Where Has All the Money Gone?
Teachers’ Share of K-12 Education Budget Declining
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October 2004In recent years, much of the public debate about Mississippi’s education budget has been focused on the need to pay teachers more. But when the amount of money spent on K-12 public education in school year 2002-2003 is compared to the amount spent ten years earlier, more than three-fourths of the additional money was spent on items other than teacher compensation.
As legislators grapple over the most appropriate ways to fund teacher salary increases to which they have committed through school year 2005-2006, they should consider whether such raises could be funded in significant measure by money already available to school districts.
Although recent news reports quote school district officials as saying they will be forced to reduce the number of teachers they employ, the spending patterns revealed in this report raise the question of whether priorities could or should be adjusted so that classroom teachers would not have to be laid off.
From the 1992-93 school year to the 2002-03 school year, “Total Current Expenditures,” which is similar to a current operating budget, increased by $843 million, after adjusting for inflation. Of that amount, $193 million - only 23% - was spent on increasing teacher compensation, including salaries and most benefits*. The remaining $650 million, or 77%, was spent on other “current expenditures.”
[see chart 1] Click here for data.
The $843 million increase mentioned above does not include a $204 million increase in capital costs, such as construction, interest payments and debt repayment. That $204 million
represents a 109% jump in those costs, which are called “Non-Revenue Transactions” in the Department of Education’s accounting system. When those transactions are considered, the
total increase in spending is $1.05 billion, after adjusting for inflation, from the 1992-93 to 2002-03 school years. When compared to that grand total, the $193 million increase in teacher
compensation amounted to 18% of the total increase in spending, other current expenditures took 62%, and “non-revenue transactions” consumed 20%.
Even those amounts don’t represent all the money spent on K-12 education in the state. State-level administrative expenses are not included in those totals, nor are funds from sixteenth section and other trust funds.
Teachers’ Share of 2002-2003 Spending
The discussion in this paper has thus far focused on how the increases in funding have been applied. We now turn our attention to the total 2002-03 school year budget, now that those increases are in place. Total Current Expenditures, including local, state, and federal funds in the 2002-03 school year amounted to $2.95 billion.
Of that total, the amount spent on teacher salaries was $1.02 billion, or 35%. Benefits added another quarter-billion dollars, making the total spent on teacher compensation about $1.28 billion, or 43% of total current expenditures. Ten years earlier, salaries amounted to 41% of the operating budget, and total compensation added up to 51%.
Chart 2 shows a historical perspective of teacher salaries as a share of the operating budget. [Note that this chart only includes salaries, because health insurance benefits in earlier years were
paid for, if at all, by local districts, and those amounts were not readily available.] Click here for data.
Even when looking only at the “instruction” category of spending (which includes some items most people would not think of as instruction), teacher compensation represents a declining percentage. Ten years ago, teacher compensation represented 70% of “instruction” cost; in 2002-03, it represented only 59%.
So where has all the money gone?
Table 1 of this report shows K-12 spending as reported by the Mississippi Department of Education. Many items there are worth noting, but a few are especially interesting. Spending on principals’ offices (classified by the Department of Education as “instruction” cost), has increased by $52.5 million, or 49%, after adjusting for inflation, over the past ten years. There are now 54% more assistant principals than there were 10 years ago. There are also 73% more instruction
program “supervisors,” netting a total of 62% more people with supervision responsibilities, even though there are only 4% more classroom teachers for them to supervise. (A comparison chart showing the number, average salaries, and total salary cost for all “instructional” personnel is available by clicking here.)Local superintendents’ and school boards’ expenses have grown by $24 million, or 34%. Salaries of the state’s 149 superintendents range widely across the state, but the average salary for superintendents in “county” school districts in 2002-03 was $77,528, and for “separate” school districts, $89,960.
These increases in administrative costs and personnel have occurred despite the fact that there were 12,000, or 2.5%, fewer students than there were 10 years earlier.
Other large dollar-amount increases are $48 million (54%) in “Staff Development and Library/Media”; $116 million (65%) in “Operation and Maintenance of Plant”; $90 million (111%) in “Facility Acquisition and Construction”; $86 million (130%) to redeem bonds or pay back borrowed money; and $29 million on interest. In almost all categories, the large percentage growth is worth investigating, although the dollar amounts may not be as large as the ones mentioned here. [Note: Some categories in Table 1 that show a 100% growth (Social Work, Health Services, Psychological Services, and Other Support Services) were included in other categories before 2002-03.]
Again, all these comparisons are made after adjusting for inflation.
Conclusion
There is no doubt that some expenses escalate faster than the rate of general inflation, and some build-up in spending may be legitimately justified because of prior neglect. However, when every category of K-12 spending has grown at least 31% ahead of inflation (except one - food service, which increased 7%), it is prudent for legislators to question whether some priorities need to be shifted in order to pay for the increase in compensation that has been promised to teachers.
Those who ask such questions should not be labeled as “opponents of education.” In fact, they might be the heroes of real education by working to place more “education spending” where it will provide the most education for the students in Mississippi’s public schools.
* Teacher compensation was calculated as follows: Average Salary (1993 salary was inflation-adjusted to 2003 dollars) + the State’s share of Social Security and Medicare Taxes (7.65% of inflation-adjusted salary) + the State’s contribution to the Public Employees’ Retirement System (9.75% of inflation-adjusted salary) + the health insurance premium paid for the employee by the state. [Note: health insurance was provided by local districts in 1993. For purposes of the teacher compensation calculation, we used the premium paid for state employees that year, adjusted to 2003 dollars.] Not included in this calculation: the State’s match of life insurance premiums, which in 2003 amounted to about $120 per year for those who chose to participate. This was not included in the calculation because the state did not provide that match in 1993. The calculation also does not include workers compensation policies, which are contracted by local districts with varying premium amounts.
Forest Thigpen, the author of this Issue Brief, is President of the Mississippi Center for Public Policy, an independent,non-profit organization based in Jackson. Its mission is to promote and protect the concepts of limited government, free enterprise, and strong traditional families.
© Mississippi Center for Public Policy
