Salary guides have been a staple in New Jersey’s educational system for many years. The salary guide is the method used to compensate teachers and most other school district employees, and affects not only the district’s financial resources, but also the district’s personnel resources. For those unfamiliar with the term, a salary guide is a schedule of how much an employee is paid, according to their years of experience and their level of educational attainment. (For example, on a salary guide, a fifth-year teacher makes more than a fourth-year teacher, but a fifth-year teacher with a masters’ degree makes more than one with a bachelors’ degree.)

The composition, or the structure, of the guide directly and indirectly affects the board’s ability to meet many of its management goals, such as attracting new hires to the district, retaining excellent employees in the district, encouraging the desired amount of continued academic preparation, and appropriately compensating staff members. The structure of the guide can also have strategic implications for the construction and negotiations of successor salary guides.

In New Jersey, as well as throughout the United States, school employee unions (and to a lesser extent, school management) have demonstrated a strong preference for salary guides. Union philosophy contends the salary guide approach treats employees consistently, fairly, and equitably. (Although that assertion isn’t always true, particularly when a raise is not distributed across the guide in a consistent manner — with more senior employees receiving much larger raises than more junior employees.) In addition, from the employee’s perspective, the standardized guide structure suggests a certain level of predictability of future guide advancement and anticipation of potential future earnings.

While there is no question that a salary guide limits a board’s discretion in compensating employees, the standardized approach also hold some benefits for management. Because of the specific rules and guidelines for paying employees, decisions about how much to pay existing staff as well as new hires are relatively straightforward. Although some districts have negotiated discretion in placing new hires on the guide, in general, districts do not need to wrestle with the difficult decision of how much to compensate staff, since salary guides, by their very nature, establish guidelines for paying employees based on experience and educational attainment. As a result, it is less likely that compensation decisions will become a source of dispute within the management team or that employees and their unions will claim individual salary rates have been set arbitrarily, capriciously or discriminatorily. A salary guide provides school management with a consistent, uniform compensation policy.

Meeting the Board’s Personnel Goals The standardized format of compensating school employees on the salary guide does not eliminate a board’s ability to meet district needs and to achieve boards’ personnel goals. Rather, boards that understand salary guides know the structure of the guide can help, or hinder, their ability to meet their personnel goals. For example, a district that feels it is having trouble attracting new teachers might boost salaries for first-year employees more than it does for those with more experience.

Once upon a time, many districts reached a negotiated settlement with their union for a certain percentage salary increase — and then allowed the union leaders to decide how to distribute the increase on the salary guide. Thankfully, fewer boards allow that to happen now; retaining control of those decisions allows boards to address specific personnel needs.

In addition, they know the salary guide (including the guide structure) can be changed through negotiations. While the existing guide structure can create employee expectations that can present some interesting challenges in negotiating changes to the guide, boards can meet the challenge by thoroughly understanding their guides, by establishing bargaining goals for successor guides, and by planning their bargaining strategy to achieve those goals. Meeting this challenge begins with a thorough understanding of how a salary guide works.

As indicated above, the salary guide method is the methodology used almost exclusively in New Jersey for determining a teacher’s salary. Historically, the salary guide approach advances teachers one-step on the guide each year until maximum is reached. Guides typically link increases only to length of service and educational attainment of teachers.

While the salary guide is the most prevalent method, and is easy to understand, there are some definite disadvantages and concerns with this method. A few of these potential disadvantages include the creation of balloons (extremely large increments from one year of experience to the next) or other aberrations, inequitable distribution of increases among teachers, and restrictions on salaries of new hires. When the parties have a salary guide, new employees must be placed at an existing rate on that guide. Furthermore, the salary guide method creates an expectation of an incremental step increase each year.

We have seen an effort in recent years for school districts to move away from traditional salary guides in order to meet specific goals that the traditional salary guide would not achieve. For example, recently a district in northern New Jersey eliminated its salary guide and gave out a flat percentage increase to employees for each year of the three-year contract. This was done to compensate staff within a constrained budget while also giving out increases in a more equitable manner. Other ways to move away from a traditional salary guide include:

Salary Ranges While currently non-existent in determining teacher compensation, the salary range approach is one that could be of great benefit. In fact, this approach to compensation is much more common and accepted in the area of administrator and support staff salaries. With a salary range, there is a minimum and a maximum salary, with nobody being paid below the minimum or above the maximum. Staff members receive increases and move through the range until they reach the range maximum. Thereafter, staff at maximum would receive more modest increases (i.e., their salary would only increase by the amount that the range increases). Generally, the minimum and maximum would increase each year by some amount that would be smaller than the settlement. For example, if the parties agree to an overall increase of 2 percent, it could be agreed that the minimum and maximums only increase by 0.5 percent or 1 percent.

With this approach, as with a salary guide, staff still reach maximum and then their salary increases level off. There are no interim steps between minimum and maximum and, therefore, no expectation for a certain increment or salary rate in the coming year. There is also no possibility of balloons. With this approach, boards retain flexibility to determine the salary rate for new hires (as long as it is between the minimum and maximum), and the percentage increase for each employee within the range.

Merit Pay Without question, merit pay is one of the most widely-discussed issues whenever the topic is improving public education. That being said, it cannot be overlooked that in New Jersey “merit pay” has mostly been discussed in a theoretical sense, leaving confusion over what exactly is mean by the term. This is because merit pay takes on various meanings and forms. It includes things such as pay for performance; value-added assessment, career ladders, and bonus pay. In general, merit pay (and the possible variations) are numerous, and require a more thorough examination. Brief explanations of several approaches are as follows:

  • Two-Lane Salary Plan: In this plan, a “merit lane” is added to the traditional salary schedule to recognize outstanding performance. It would start somewhere above step one to give the administrators or evaluation committee an opportunity to observe a teacher’s performance over a period. If a teacher did not exhibit meritorious performance in a given year, he or she would still move up a step but would return to the regular salary lane.
  • Bonus Awards: Rather than tie the merit increase to the salary guide, this performance-based plan would provide a separate off-guide bonus payment to teachers exhibiting meritorious performance. The bonus is not included in the “base” pay and is therefore not pensionable nor does it have to be paid in subsequent years.
  • Bonuses: Another device that could be employed to address specific board goals is the bonus. Bonuses could be paid over and above the regular salary guide to certain categories of teachers. Boards may find this approach attractive because it provides a greater degree of flexibility in addressing a number of objectives. Bonuses may not only assist districts in recruiting and retaining certain categories of teachers such as math, science, and special education, but may also be used to encourage teachers to teach in adverse working conditions or to improve their attendance.

A board must carefully review its methodology for teacher compensation and determine if it is assisting and enabling the board to deliver the highest quality education to its students. If the existing practice is not meeting the district’s needs, or is in some way limiting the board from achieving its goals, it may be time to negotiate a change.

While the above listed methodologies are not all-inclusive, they provide an overview of the concepts. Keep in mind that in today’s difficult economic environment, with limited dollars and greater demands (both financially and educationally), boards must strive to obtain the greatest benefit from each dollar spent, and this includes salaries. The only limitations are the restrictions imposed by law, leaving it to the board to negotiate the way salaries are determined. Remember: Everything regarding salaries is negotiable.

Kurt Rebovich is an NJSBA labor relations consultant.