The biggest part of any school district budget goes to compensation for employees. It varies slightly by district, but about 75% of the money spent in any year goes to employee paychecks.

So one of the most important issues districts must confront is how salaries are decided, and whether those salary levels are appropriate.

When the employee group in question is unionized, as is the case with all New Jersey public school districts, this will inevitably be a central focus of the negotiations.

However, if a group of employees is not unionized, such as support staff employees, a sound salary policy is not only necessary for good school management, but also is one of the best practices a district can follow. In many instances, employees unionize simply because staff are not only dissatisfied with the salaries paid, but because there is no understandable basis or process for determining the salaries.

Although your district may be happy with its current staff compensation structure, a thorough knowledge of other approaches will ensure the tools needed to meet its staffing and educational goals are met. In fact, it has been the long held position of the NJSBA that boards of education should look at all possible methods to determine staff compensation. Specifically, NJSBA Position and Policy 4140, which was originally enacted in 1972 and last amended in 2016, states the following regarding teacher compensation:

  1. The NJSBA believes that a district’s method of compensating employees should be based on a salary structure that has a rational basis which reflects the goals and objectives of the school system.
  2. The NJSBA believes that boards should carefully review and analyze their existing compensation plans to determine whether their salary guides reflect their districts’ compensation and personnel goals and consider new compensation models including, among other factors, differentiated staffing models, relative workload, degrees of responsibilities and performance as methods of determining compensation.

The following is a very general overview of ways to determine staff compensation. Keep in mind this article is intended to be an overview of how staff pay may be determined in New Jersey and is not exhaustive or an endorsement of any particular method.

Teacher Pay For teachers, the almost exclusive way salaries are determined in New Jersey is through the salary guide approach. However, there is no legal requirement for the continuation of the salary guide model.

In fact, there is a misconception held by far too many people in education, including those on both the management and union sides, that the law does not permit a change from the current methodology of teacher payment. However, this misconception is simply wrong, as the law provides very few requirements regarding teachers’ compensation.

There are currently only two legal requirements regarding teacher pay: (1) a full-time teacher not be paid less than $18,500; and (2) the prohibition against the reduction of a teachers’ salary. Despite what you may have heard, the law does not require an annual increase, step advancement, or additional pay for higher educational degrees.

Indeed, all aspects of teacher compensation, including the amount and how the amount is determined, are negotiable. The board and the teachers’ union must mutually agree to the methodology used, which entails negotiations between the board and the union over the issue. A board wishing to seek a different methodology in determining compensation is free to propose the same during negotiations.

What is a Salary Guide? This is the methodology most often used in New Jersey for determining staff salaries. (As indicated above, it is the almost universal basis for teacher pay determinations.) Generally, the salary guide approach advances staff one step on the guide each year until the maximum is reached. The guides typically link increases only to length of service and educational credit attainment of staff.
While the salary guide is the method most prevalent and is easiest to understand, there are some definite disadvantages and concerns. A few of these disadvantages include the creation of balloons or other extremely large increments and aberrations, inequitable distribution of increases among staff, and restriction on establishing salaries of new hires. When the parties have a salary guide, new employees must be placed at some existing rate on that guide. Furthermore, the salary guide method embeds an expectation of an incremental step increase each year, which can be quite problematic during negotiations.

Salary Ranges This approach is more commonly found and accepted in the area of administrator and support staff salaries. However, this approach could be of great benefit for determining teacher staff compensation if the board and union could agree to its utilization.

With a salary range, there is a minimum and a maximum salary, with nobody being paid below the minimum or above the maximum. Staff receive increases and move through the range until maximum is reached. Thereafter, staff at maximum would then receive more modest increases (i.e., 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 3.0%, it could be agreed the minimum and maximums only increase by 1.5% or 2.0%.

With this approach, staff still reach maximum (just like with a salary guide), but then their salaries 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 of improving public education is discussed. However, in New Jersey “merit pay” has mostly been discussed in a theoretical sense, leaving what is meant by “merit pay” to be more fully fleshed out. This is because merit pay takes on various meanings and forms. It includes such things as pay for performance; value-added assessment, career ladders, and bonus pay. In general, possible merit pay variations are numerous and require a more thorough examination.

Districts should carefully review their methodology for staff compensation and determine if it is assisting and enabling the district 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 district from achieving its ultimate goal, the proper course of action is to seek a change.

How to go about making this change depends upon whether if the group of employees involved is unionized (where the change must be negotiated) or not unionized (where the change can occur by policy). However, for non-unionized employees, districts must nevertheless be very careful in how they go about changing the policy, as the surest way to go from non-unionized to unionized is to create a salary system that staff deem to be confusing or harmful to their interests.

Robert Greitz is a consultant/negotiator in NJSBA’s legal and labor relations services department.