In May 2003 the National Education Association reported Oklahoma is “47th in the nation in public school teacher pay.” According to the NEA, “Oklahoma’s average teacher salary ($34,744) is just 78 percent of the national average ($44,683).”
Does this suggest Oklahoma lacks commitment to quality education? Many people wonder after seeing such 50-state rankings of education spending.
“If we want to keep our best teachers and prevent other states like Texas from raiding Oklahoma for talent, we’re going to have to do a better job on salaries,” said Oklahoma Governor Brad Henry (D).
Unfortunately, Oklahoma’s efforts on behalf of elementary and secondary school teachers are rarely put into proper perspective. When differences in tax burden, living costs, employee benefits, and working conditions are taken into account, Oklahoma teacher salaries actually compare favorably to teacher salaries in other states, as well as to salaries of other workers in Oklahoma.
More Take-Home Pay, Better Benefits
According to the Washington, DC-based Tax Foundation, the “average tax rate–federal, state, and local taxes as a percent of income–is 26.5 percent in Oklahoma versus 30.0 percent for the nation as a whole.” This is largely because Oklahoma is a relatively poor state with relatively few high-income earners paying the progressive federal income tax. Oklahoma’s lower-than-average tax rate means every $1,000 of gross pay in the state yields $735 in take-home pay–5 percent more than the $700 average for all U.S. workers.
For an Oklahoma teacher making the average salary, this represents a $1,216 take-home “bonus.” That Oklahoma teacher brings home $1,216 more than her national counterpart making the same salary.
What’s more, take-home pay goes further in Oklahoma. For example, “$100 in the Oklahoma City metro area purchases goods that would cost $111 in the rest of the U.S.,” according to the most recent survey of the American Chamber of Commerce Researchers Association (ACCRA). Adjusting Oklahoma’s teacher salaries to reflect this cost differential raises the salary average to $38,566, an increase of $3,822.
It should also be noted that the salary data exclude fringe benefits. Virtually all public school teachers are covered by defined benefit retirement plans, which pay scheduled monthly amounts throughout the employee’s retirement. These plans differ from the defined contribution plans prevalent in most private companies, in which retirement benefits depend on the stock market and other investments.
Teacher retirement benefits are also usually indexed to inflation. Retired teachers often work in a new job while still receiving full pension benefits. As a result, teachers usually retire earlier than workers covered by Social Security or a conventional pension plan.
Health insurance is nearly universal for public school teachers. Federal data show about one-half of teachers pay nothing for single-person insurance coverage, a benefit achieved by only 20 percent of professional and managerial employees in medium and large private firms. And only 10 percent of private firms pay the full premium for family policies, compared to 29 percent of public school districts.
Relative to their colleagues in surrounding states, Oklahoma teachers have generous benefit packages. Fringe benefits for K-12 instructional staff equal 21.3 percent of salaries in Oklahoma, according to Census Bureau data. By comparison, benefits average just 13.9 percent of teacher salaries in Texas, 19.2 percent in Kansas, and 18.9 percent in Colorado.
Total compensation, salary plus benefits, is estimated at $42,134 for the average teacher in Oklahoma. That is within 5 percent of the average compensation received by teachers in every contiguous state except Colorado. And when taxes and living costs are taken into account, Oklahoma teachers are compensated better than teachers in most surrounding states.
Small Class Sizes another “Perk”
Oklahoma’s student/teacher ratio (15.1 to 1) is also below the national average (16 to 1). Smaller classes give teachers better control while reducing the time they spend grading papers, meeting with parents, staying after school with students, etc. Small class size is therefore another “perk” not reflected in teacher salaries. It is a very expensive perk, however, requiring that more teachers be hired.
Had Oklahoma allowed its student/teacher ratio to rise to the national average, 2,324 fewer teachers would have been employed in 2000-01. Smaller class size explains why, despite its low rank on teacher salaries, Oklahoma is in the top half of states (22nd) when ranked on the percent of personal income spent on teacher salaries. In 2000-01 Oklahoma spent 1.89 percent of its personal income on teacher salaries; the national average was 1.84 percent.
An even more comprehensive measure of the state’s efforts on behalf of education is found by tallying up all current K-12 spending, benefits, administrative costs, and salaries. When total expenditure on these items is measured relative to personal income, Oklahoma ranks 14th highest among the states. This is hardly a sign of a state not interested in quality education.
Edwin S. Rubenstein, president of ESR Research in Indianapolis, holds a B.A. in economics from Johns Hopkins University and an M.A. in public finance from Columbia. He has served as a municipal bond analyst for Moody’s Investors Service, senior economist at W.R. Grace & Co., contributing editor at Forbes magazine, and staff economist for the New York State Commission on Education.
