Hitting the $40,000 Threshold: Examining Teacher Salary Policy in Indiana

Indiana ranked 38^th in the US for average teacher salary in the 2018-2019 school year. To raise salaries to a competitive level, the state implemented a series of compensation policies, including legislation requiring all public school districts to increase minimum teacher salaries to $40,000 by the 2022-23 school year.¹

School finance is often measured through two, sometimes competing, goals: adequacy and equity. Policies that raise the floor for teacher salaries aim to advance adequacy. Policies that re-distribute and target funding to help districts hire quality teachers advance the goal of equity.

Does Indiana’s teacher salary policy advance the goal of adequacy or equity?

Figure 1.
Minimum Teacher Salary: 2022-23 

Advancing Adequacy?

To assist districts in reaching the $40,000 minimum, the state increased per pupil funding by a uniform ~4.5% in each of the two years leading up to policy implementation, regardless of initial minimum salary of each district. This was a large increase in comparison to the ~2.5% increases of prior years. With this boost in state aid, roughly 99% of districts met the $40,000 requirement by the 2022-23 school year (see salary distribution in Figure 1).

Verdict: By these outcomes, it can be argued that Indiana advanced adequacy by uniformly distributing an increase in state funding to all districts and achieving an increased minimum salary level across the state. The average minimum salary was $37,694 in the 2019-2020 school year and $42,657 in the 2022-2023 school year. This potentially enhanced the attractiveness of teaching (vs. other professions) and may have strengthened Indiana’s competitive advantage when competing for teachers from other states.

Figure 2.
Minimum Salary Ranges 

Advancing Equity?

Despite success in raising minimum salaries, the gap between the highest and lowest minimum salaries did not decrease after the policy was implemented; rather, those districts least able to compete in the market remained so. The policy not only raised the minimum salaries of lowest paying districts, but it also raised the minimum salaries of the highest paying districts. As seen in Figure 2, the spread between salaries across districts decreased from 2019-20 to 2021-22, but this spread grew again in 2022-23. Therefore, districts already above the minimum requirement that received the uniform increase in state aid had the liberty to use their increased funds to continue to raise their salaries well beyond the $40,000 threshold, allowing them to raise salaries across the board. As a result, suburban districts had the highest salaries before and after the policy was implemented, even despite having equivalent costs-of-living to urban districts. Additionally, districts with the highest percentages of poor students had the lowest salaries before and after policy implementation.

Verdict: While the policy helped to achieve a more livable wage for teachers in the lowest spending districts, it also allowed districts already above the $40,000 minimum the discretion to target lower salaries, bump up the entire salary schedule, or even just boost the highest salaries. As a result, it did not alter the competitive (dis)advantage faced by some districts. By these standards, the policy did not advance equity since it did not narrow the salary gap between suburban districts and their urban and rural counterparts, nor wealthy districts and their poor counterparts. These districts are still on an unequal playing field to recruit and retain teachers.

Recommendations Moving Forward

• State Increases Must be Maintained: The $40,000 policy ensured a minimum salary in districts across the state; however, continued increases in state aid are necessary to ensure that districts can maintain and continue to increase these salaries. If not, districts could face budget constraints as they may not be able to fulfill their enhanced contractual salary obligations set up by this policy.
• Exploration into More Targeted Policies: Indiana has made a commitment to raise teacher salaries, and the state should continue to address inequity in salaries. In an increasingly competitive market with an increasingly mobile workforce of teachers, the state needs to ensure that rural, urban, and poor districts offer competitive salaries to compete with their suburban and wealthy counterparts.

This brief is based on a manuscript under review by author Kristie LeBeau, PhD. For more information about this policy, listen to the conversation with Dr. LeBeau on Episode 3 of the CEEPing Up with Education podcast.