The Latest In Faculty Compensation: Allocating Resources Among Your “Buckets”

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The Latest In Faculty Compensation: Allocating Resources Among Your “Buckets”

Almost all schools want to pay their teachers more competitive packages to be in the running to recruit them in a tightening market and to ensure that current capable teachers feel supported, nurtured and valued.

Most schools have devised (or fallen into) systems that help to achieve a higher level of faculty morale through a combination of pay, benefits, workload and quality of life conditions. There has been almost no rhyme or reason and little institutional memory to explain WHY most schools are doing what they are doing.

Schools spread their resources among “buckets” or categories of compensation. Doing this wisely by understanding and considering the career and family needs of teachers whom you want to recruit and retain is a powerful part of managing your compensation system and the scarce dollars that fund it.

The “buckets” are:

  • Cash
  • Medical and dental coverage
  • Retirement percentages and vesting timetables
  • Housing or housing support
  • Professional development
  • Life insurance
  • Course load and preps
  • Student load and assistants
  • Tuition remission or equivalent
  • Sick and personal leave policies
  • Disability coverage
  • Stipends and extra pay
  • Tutoring and summer program options
  • Required non paid duties
  • Bonus opportunities
  • Salary system growth opportunities
  • Flexibility of hours/part time/full time
  • Day Care
  • Free lunch, parking, quality of space and location

The “buckets” differ in value and importance for these three groups: young singles or young married couples; families with children; and the senior cohort. Assessing which group or groups you want to recruit or retain now and in the future and then determining which buckets appeal most to them becomes especially important in an environment of a teacher shortage.

Some recent examples will demonstrate how schools with cash salaries in the low to moderately competitive ranges still have the tools to recruit teachers who are most needed and desired and ensure the loyalty of current valued faculty.

    1. THE FIRST MODEL

One is a K-12 School of some 450 students where starting salaries are substantially below those at public schools but rise to be moderately competitive at the mid career level only to fall again towards the senior level. Compared with the local independent school competition, this School ranks overall at about the 65% to 70% of its peer group salaries.

The salary delivery system in this School operates with no published ladder or scale. Entry salaries are negotiated and annual increases are a flat 3-4% across the board for all teachers. The net long term effect of using the percentage increase method is always less money for younger teachers and more for older ones.

One valuable benefit that offsets the moderate (or in some cases low) salaries is the high contribution of the School toTIAA. The School vests each teacher after only one year, begins the contribution at 7% and raises it to 10% over five years. Another benefit which the faculty and staff appreciate is the 100% medical coverage for the individual through a PPO, not an HMO.

This same School has small average class sizes of 14 in the Lower School and Middle School and even smaller in the High School. Weekly teaching loads are 20 periods of 45 minutes each and one to two preps.

There are no required after school extracurricular assignments and relatively few stipended positions. The professional advancement funds are relatively generous. The cost of living in the area is modest and all but one of the teachers interviewed owns a home.

Twenty years ago in a very forward-thinking move, this School also established an onsite daycare center. It pays the Director’s salary and the employee pays for child care at the going market rate or slightly below. Even teachers who cannot take advantage of this benefit appreciate its value and contribution to the creation of a positive working environment and a “caring” culture. Every teacher mentioned it whether they had a child in that program or not.

The School also provides 50% tuition but about 75% of the teachers are grandfathered at 90%. Those who are not eligible for 90% may apply for need based aid after the 50% remission is granted.

Whether one agrees with the philosophical implications of the decisions that led to this “model” (and many schools would not) the combination of low to moderate range salaries and some generous tangible and intangible benefits suffice to attract and keep highly qualified and motivated teachers. There has been almost no loss of teachers for reasons of low cash salaries. It is true, however, that most faculty members are secondary breadwinners. Obviously, in this model the happiest teacher will be one who has a child or plans to have one attend the School. Those who are single struggle more but are still moderately satisfied.

Clearly, this “system” in allocating its “buckets”- whether intentionally or more likely accidentally over time- has substituted quality of life conditions, strong benefits and modest workload in exchange for modest salaries overall and very modest salary increases.

    1. A SECOND MODEL

Another School has no problem recruiting teachers. Attrition has been quite low except for retirements.

In this model, the School offers high medical and retirement benefits, above average professional development support and moderate class size of about 18 across Divisions. The average workload for the week is also moderate at 20 periods plus advisory of 20 minutes each day.

The average pension plan contribution by the School is 5%. No one is required to contribute to the Plan (which is a negative in this consultant’s view).

In this case, many of the teachers applying to the School are already vested in the local public school pension plan so they have fewer pension worries. However, the pension worries of the career independent school teachers or young recruits are substantial as they contemplate whether this School is in fact a viable place in which to build a retirement asset.

Over one-third of all teachers receive a merit-based bonus for efforts above and beyond what is expected in leadership, committee work and other jobs for which no established stipend may be in place currently. While all teachers interviewed acknowledge that this bonus system has some aspects of ambiguity and discretion, it is nonetheless viewed as a plus and an honorable way for the School to try to value workload without assigning pay to every single task that needs coverage.

In this second School there is a published longevity based salary scale not unlike the local public schools but operating at a lower percentage at each year of experience. Like all scales in our independent schools, it has some unexplainable “jumps” that are a product of history and incident. By and large, teachers attempt to negotiate modestly around the scale to help their particular family situation, and the more creative and assertive ones tend to augment their take home pay. This always happens when lock step scales are in place as teachers jockey their mix of loads, activities and assignments to generate extra income.

Helping the appeal of the School’s compensation and benefits package are the area’s low cost of living, relatively inexpensive housing prices and low taxes.

    1. A THIRD EXAMPLE

There is a third school model worthy of note. This school is in a very high cost of living area where younger and mid career teachers may never be able to buy a home unless married to a spouse with a MUCH higher income. Yet almost no one ever leaves. There is school-owned housing mostly to serve the boarding population of this School but only 25 to 33% of the faculty (mostly younger and mid-career) live in it. The factors that seem to draw and keep teachers at this School include: the unusually lovely and spacious setting; the low class size; the strong pension plan; and the benefit bank of almost $10,000 which can be applied toward medical coverage, more retirement or taken as taxable cash.

In this third School a high priority appears to be to bring in young teachers at very competitive starting salaries. A banded ladder salary system has been in effect for many years. It may play an important role in retaining teachers as it outlines a clear opportunity to move up the compensation curve through means other than simply staying another year and/or accumulating graduate credits. Younger teachers see more of an opportunity to get ahead earlier.

The quality of life issues, including the ability to take advantage of recreational opportunities in the area, the clean non urban setting and a collegial tight working environment are a major draw to teachers in all age groups.

    1. THE COMMON THEME: CULTURE OVER CASH

The morale at these three Schools is high. In fact it is very high, and this consultant heard relatively little of the typical “grumblings” and more appreciation for the intrinsic benefits of teaching in an independent school environment. This is the case even though the cash salaries are in general below those in the public school sector, and in the case of the second School, the pension plan benefits are far below.

In Schools I and II, excluding those already vested in state teacher pension plans, actual retirement accumulation is very low with few exceptions. Thus, not all of the news is good long term as lower salaries tend to lead to lower retirement assets.

The third School has done an excellent job of meeting the needs of teachers at various points in their professional and personal lives primarily through the concepts of a career ladder and a benefit bank and aided by an attractive (albeit expensive) setting.

The three Schools noted above are obviously willing to make some exceptions for teachers who are experiencing stress in their personal or family lives. One helps teachers take a leave or go part time when necessary. One finds or creates assignments for some teachers who are not really needed full time to ensure that they receive the benefits to which full time faculty are entitled. While some schools would not agree with such practices, the atmosphere at all three Schools is personally as well as professionally supportive, contributing to positive morale and school culture.

In addition, these Schools have a hard working faculty with high morale, modest workload, modest salaries, some tuition remission, and generous individual medical plans, generous or even unlimited sick leave, relatively supportive professional development funds and even in one case relatively strong retirement contributions. However, the reality is that many of them are married to spouses who earn as much or more than they do. The presence of the secondary breadwinner has been the case for mainly female elementary school faculties for years. But that is changing and has changed substantially for legal and moral reasons. However, it is clear that many of our schools still are relying heavily on spouses or partners to provide the family medical and long term retirement stability.

Thus in all three cases above, school “culture” is a trump factor over less than fully competitive cash salaries and/or retirement benefits. Schools and administrators, boards and faculties need to assess clearly not only obvious cash salary levels and the somewhat more subtle benefit trends, but they also need to look carefully at workloads, extra assignments, flexible hours, day care and the overall impact of a range of policy decisions on faculty tone and attitude.

    1. MEASURING YOUR BUCKETS

The message here is clear. “Measuring your “buckets”, i.e., where and how you spend your resources including the less visible ones is a crucial element in compensation planning. While a lower workload, higher pension, 100% remission and PPO medical plans are clearly expensive, some aspects of them generate a culture of appreciation which may be somewhat less costly but equally or more powerful and attractive to teachers: partial tuition remission; day care; professional development; flexible personal and sick leave; and flexible approaches to part time.

These patterns DO constitute “systems” of behavior although they are not generally noted as such. What many schools lack is sufficient knowledge of their own faculty culture and how that culture understands and views this wide array of benefits and traditions, cultural exceptions and fraternal support.

All schools would be wise to undertake a review of whether faculty members even recognize the range of their current monetary and non-monetary support systems and then whether or how highly they value them. A carefully designed independent survey can be one way to conduct such a review. If they do not appear to understand or appreciate them, schools should educate current and prospective teachers about their power to make teaching there a viable option long term.

However, too much emphasis on the needs and priorities of teachers creates resentment among staff even though they are compensated differently. A similar but separate assessment of how a school meets the financial and non-financial needs of STAFF is worthy of serious consideration.

Littleford & Associates has worked with the three Schools above and over 1500 more to help them first understand and celebrate what they do well and then to help determine how to improve existing compensation and support systems for both faculty and staff.

John Littleford
Senior Partner