Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
Politics is the art of the possible. Economics is the science of choice. Political economy is the study of political choices constrained by the possible. One of the biggest issues the Indiana Legislature will face in 2020 is what to do about K-12 teacher salaries.
Indiana school funding is determined by the Legislature, but school budgets and teacher salaries are determined by local school corporations. If the Legislature wants to increase teacher pay in Indiana, the first question to answer is, how can we ensure that additional appropriations to local school corporations actually end up in teacher paychecks?
The second question to be addressed is how large a pay increase, if any, is even feasible. Somewhere in our education, we learned that a thousand thousands is a million. Indiana has approximately 60,000 K-12 teachers. So, for every $1,000 increase in the base pay of Indiana teachers, the state needs $60 million in recurring revenue.
One aspirational goal for teacher pay expressed by the Indiana mayor who is running for president is to “respect teachers like military veterans and pay them like doctors.” Nice idea, but a quick calculation reveals that, to get Indiana teachers to an average of $95,000 a year, still well below that of most doctors, from the current average of $50,000 would require additional state revenue of $2.7 billion a year. That’s equal to 43% of projected 2020 state income tax revenue or 33% of state sales tax revenue, according to the latest Indiana state revenue forecast released Dec. 20. Sorry, Pete; that’s out.
However, that same forecast gave some good news: It projected state revenue to be $238.8 million higher than its April 2019 forecast. Part of this is from a strong economy. Part is from a better projection of increased sales taxes revenue attributable to the Wayfair decision, where the U.S. Supreme Court authorized states to collect sales taxes on out-of-state internet-based transactions. Additional revenue will also come from recently legalized sports wagering. However, some of this revenue has already been committed by actions of the 2019 legislative session. This means additional available revenue is only $124.1 million. Again, some quick math reveals this could support a $2,000 increase in the base pay of Indiana teachers.
We are now in the realm of the possible. Making the case that it is desirable is another matter. But the first test for the desirable: Is it possible?•
___
Bohanon and Curott are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.
Please enable JavaScript to view this content.