teachers are some of the lowest paid in the union.

News reports over the last several months indicated that Oklahoma’s average teacher salary—$44,128, according to estimates from the National Education Association (NEA)—is the lowest in the region and 49th nationally.

But it turns out that’s not the whole story. Would you believe this data set excludes more than $300 million of taxpayer-funded payroll?

To understand and compare salaries, one has to examine the various components of that salary number. Actual teacher “pay” is only part of what is included in compensation.

Consider retirement funding. Both Arkansas and Oklahoma, for example, have defined-benefit plans with large unfunded liabilities. In order to ensure that current teachers have a fully funded plan when they retire, both states make large payments to their retirement systems via employer contributions (which taxpayers ultimately fund, of course).

The difference is that Arkansas chooses to run its full payment to the teacher retirement system through payroll by contributing 14 percent of a given teacher’s salary towards retirement.

Oklahoma uses a different approach. Oklahoma makes a partial contribution through payroll of 9.5 percent of salary, and in addition the State of Oklahoma contributes 5 percent of its revenues from sales taxes, use taxes, corporate income taxes, individual income taxes, and lottery revenues directly to the teachers’ retirement system.

This amounts to $305 million in state taxpayer funds plus another approximately $20 million in federal taxpayer funds.

What this means is that Oklahoma makes a total contribution of 17.2 percent of payroll to the retirement system. The NEA methodology only counts the 9.5 percent because it does not flow through payroll and therefore is not counted as compensation.

In sum, an apples-to-apples comparison would show that Oklahoma teacher salaries are actually $51,869. That would put Oklahoma closer to the middle of the pack nationally.

To its credit, the NEA itself acknowledges that “compensation systems at the district level include more than salaries alone.

Unfortunately, it is difficult to quantify and categorize the employee benefits—both monetary and nonmonetary—associated with public school employment. Add the fact that each state is made up of individual school-district employers and it becomes apparent that salary statistics alone should not be the basis for evaluating state or district compensation” (emphasis in original).

In a recent letter to the editor of The Oklahoman, Ken Murphey of Kingfisher wrote: “I come from a family of teachers, including my parents, two siblings and one of my children. … I don’t think teachers, including teachers in Oklahoma, are underpaid. An average salary that exceeds $44,000 for nine months of work in our low cost-of-living state isn’t too bad.”

Indeed, the NEA acknowledges that “variations in the cost of living may go a long way toward explaining (and, in practice, offsetting) differences in salary levels from one area of the country to another.”
In any case, taxpayers and policymakers need to have a complete, accurate picture before making decisions about teacher compensation.

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