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The Cost of Underpaying Texas Teachers
December 2004

My goal is to drive more of every education dollar directly into the classroom with the teachers and students, where it belongs. I would rather spend 1 billion dollars today investing in our future, than losing 13.3 billion dollars annually paying for failed policies of the past.
   —Carole Keeton Strayhorn, Texas Comptroller

Low pay for Texas teachers is driving all too many of our best educators from the profession. According to national studies, a shortage of good teachers in key areas is hurting student performance and that, in turn, causes too many students to leave school before graduation.

In Texas, nearly 25 percent of the state’s residents aged 25 and older lack a high school diploma. Each year, another 45,000 to 50,000 students drop out of Texas public schools, costing the state $11.4 billion in lost gross state product (GSP). And this process is cumulative; every additional dropout increases the long-term cost to the Texas economy. At current rates, ten years’ worth of dropouts will cost Texas $114 billion in long-term economic output, while 20 years will cost our economy $228 billion.

For individuals without a high school diploma, job prospects are bleak. Dropping out costs men $365,707 in lifetime earning potential, and women $236,111. Dropouts cost the state and federal governments $1.4 billion annually in social costs, as they are six times more likely to be incarcerated and 2.7 to 3.7 times more likely to receive public assistance.

Our state economy cannot remain healthy without a well-educated work force, and we cannot create and maintain that work force without the help of dedicated and qualified teachers.

Studies show that most students drop out due to poor academic performance. And studies have proven that the teacher in the classroom makes the greatest difference in academic achievement, regardless of the students’ economic or ethnic backgrounds.

To ensure the state’s economic stability, Texas must recruit, reward and retain a stable pool of highly qualified and experienced teachers that are fully certified in their subjects and prepared to spend their careers teaching. Today, nearly 37,000 Texas teachers leave the classroom each year for other professions or to retire. Growth in the state’s school-aged population demands another 5,000 new teachers each year, and at present that goal is not being met.

During the next session of the Legislature, school funding will be a major priority. Every school finance plan offered to address the current school funding crisis calls for local property tax relief and greater state investment in public education. The new state investments suggested in these plans begin at $1 billion annually.

In September 2004, State District Judge John Dietz ruled that the state’s method of funding public schools violates the Texas Constitution on two grounds: the amount of revenue is insufficient to meet the constitution’s requirement to provide “an adequate suitable education”; and the property tax system, under which an increasing number of districts are forced to tax at the statutory cap of $1.50 to meet state-mandated standards for academic performance, has effectively removed “all meaningful discretion” from local authorities and become an unconstitutional state property tax. Debate and litigation on this matter will undoubtedly continue for the foreseeable future.

A level of new state funding will be needed, therefore the question follows: how can the state ensure that additional state dollars are used to improve the quality of public education? The answer is clear: these funds must be spent to recruit, reward and retain highly qualified teachers for Texas classrooms.

Teachers: The Most Important Factor

Lengthy studies in Texas and Tennessee have shown that students taught by fully certified and experienced teachers can overcome significant economic and environmental challenges to succeed. The likelihood of success for the same students with poorer teachers is much less.

The Tennessee study found that high-achieving students with the most effective teachers gained 25 percentile points on standardized exams in one year, while those with the least effective teachers gained only two points. The impact on low-achieving students was even greater; those placed with the most effective teachers gained 50 percentile points, while those with the least effective teachers gained only 14 points.

Texas researchers studied fourth-graders in the Dallas ISD for three years in a row, contrasting those who had effective teachers, as measured by previous student performance on achievement tests, with those judged to have ineffective teachers. The scores of the fourth-graders with effective teachers rose 16 percentile points in reading and math by sixth grade, while the scores for students assigned to ineffective teachers dropped by 18 percentile points in reading and 33 points in math.

There appears to be a direct correlation between a stable and qualified (meaning teachers who are teaching in their field of certification) teaching staff and test scores at campuses experiencing high turnover and those that assign teachers to subjects outside their fields of study. Exhibits 1 and 2 provide Texas Assessment of Knowledge and Skills (TAKS) test data for campuses grouped by both the percentage of teachers who were teaching in 2002-03, did not return in 2003-04, and by the percentage of teachers teaching outside their fields in 2002-03.

In the exhibits, “Panel Recommendation” refers to the passing standard for the new TAKS test adopted by the State Board of Education (SBOE) in November 2002 based on recommendations from approximately 350 educators and citizens who served on TAKS standard-setting panels. Because the new TAKS is much more challenging than its predecessor, the Texas Assessment of Academic Skills (TAAS), the SBOE agreed to a transition plan to phase in the standard over several years. Although the Panel Recommendation is not used to determine accountability ratings, the percentage of students passing at the panel recommended standard is the ultimate goal and has been used to evaluate student performance in this report.

Both exhibits 1 and 2 illustrate that campuses with stable teachers who know their subject matter produce better academic results.

Exhibit 1
Texas Teacher Turnover and Student Performance, 2002-03
Percent Teachers Leaving the Campus in 2002-03 Percent of Students Passing All Sections of the TAKS 2002-03 at the Panel Recommended Standard Percent of Students in State Impacted
0 - 10% 53.6% 11.2%
11 - 20% 48.9% 45.3%
21 - 30% 46.0% 29.8%
More Than 30% 44.3% 13.7%
Statewide Average 47.9% n/a
Source: State Board for Educator Certification (SBEC), and TEA AEIS 2002-03.

Exhibit 2
Texas Teachers Teaching Outside Their Field and Student Performance, 2002-03
Teachers Outside of Field in 2002-03 Percent of Students Passing All Sections of the TAKS 2002-03 at the Panel Recommended Standard Percent of Students in State Impacted
0 - 10% 61.4% 22.2%
11 - 20% 51.8% 26.2%
21 - 30% 43.6% 26.7%
More Than 30% 36.9% 24.9%
Statewide Average 47.9% n/a
Source: State Board for Educator Certification (SBEC), and TEA AEIS 2002-03.


According to the 2000 census, (Exhibit 3) nearly 25 percent of Texans aged 25 and older lack a high school diploma, a share lagging nearly 5 percentage points behind the national average.

According to the National Center for Education Statistics (NCES), 45,000 to 50,000 students drop out of Texas public schools each year. This is a far higher number than the 15,000 to 20,000 reported each year by the Texas Education Agency (TEA). TEA’s methodology for calculating the state dropout rate, however, has been questioned repeatedly by children’s advocacy organizations, members of the Texas Legislature and other state agencies, including the Texas State Comptroller.

Exhibit 3
Texas and National Educational Attainment, 2000
  Texas Population Texas % of Total National % of Total
Population 25 years and over 12,790,893    
Education: less than 9th grade 1,465,420 11.5 7.5
9th to 12th grade, no diploma 1,649,141 12.9 12.1
Total population with no diploma   24.4 19.6
High school graduate (includes equivalency) 3,176,743 24.8 28.6
Some college, no degree 2,858,802 22.4 21
Associate degree 668,494 5.2 6.3
Bachelor's degree 1,996,250 15.6 15.5
Graduate or professional degree 976,043 7.6 8.9
Percent high school graduate or higher   75.7 80.4
Percent bachelor's degree or higher   23.2 24.4
Source: U. S. Census Bureau, DP-2. Profile of Selected Social Characteristics: 2000.

The 78th Texas Legislature in 2003 responded to ongoing public and agency concerns about the state’s dropout methodology with the passage of Senate Bill 186, which amended the Texas Education Code to require TEA to use the federal definitions and methodology for calculating dropout rates, as developed by NCES, beginning in the 2005-06 school year.

Poor academic achievement has long been associated with dropping out. A February 2002 report from the federal Government Accounting Office (GAO) cited academic failure as a chief contributor to the likelihood of students dropping out of school.

Clearly, better teachers produce higher-achieving students, and when students perform well academically, they are far less likely to drop out of school.

A TEA survey of Texas students between grades 7 and 12 who dropped out of the state’s public education system in 2000-01 reported the following reasons for leaving school:

  • percent listed school-related concerns, such as poor attendance or failing grades;
  • percent listed job-related concerns, such as finding a job or joining the military;
  • percent listed family-related concerns, such as pregnancy or marriage; and
  • 24 percent listed other concerns, such as age or enrollment in a non-state-approved alternative program.

The survey also found that:

  • percent of the respondents had not previously been identified as being at risk of dropping out;
  • 63 percent were not economically disadvantaged; and
  • 73 percent were Hispanic or African-American.

Comparing secondary teacher profiles to completion rates and student performance on the TAKS produces a clear pattern. In those high schools with the lowest percent of students completing their education and passing the TAKS at the panel-recommended standard, teachers were leaving more frequently and were more likely to be teaching outside their field (Exhibit 4).

Exhibit 4
Secondary Student Performance vs. Teacher Profiles
Student Performance Teacher Profiles
% Students Completing High School 2003 % Students Passing TAKS 2002-03 at Panel-Recommended Standard % Teachers Leaving in 2003 % Teachers Teaching Outside Their Field 2003
< 95% 23.6% 20.6% 31.2%
95 - 97.99% 33.8% 20.0% 28.6%
98 - 100% 44.9% 19.3% 27.9%
Source: Completion and TAKS data from TEA, AEIS 2002-03. Teacher data from SBEC 2002-03 and 2003-04.

Data from all grade levels in 2002-03 also suggest that the average experience level of a school’s teachers can be linked with the percentage of students able to meet the TAKS panel recommendation. Exhibit 5 shows that teachers who remain in the classroom for more than five years consistently produce better academic results in their students. Therefore, it seems important to support newer teachers and help them gain the experience they need to teach effectively.

Exhibit 5
Teacher Experience Versus 2002-03 TAKS Performance
Average Level of Teacher Experience per Campus Percent of Students Meeting State Board Panel Recommendation on TAKS
0 to 5 Years 37%
6 to 10 Years 48%
11 to 15 Years 48%
15 to 20 Years 48%
Over 20 Years 49%
Source: Texas Education Agency AEIS data 2002-03.

The Teaching Work Force

Texas public schools employ nearly 290,000 teachers, including full-time and part-time teachers and permanent substitutes. To be a teacher in Texas, an individual must have:

  • a bachelor's degree from an accredited college or university. Texas higher education institutions do not offer a baccalaureate degree in education per se. Every teacher must have an academic major as well as teacher training courses. The only exemption from the degree requirement is for individuals seeking Career and Technology certification to teach certain courses such as welding or computer-aided drafting.
  • teacher training through an approved program. These programs are offered through colleges and universities, school districts, regional education service centers, community colleges and other entities.
  • successful completion of the appropriate teacher certification tests for the subject and grade level to be taught.

State Board for Educator Certification (SBEC) approved the creation of a Temporary Teacher Certificate (TTC) at its April 2, 2004 meeting. The TTC provides an additional certification route for persons who already hold a bachelor’s degree or higher and wish to enter the teaching profession.

Persons requesting a TTC must be employed by a Texas school district for the two-year period of the certificate. The school district assumes the responsibility of training the individual for the period. School districts wishing to hire candidates using the TTC must prepare and submit a Preparation, Mentoring and Support Plan (PMSP) to SBEC for review and approval; hire and recommend the candidate to SBEC for the TTC; and recommend the candidate for a standard certificate at the end of the two-year TTC period.

The Comptroller’s January 2003 report, Limited Government, Unlimited Opportunity, recommended (ED4) that the state fully fund stipends for experienced, quality mentor teachers to work directly with those individuals entering the profession without traditional teacher training. State funding for mentor stipends was not, however, appropriated at the time that the TTC was implemented.

Exhibit 6
Texas Teachers by Sex and Ethnicity
1997-98 vs. 2002-03
  1997-98 % of Total 2002-03 % of Total
Females 196,887 77.3% 222,934 77.3%
Males 57,671 22.7% 65,452 22.7%
Total Teachers 254,558   288,386  
African American 20,754 8.2% 26,059 9.0%
Hispanic 40,226 15.8% 52,430 18.2%
White 191,485 75.2% 206,673 71.7%
Asian/Pacific Islander 1,364 0.5% 2,483 0.9%
Native American 729 0.3% 741 0.3%
Source: TEA, AEIS 1997-98 and 2002-03.

Some candidates also must have a passing score on the Texas Examination for Educator Standards (TExES) test. The TExES is available only for subjects in grade 8-12 for 2004-05, but may be expanded to other areas in future years.

In Texas and across the nation, white females traditionally have dominated the teaching profession. Exhibit 6 shows that, in Texas, the relative proportion of male to female teachers has remained unchanged over the last five years. Although the number and percent of Hispanic and African American teachers is increasing, more than 71 percent of all teachers were white in 2002-03.

Most Texas teachers have college degrees or have passed certification tests. Of nearly 290,000 teachers currently in the classroom, about 3,600 do not have a college degree (Exhibit 7).

Exhibit 7
Texas Classroom Teachers by Highest Degree Held, 2002-03
  Count % of Total
No Degree 3,611 1.30%
Bachelors 219,237 76.00%
Masters 64,126 22.20%
Doctorate 1,412 0.50%
Source: TEA, AEIS 2002-03.

Teachers from other states or countries who hold acceptable credentials can gain certification in Texas by passing the appropriate Texas tests. Some out-of-state teachers can gain certification in Texas based on certification tests taken in another state, if SBEC has found those tests to be similar to and at least as rigorous as equivalent Texas tests. SBEC began reviewing other state’s tests in fall 2001 and has since issued a list of comparable tests.

SBEC reports that 20,698 new teachers received Texas teaching certificates in 2003, of which approximately 46 percent were received by individuals prepared by colleges and universities; 19 percent by individuals prepared through post-baccalaureate programs; and 34 percent by individuals prepared through alternative certification programs.

In August 2004, noted education expert Linda Darling-Hammond testified in the state’s school finance trial that the number of Texas teachers who are not certified or teaching in their area of expertise is rising. Darling-Hammond reported that the share of Texas teachers not fully certified rose to 13 percent in 2003. In addition, she stated that districts with large populations of low-income and minority students face the most significant shortages of appropriately certified teachers.

Exhibit 8 indicates the types of teaching permits currently held by Texas classroom teachers. School districts may also obtain an approved waiver from TEA to allow an uncertified or inappropriately certified teacher to provide instruction.

Exhibit 8
Texas Teaching Permits by Type, 2002-03
Permit Type Count
Emergency (for certified personnel) 3,106
Emergency (for uncertified personnel) 7,553
Nonrenewable 2,191
Temporary Classroom Assignment 1,000
District Teaching 1,086
Temporary Exemption 20
Total 14,956
Source: TEA, AEIS 2002-03.

Teachers holding certificates issued on or after Sept. 1, 1999, as well as those holding “lifetime certificates” who voluntarily opted in to the present certificate renewal system, must obtain between 150 and 200 hours of continuing professional education (CPE) every five years from an SBEC-approved provider to renew their certificates. District-provided in-service training generally satisfies the CPE requirement, as can other activities such as college coursework, professional seminars, mentoring experience and self-directed study. SBEC counts one semester credit hour earned at an accredited institution of higher education as equivalent to 15 CPE “clock” hours.

In addition, some districts require additional training as a condition of employment. Such districts decide what will count for their own purposes, but cannot decide what will count for CPE purposes.

According to SBEC, the type of teacher preparation candidates receive has changed significantly over the past five years. In 1999, 66 percent of beginning teachers received certification through undergraduate programs at colleges and universities; by 2003, this figure dropped to 45.5 percent. Simultaneously, the percentage of teachers prepared through alternative certification programs rose, from 17 to 34 percent. SBEC also reports that alternative certification programs produce most of the state’s new male teachers, minority teachers and teachers certified in critical shortage areas.

In April 2004, SBEC approved rules that will allow college graduates with no teacher training to teach classes in grades 8-12. The new rules will allow school districts to hire uncertified teachers if they have a college degree in the subject area to be taught. Following two years of on-the job training, the teacher can receive state certification. The Comptroller’s recommendation to fully fund a quality mentor program for those individuals with no formal teacher training was not implemented.

Federal No Child Left Behind Act of 2001

The federal No Child Left Behind Act of 2001 (Public Law 107-110) requires school districts to ensure that all teachers hired at the start of the 2002-03 school year and beyond to teach core academic subjects in programs supported with Title I, Part A funds meet federal requirements as “highly qualified.” Under federal rules, “highly qualified” means that the teacher:

  1. has obtained full state certification as a teacher or has passed the state teacher licensing examination and holds a license to teach in the state;
  2. holds a bachelor’s degree at minimum; and
  3. has demonstrated subject-area competence in each of the core academic subjects the teacher teaches. U.S. Department of Education (USDE) Rule 34 CFR §200.55(c) defines core academic subjects as English, reading or language arts, mathematics, science, foreign languages, civics and government, economics, arts (art, music, dance, and theatre arts), history and geography.

TEA sends federal Title I, Part A funds to schools based on their number of economically disadvantaged students or those eligible for free or reduced-price lunches and breakfasts. The students actually served, however, must be selected on a basis of educational need rather than economic status. Title I funds are supplemental in nature; in other words, they must provide additional services to the regular program and not take the place of regular education funds. Federal law allows a school to be designated as a schoolwide Title I program if 50 percent or more of the students on its campus or in its attendance zone come from low-income homes.

As of January 2, 2003, USDE rules require each state receiving Title I, Part A funds to ensure that all teachers of core academic subjects, whether hired before the 2002-03 school year or not, meet the “highly qualified” standard by the end of the 2005-06 school year.

USDE Rule 34 CFR §200.56(a)(2)(ii) allows teachers participating in an alternative route to certification program who hold at least a bachelor’s degree and have demonstrated subject-area mastery to be considered highly qualified. The cited rule establishes standards for an acceptable alternative route to certification as being one that:

  1. provides high-quality professional training that is sustained, intensive and classroom-focused so as to have a positive and lasting impact on classroom instruction;
  2. provides intensive supervision consisting of structured guidance and regular ongoing support for teachers;
  3. allows the candidate to function as a teacher only for a specified period of time not to exceed three years; and
  4. requires the teacher to demonstrate satisfactory progress toward full certification as prescribed by the state.

The rule further stipulates that the state’s certification and licensing process must ensure that these provisions are met.

Teacher Shortages

The recent federal requirement for “highly qualified” teachers comes at a time when Texas is failing to meet the demand for teachers in general.

Teacher shortages can be defined in several ways. SBEC’s June 2002 Defining the Teacher Shortage report to the Texas Legislature’s Joint Committee on the State’s Shortages of Educational Professionals offered various definitions of teacher shortages ranging from zero to 56,551 (Exhibit 9).

TEA issues an annual list of subject-matter teacher shortage areas. In October 2003, TEA cited shortages in Bilingual/English as a Second Language, Science, Special Education, Foreign Languages, Mathematics and Technology Applications.

An SBEC examination of Texas teaching certificates issued between 1999 and 2003 indicates that the majority of certificates are not being issued in critical shortage areas. The distribution of certificates across subject areas has been fairly constant over the past five years, with 6 percent being issued in Mathematics, 3 percent in Science, 8 percent in Special Education, 7 percent in Bilingual Education and 2 percent in foreign languages.

SBEC reports that only 25 percent of all initial certificates over the past five years were issued in the areas of greatest teacher shortages. The remaining 75 percent were issued in fields without significant teacher shortages, most notably in Elementary Education, English Language Arts and Reading.

Exhibit 9
SBEC Estimates of Teacher Shortages
 Method Used to Estimate the Shortage of Teachers 2000-01 Shortage 2001-02 Shortage
1.Number of classrooms without an adult to instruct students 0 0
2.Number of certified teachers available to teach 0 0
3.Number of teaching positions to be filled before the start of school 39,652 37,000
4.Number of teacher on emergency permits 14,440 14,488
5.Number of teachers not holding a standard certificate 21,077 33,899
6.Number of teacher full-time equivalents assigned to teach outside their field of expertise 42,237 47,053
7.Number of teachers assigned to teach outside their fields more than 50 percent of the day, using a subject-area analysis 40,138 42,808
8.Number of teacher full-time equivalents assigned to teach outside their fields, using a subject-area analysis 45,155 56,551
9.Number of teachers assigned to teach outside their field of expertise for more than 50 percent of the day 41,197 50,381
Source: Texas Higher Education Coordinating Board, "Strategic Plan to Address the Teacher Shortage" (Texas State Board for Educator Certification).

Enrollment Growth and Demographic Change

Enrollment growth in Texas public schools is increasing the demand for teachers. According to TEA data, the student population in Texas public schools rises on average by nearly 2 percent annually, a rate equating to an average increase of more than 71,000 students each year over the last eight years, or nearly 77,000 annually over the last five years (Exhibit 10). Based on an average Texas class size of about 15 students per teacher, this implies a need for about 5,000 new teachers each year.

Exhibit 10
Texas Student Enrollment Growth
1996-97 to 2003-04
School Year Enrollment Annual Growth % Change
2003-04 4,328,028 88,117 2.1%
2002-03 4,239,911 92,258 2.2%
2001-02 4,146,653 87,034 2.1%
2000-01 4,059,619 67,836 1.7%
1999-2000 3,991,783 46,416 1.2%
1998-99 3,945,367 53,490 1.4%
1997-98 3,891,877 62,902 1.6%
1996-97 3,828,975    
Average Growth Per Year
(last 8 years)
71,293 1.8%
Average Growth Per Year
(last 5 years)
76,532 1.8%
Source: Texas Education Agency Academic Excellence Indicator System.

Between 1993-94 and 2002-03, the Texas student population rose by 18 percent. The number of students served by special programs, however, has grown faster. The number of students in Bilingual/English as a Second Language programs rose by 54 percent. The economically disadvantaged student population increased by 36 percent, while the number of special education students rose by 28 percent (Exhibit 11).

Special populations such as these present a greater-than-average challenge to educators, who must possess greater skills and training to provide these students with appropriate educations.

Exhibit 11
Special Population Student Enrollment Growth
1993-94 to 2002-03
Special Populations 1994 2003 % Increase
Bilingual /ESL 371,102 572,019 54%
Econ. Disadvantaged 1,623,108 2,201,534 36%
Special Education 385,126 491,259 28%
Source: Texas Education Agency PEIMS Data.

Student population growth between 1993-94 and 2002-03 varied by grade level. The number of students entering the system in the earliest grades rose dramatically, due in part to the expansion of the Head Start Program and other preschool efforts. The later high school grades expanded rapidly as well. Enrollment in the primary and middle grades grew more slowly and at roughly the same pace (Exhibit 12).

Highly qualified teachers for the growing population of the early grades are critical because the pre-reading and math skills learned there are key predictors of later student success. Qualified middle and high school teachers are vital as well, of course, since they will improve the likelihood that their students complete their educations and go on to post-secondary institutions.

Exhibit 12
Student Enrollment Growth by Grade Level
1993-94 to 2002-03
Grade Level 1994 % of Total 2003 % of Total % Increase
1994 to 2003
Early Education 12,681 0.4% 14,532 0.3% 15%
Pre-Kindergarten 102,814 2.9% 156,664 3.6% 48%
Kindergarten 268,423 7.5% 315,027 7.4% 17%
Grade 1 299,334 8.3% 329,591 7.8% 10%
Grade 2 288,110 8.0% 320,398 7.6% 11%
Grade 3 289,143 8.0% 321,271 7.6% 11%
Grade 4 284,295 7.9% 321,440 7.6% 13%
Grade 5 284,248 7.9% 322,010 7.6% 13%
Grade 6 285,345 7.9% 322,961 7.6% 13%
Grade 7 286,494 8.0% 325,063 7.7% 13%
Grade 8 274,162 7.6% 316,587 7.5% 15%
Grade 9 308,383 8.6% 372,024 8.8% 21%
Grade 10 234,488 6.5% 299,089 7.1% 28%
Grade 11 205,233 5.7% 265,349 6.3% 29%
Grade 12 178,686 5.0% 237,905 5.6% 33%
Total 3,601,839   4,239,911   18%
Source: Texas Education Agency PEIMS data.

Teacher Turnover

The Texas Education Agency does not attempt to quantify teacher shortages, but does include a measure of district-level teacher turnover in its Academic Excellence Indicator System (AEIS). In 2003, TEA calculated this statewide turnover rate at 15.6 percent.

While many teachers move between school districts each year, the TEA data suggest that almost 37,000 full time equivalent (FTE) teachers working in Texas school districts in 2003 were no longer doing so in 2004. Forty-five percent of those were teachers with five or fewer years of experience.

Beginning teachers—again, those with five or fewer years of experience—who left the field after the 2002-03 school year taught at campuses with approximately the same demographics as average campuses statewide. The campuses that lost teachers had slightly fewer special education and economically disadvantaged students than the state average, and slightly more limited-English-proficient, bilingual and minority students. Campuses that lost teachers also tended to be larger than average (Exhibit 13).

Exhibit 13
Campuses that Lost Beginning Teachers
State Averages
Population Campuses with Beginning
Teachers Leaving
State Average
Special Education 11.4% 11.6%
Limited English Proficient 15.1% 14.9%
Econ. Disadvantaged 51.2% 51.9%
Bilingual 13.7% 13.5%
Minority 61.3% 60.2%
Campus Size 665 548
Source: Texas Education Agency PEIMS data from 2002-03, AEIS 2002-03.

An examination of average base salaries and teacher turnover between 2002-03 and 2003-04 indicates that turnover is highest where teacher pay is lowest. (It should be noted that SBEC data on turnover includes any teacher who left a campus, whether or not he or she simply changed campuses or districts.)

Exhibit 14
Teacher Turnover at Campuses
2002-03 through 2003-04
Average Base Salary at Campuses, 2002-03
Average Base Salary Percent Teacher Turnover 2002-03
Less Than $35,000 24.1%
$35,000 - $39,999 22.3%
$40,000 - $44,999 20.7%
$45,000 or More 19.9%
Average 21.6%
Source: State Board for Educator Certification and TEA AEIS 2002-03.

SBEC’s data also indicate that the percentage of teachers who remain in the classroom for five years after initial certification does not vary significantly for those prepared by traditional undergraduate (71 percent) and alternative certification (66 percent) programs. Only 66 percent of teachers prepared through post-baccalaureate programs are still in the classroom after five years.

These three groups do vary, however, in the rates at which they choose not to enter the teaching field. Six percent of alternatively certified teachers did not teach after receiving their teaching certificates, compared to 10 to 11 percent of teachers prepared by traditional undergraduate programs and 14 to 15 percent of teachers prepared by post-baccalaureate programs.

Although different researchers often define teacher turnover differently, several conclusions regularly emerge from the research studies. Teacher turnover is lower in schools whose students perform well and higher in schools with poor academic performance. Not surprisingly, turnover is also lower in low-poverty schools and higher in high-poverty schools. Finally, teacher turnover is a much greater problem among newer teachers. Some researchers suggest that after just five years, between 30 and 40 percent of all beginning teachers have left teaching altogether. Texas exhibits a similar pattern.


SBEC recognized that inexperienced teachers left the profession at higher rates than experienced teachers and responded by developing the Texas Beginning Educator Support System (TxBESS), which is designed to provide systematic support for beginning teachers in their first and second years on the job. According to the SBEC Web site, since the spring of 2000, over 5,000 beginning teachers have been supported through TxBESS. Under TxBESS, mentor teachers receive training, “release time” from certain teaching duties and an average stipend of $400 a year to mentor a new teacher. Evaluations of the program performed by SBEC show that 84 percent of teachers who participated in the program came back after their second year.

History of Texas Teacher Salaries

Texas first adopted a state-mandated minimum salary for teachers in 1949. In 1955, the state first required a baccalaureate degree for public school teachers, and the Legislature accompanied this mandate with an upgrade in the basic teacher salary schedule.

While the state mandates a minimum teacher salary schedule, teacher salaries in Texas are paid by local school districts directly to teachers. Funding for school district operations comes from federal, state and local sources, meaning that teacher salaries are partially funded by the state and federal governments, but state school funding formulas determine how much is paid directly from local taxes. Further, many local school districts offer salaries in excess of the minimum salary schedule.

The state’s Educational Opportunity Act of 1984 (House Bill 72, 68th Second Called Session) enacted sweeping reforms in public education, among them a requirement that teachers and administrators pass the Texas Examination of Current Administrators and Teachers (TECAT) exam, a basic competency test in reading and writing, by June 30, 1986 to revalidate their certificates. The act also contained provisions designed to attract and retain teachers by giving teachers a pay raise, providing them with a planning period during the school day, instituting lower pupil-teacher ratios for the early grades and adopting a career ladder as an incentive to high performance.

This Texas Teacher Career Ladder, in place from 1984-85 to 1992-93, provided salary supplements ranging from $1,500 to $6,000 to teachers at level 2 or higher on the career ladder (TEC 16.057, 1986). Advancement along the career ladder was based upon local assessment of the teacher’s performance, certain professional development requirements and years of service. At level four of the career ladder, teachers would be required to assume other duties such as supervising student teachers, acting as team leaders or mentors, conducting advanced academic training and assessing other level-four candidates. The Legislature abolished the career ladder before any teachers attained level four, but the legislation stipulated that teachers would continue to receive the supplements earned while the program was in place.

In 1995, a sweeping rewrite of the Texas Education Code (Senate Bill 1, 74th Session) established the State Board of Educator Certification, gave teachers authority to remove disruptive students from class and increased minimum salaries for teachers by 5.5 percent for the 1997-98 school year. The Legislature also appropriated funds for another 1 percent increase for the 1998-99 school year.

Late in the session in 1999, the Comptroller identified $807 million that allowed then-Governor George W. Bush to sign into law legislation increasing biennial state funding for public education by $4.0 billion, the largest such increase in the state’s history. Included in that amount was funding to provide a $3,000 annual salary increase for teachers, counselors, librarians and school nurses. This 1999 action was the last legislatively authorized and funded salary increase for Texas teachers.

While not a salary increase, in 2001, the Texas Legislature established a statewide school employee health insurance plan for teachers and other employees of school districts. All districts, whether participating in the state insurance plan or not received from the state a $75 a month per employee contribution for the district to use to pay for employee heath coverages, and $1,000 a year “pass through” for each school employee. Employees could use the $1,000 ($83 a month) to pay for additional employee coverage, dependent coverage, compensation or any combination of the above.

In 2003, the $1,000 distribution was cut to $500 for teachers and reduced even more significantly or eliminated entirely for other non-teaching staff or administrators. Initially supplemental compensation was eliminated and health reimbursement accounts (HRA) were to be set up and administered through the Texas Teacher Retirement System (TRS). After much controversy, the HRA’s were not implemented and teacher and school employee organizations are asking the Legislature to restore the full $1,000 supplement during the 2005 legislative session.

The state base salary schedule in TEC Section 21.402 applies to all classroom teachers, full-time librarians, full-time counselors and full-time school nurses. There is no state minimum salary for any other public education position.

National Comparisons

Texas’ teacher salaries are lower than those in most other states (Exhibit 15). Texas’ average teacher salary for the 2003-04 school year ranked 33rd in the nation in a May 2004 study by National Education Association Research. Furthermore, the same study indicated that Texas is losing ground, as its ranking fell from 32nd in the 2002-03 school year. In part, these findings may reflect a lower-than-average cost of living in Texas, but competition among states for highly qualified teachers is increasing, and teachers have shown their willingness to relocate if pay or working conditions in another school, city or state are better.

Exhibit 15
Average Salary for Classroom Teachers, 2003-04
Region and State Instructional Staff Elementary Secondary All Teachers National Ranking on All Teachers Average % Change 1993-94 to 2003-04 (current $) National Ranking in % Change
50 STATES AND D.C. $49,017 $46,712 $46,928 $46,826   31.0%  
Alabama $40,688* $39,133* $39,133* $39,133* 39 36.3% 13
Alaska $52,020* $50,697* $50,697* $50,697* 13 6.7% 51
Arizona $53,479* $41,843* $41,843* $41,843* 28 31.6% 22
Arkansas $39,423* $38,629* $38,629* $38,629* 42 37.5% 12
California $59,675* $58,287* $58,287* $58,287* 1 44.8% 5
Colorado $45,507* $43,669* $43,669* $43,669* 23 29.1% 30
Connecticut $59,500 $56,480 $57,300 $57,000 3 14.5% 50
Delaware $55,000* $52,499* $52,499* $52,499* 8 40.1% 8
District of Columbia $58,817 $57,009 $57,009 $57,009 2 34.0% 16
Florida $42,619* $41,313* $41,313* $41,313* 29 29.3% 29
Georgia $48,275 $45,181 $46,987 $45,939 16 49.6% 1
Hawaii $46,867 $45,479 $45,479 $45,479 18 24.4% 41
Idaho $41,080* $41,080* $41,080* $41,080* 31 48.0% 3
Illinois $55,379 $49,997 $57,630 $52,950 7 34.4% 14
Indiana $47,127 $45,890 $45,786 $45,791 17 28.2% 31
Iowa $40,866 $38,608 $40,154 $39,432 37 28.2% 32
Kansas $40,013 $38,883 $38,883 $38,883 41 14.7% 49
Kentucky $41,555 $39,895 $40,741 $40,187 34 27.1% 35
Louisiana $40,096* $38,300 $38,300 $38,300 44 46.8% 4
Maine $43,820 $39,459 $39,769 $39,558 36 27.6% 33
Maryland $53,506* $51,145* $51,145* $51,145* 12 29.6% 27
Massachusetts $64,935* $52,150 $52,150 $52,150 11 33.7% 18
Michigan $54,836* $54,836* $54,836* $54,836* 5 22.2% 45
Minnesota $46,541 $45,781 $44,276 $45,041 20 27.1%* 34
Mississippi $37,064* $35,684* $35,684* $35,684* 48 41.9% 6
Missouri $40,036 $38,125 $37,883 $38,006 45 25.4% 40
Montana $37,443* $36,689* $36,689* $36,689* 47 30.1% 26
Nebraska $42,770* $39,635 $39,635 $39,635 35 34.1% 15
Nevada $44,397 $41,926 $42,728 $42,254 26 24.4%* 42
New Hampshire $49,306* $42,881* $42,881* $42,881* 25 25.7% 39
New Jersey $58,116* $55,142* $55,142* $55,142* 4 23.4% 43
New Mexico $39,211 $37,259 $38,517 $37,624 46 38.3% 11
New York $54,989* $53,482* $53,482* $53,482* 6 16.8% 48
North Carolina $44,413* $44,076* $44,076* $44,076* 22 48.3% 2
North Dakota $35,889 $35,793 $34,794 $35,441 49 39.0% 10
Ohio $48,101* $46,572* $46,572* $46,572* 15 30.6% 24
Oklahoma $36,411 $34,781 $35,223 $34,993 50 29.6% 28
Oregon $49,500* $49,169* $49,169* $49,169* 14 30.4% 25
Pennsylvania $53,663 $52,400 $52,200 $52,200 10 23.1% 44
Rhode Island $54,922* $52,261* $52,261* $52,261* 9 33.1%* 20
South Carolina $43,276* $41,299* $41,299* $41,299* 30 39.7% 9
South Dakota $34,460 $33,310 $33,063 $33,236 51 31.6% 23
Tennessee $42,283* $40,657* $40,657* $40,657* 32 33.2% 19
TEXAS $43,015 $40,080 $40,923 $40,494 33 32.6% 21
Utah $40,316* $39,156* $39,156* $39,156* 38 41.3% 7
Vermont $43,457 $41,725 $42,296 $42,007 27 21.7% 46
Virginia $45,326 * $44,240 * $44,240* $44,240* 21 34.0% 17
Washington $47,775 $45,493 $45,349 $45,429 19 26.7% 36
West Virginia $39,961 $38,207 $39,034 $38,461 43 25.9% 38
Wisconsin $46,593* $43,382* $43,382* $43,382* 24 20.5% 47
Wyoming $41,170 $39,197 $39,080 $39,130 40 26.4% 37
* Twice a year, NEA Research submits current-year estimates of more than 35 educational statistics to each state's Department of Education for verification and revision. The figures submitted by NEA Research are generated using regression analyses, which are standard statistical techniques designed to make predictions for the current year using numerical data from prior years. Only if an education department does not replace these projections with its own estimated data does NEA use regression-generated figures in this report. Such NEA estimates are identified with an asterisk in this summary.

Source: Ranking & Estimates, National Education Association Research, May 2004.

Exhibit 16
Comparable Occupations
Teacher Type 2003 Average Teacher Salary % Growth Previous
5 years
2003 Average Comparable Salary % Growth Previous
5 years
2003 Teacher Pay Gap Pay Gap as % of Teacher Salary
Kindergarten Teachers, Except Special Education $39,040 13.1% $44,721 15.0% $5,681 14.6%
Elementary School Teachers, Except Special Education $40,800 15.6% $44,941 13.2% $4,141 10.1%
Special Education Teachers, Middle School $40,840 10.4% $48,213 15.5% $7,373 18.1%
Special Education Teachers, Preschool, Kindergarten, and Elementary School $40,840 11.4% $48,213 15.5% $7,373 18.1%
Special Education Teachers, Secondary School $41,460 12.6% $48,213 15.5% $6,753 16.3%
Middle School Teachers, Except Special and Vocational Education $41,800 15.0% $47,704 15.6% $5,904 14.1%
Vocational Education Teachers, Middle School $42,640 9.5% $47,704 15.6% $5,064 11.9%
Secondary School Teachers, Except Special and Vocational Education $43,290 14.2% $47,704 15.6% $4,414 10.2%
Vocational Education Teachers, Secondary School $44,850 10.7% $47,704 15.6% $2,854 6.4%
Source: Texas Workforce Commission Career Development Resources Division and Bureau of Labor Statistics, Occupational Employment Statistics.

Pay in Comparable Occupations

All too often, teachers find that they can earn more by entering other occupations that need their skills.

The Texas Workforce Commission has developed an Occupation and Skill Computer-Assisted Researcher (OSCAR) system to help workers find appropriate occupations given their existing skills. This system can be used to identify occupations that rely on the skills and training teachers possess. Based on Bureau of Labor Statistics occupational wage data, one can then calculate the average salaries in these comparable occupations.

Exhibit 16 compares average salaries for nine teaching occupations to the average salary calculated for professions employing similar “skill sets” as teachers. For each of the nine teaching occupations, OSCAR identified from 21 to 67 comparable professions, such as sales managers, service managers, wholesale and retail buyers, personnel recruiters and training and development specialists. The exhibit then estimates the “pay gap” between an average of these professions and the various teaching occupations.

Depending upon the type of teacher, comparable jobs in Texas requiring the same skills pay from $2,854 to $7,373 per year more than teaching positions. This implies that in 2003, teachers could have switched to another occupation requiring similar skills and enjoyed an average pay raise ranging from 6.4 percent to 18.1 percent of their current salary. Moreover, in most cases this gap has increased over the past five years.

Reasons for Leaving

A May 2000 survey by Scholastic Inc. and the Council of Chief State School Officers found that the most effective strategies for retaining experienced teachers were:

  • better pay and administrative support;
  • active role in decision-making;
  • more planning time with peers;
  • ongoing professional development;
  • sabbaticals for professional growth; and
  • career advancement opportunities.

Other than salaries, the Education Commission of the States Issues Reports, 2002 listed causes for teacher dissatisfaction including stressful or unsupportive work environments marked by:

  • student and parental apathy;
  • disciplinary problems;
  • inadequate physical facilities;
  • lack of collegial support;
  • lack of supportive leadership; and
  • lack of decision-making authority.

Workplace demands are particularly difficult for teachers in the early years of their careers. Schools often assign veteran teachers to the most attractive schedules and the more academically gifted and “easier to teach” students, leaving less desirable schedules and more difficult students to newer teachers.

Teachers who depart the profession report that the increased demands of the job, particularly the challenges of increasingly antisocial and violent student behavior and high-stakes accountability testing, simply are not worth the low level of compensation.

Most studies indicate that one of the major reasons motivating teachers to leave the profession is the work environment. Teachers are being asked to do more with less, sometimes in increasingly hostile and even violent situations.

Filling Teaching Vacancies

Current teacher preparation programs are not meeting the demand for new teachers. According to the Texas Higher Education Coordinating Board (THECB), the various Texas teacher preparation programs produced 14,355 new teachers for the 2001 academic year. In a 2003 report, THECB further noted that about Texas schools hired an additional 3,000 teachers from other states in 2000-01. In total, then, there were about 17,355 new teachers available to fill 39,652 positions in 2000-01. Similarly, THECB reported 19,000 new teachers were available to fill 37,000 vacancies in 2001-02.

Teachers returning to the profession are filling some shortages. In 2000-01, 25 percent of the new teachers had not taught in the previous year but had taught in at least one year between the 1994-95 and 1998-99 academic years.

The Texas Teacher Retirement System (TRS) estimates that between 6,000 and 8,000 officially retired teachers teach in Texas public schools each year. Texas Government Code 824.601 discourages teachers from returning to work after retirement by stating that “...a retiree is not entitled to service or disability retirement benefit payments, as applicable, for any month in which the retiree is employed in any position by a Texas public educational institution.” Longstanding exceptions contained in Section 824.602 allow retirees to serve as substitutes, half-time employees and full-time employees for a period of no longer than six months. TRS cites the actuarial cost to the fund as the reason for maintaining these restrictions on teachers for immediately returning to work after retirement.

Over the last five years, the Texas Legislature has added further exceptions to the Government Code that were crafted to ensure TRS’ actuarial soundness while addressing the ongoing teacher shortage. In 1999, classroom teachers in acute shortage areas were allowed to return after a 12-month break in service with no retirement penalties. In 2001, the Legislature allowed teachers who were already retired on January 1, 2001 to return with no restrictions, since they had already retired and this incentive would not encourage more teachers to retire.

Many districts pay salaries far in excess of the minimum salary schedule in an effort to recruit, reward and retain qualified teachers, particularly in areas of critical shortages. Forty-five percent of respondents (representing 308 Texas school districts) to a 2003-04 Texas Association of School Boards survey reported paying “shortage stipends” to teachers in at least one critical shortage area. Shortage stipends are additional annual payments made to teachers working in subject areas designated by the Commissioner of Education as critical shortage areas, such as math, Special Education and Bilingual Education.

Bilingual Education was the most commonly reported area receiving stipends, with 60 percent (185 districts) offering teachers a stipend in this area. It was also the area receiving the largest stipends, averaging $2,073. Shortage stipends are particularly common in large districts; 66 districts with more than 10,000 students (77 percent of respondents in this size category) reported offering stipends.

Some school districts have resorted to extensive measures to reduce teacher turnover. The Dallas Independent School District (DISD) enacted a program to attract and retain a qualified teaching work force that included increasing the beginning teacher salary from $34,000 to $37,000; offering a $1,500 sign-on bonus for new hires; adding a $500 annual English as a Second Language (ESL) stipend; and providing $250 to every teacher for supplies. As a result of this intensive recruitment effort, DISD began 2002-03 with only 28 teacher vacancies, compared to 150 teacher vacancies in 2001-02 and 259 vacancies in 1999-2000.

During a 2000 school performance review of Galveston ISD, the Comptroller found that one of the biggest challenges GISD faced was recruiting and retaining teachers. With nearly 100 teaching vacancies each year, the district experienced significant difficulties in hiring and retaining certified and qualified teachers, a difficulty that had begun to affect student performance. By raising its salaries and making a commitment to remain competitive in the marketplace, the GISD board significantly improved its position. At the end of 2000-01, fewer than 40 vacancies existed. GISD Human Resource personnel told comptroller staff that early approval of the salary schedule for 2000-01 greatly improved the district’s recruitment efforts, so much so that neighboring districts complained that GISD was attracting candidates away from them.

Costs of Teacher Turnover

Teacher turnover imposes direct costs both on school districts, which must foot the bill for recruiting and training replacements, and the state, which suffers a financial loss each time a teacher candidate prepared by Texas programs chooses not to pursue teaching as a career or to leave the profession after a short time.

Local Costs

In addition to actual monetary costs, school district administrators have noted that the loss of experienced teachers is disruptive to the educational delivery process. Not only must new teachers be hired and given preliminary training, but these inexperienced teachers must be mentored and monitored more closely. The responsibility for mentoring and training is compounded with newly hired alternative certified teachers. One board member in a smaller district remarked that it takes at least a year for a teacher to become acclimated and for the general routine on the campus to be restored. Further, when turnover occurs during the middle of the school year, the disruptions are magnified, both for administrators and students.

In addition to the staff expense involved in posting job openings, interviewing candidates and establishing new hires in district accounting, other, less obvious costs are involved in teacher hiring. These include recruitment costs, such as advertising, recruiter fees, background checks, reference checks and signing bonuses, as well as any costs for overtime incurred by other employees during the hiring process. In addition, teacher turnover involves costs for exit interviews, paperwork processing and payment of accumulated leave.

Once the new teacher is hired, orientation and other training increase the turnover cost. Other costs include those involved in providing additional supervision for any substitutes employed during the vacancy and increased supervision for new teachers. Although difficult to quantify, lost productivity involved in replacing more experienced teachers with new ones represents a cost as well.

The Texas State Board for Educator Certification issued a November 2000 report, The Cost of Teacher Turnover, which assessed methods used to determine teacher turnover costs. The study employed turnover rates and salary data from the 1998-99 academic year. To determine teacher turnover costs for the academic year 2003-04, the Comptroller’s office used the most conservative estimation method outlined in the study and updated it to reflect the number of teachers who did not return in 2004 and the average teacher salary for 2003-04.

The study methodology assumes that the average cost of turnover is 25 percent of salary and benefits, based on three national models of turnover costs developed by recognized experts. The average teacher salary for 2003-04 was $40,494 according to Exhibit 15, and average benefits, estimated at 30 percent of salary, were $12,148, for a total average salary and benefits estimate of $52,642 per teacher. Based on the most conservative methodology, the cost of teacher turnover per teacher for 2003-04 is estimated to be $13,161 per teacher.

The number of full-time equivalent teachers who did not return in 2004 was 36,322. At a turnover cost of $13,161 per FTE teacher, the total cost of teacher turnover for the 2003-04 academic year is estimated at $478 million.

State Costs

Direct state costs associated with educating new teachers consist primarily of two elements: state formula funding to higher education institutions and state financial aid directed to students attending these institutions. The estimated direct cost to the state for educating new teachers for an average of four years per student, as certified by the traditional route, and five years for the post-baccalaureate route, is $175.8 million annually, based on fiscal 2003 estimates of costs associated with undergraduate students attending public colleges and universities and the number of new teachers certified in Texas. Not included in this estimate are state funds for capital improvements and other fixed costs related to state university operations.

Because 32 percent of teachers certified by the traditional route and 37 percent of those certified by the post-baccalaureate route are no longer working in the classroom five years after gaining certification, the cost to the state for educating teachers who leave the profession is estimated to be at least $59 million per year, based on fiscal 2003 numbers (Exhibit 17). Because only about 60 percent of college students graduate as reported by THECB, the cost to the state could be significantly higher.

Exhibit 17
Annual Higher Education Cost Estimate for New Teachers
Certification Route Numbers
Certified by traditional route 9,290
Post-baccalaureate route 3,408
Total teachers 12,698
FY 2003 cost per student* $3,244
Total Cost for teacher training $175.8 million
Total Cost for educating teachers no longer in the classroom five years later $59.0 million
* THECB estimated 2003 annual state cost per undergraduate student at public universities was $2,837 for formula funding. State financial aid per student is estimated at $407 per student -- a total of $3,244. The table's total cost estimate includes four years of costs for traditional undergraduates and five years for post-baccalaureate graduates.

Sources: Texas Comptroller of Public Accounts, using data from Texas Higher Education Coordinating Board and State Board for Educator Certification.

Economic Costs of Dropouts:
$11.4 Billion Every Year Directly Impacting Texas Economy

We have already seen a correlation between the likelihood of a student dropping out and the quality of teaching he or she receives. Dropouts impose their own, quite substantial costs on society.

Recent estimates from the U.S. Census Bureau can be used to directly compute the lifetime earnings gained from various levels of educational attainment.

For example, based on three years of its Current Population Survey, the Census Bureau estimates that an average worker who has not completed high school will earn $766,951 (in real 1999 dollars) over a 40-year hypothetical working career from 25 to 64 years of age. Over the same period, a high school graduate (or equivalent) would earn $1,037,759 during 40 years of work, a gain of $270,808 or 35.3 percent. Since males generally earn more than women at all levels of educational attainment, their gain from a high school degree of $365,707 or 39.5 percent is greater than for females, but in percentage terms the female gain of 44.3 percent, or $236,111, is greater (Exhibit 18).

Figures reported by the National Center for Education Statistics (NCES) are considered the most accurate data on the number of high school dropouts in Texas and across the country. As noted above, the 2003 Legislature required the Texas Education Agency to adopt NCES dropout reporting standards beginning with the 2005-06 school year.

The latest NCES figures indicate that 46,973 students in grades 9-12 dropped out of Texas high schools during the 2000-01 school year. Following the procedures used in the Comptroller’s January 2003 special report, The Impact of the State Higher Education System on the Texas Economy, this figure can be combined with Census Bureau lifetime earnings estimates and other data to estimate the annual cost of high school dropouts to the Texas economy.

Because men and women enjoy different average earnings gains from a high school degree, this total dropout figure first must be broken out by gender. According to NCES, nationwide dropouts in 2000-01 were 57.4 percent male and 42.6 percent female. If Texas followed the same pattern, an estimated 26,963 of 2000-01 Texas high school dropouts were male and 20,010 were female. The next and most important step is to multiply these estimates by their respective Census Bureau lifetime earnings losses ($365,707 for men and $236,111 for women) for completing high school.

Next, two additional adjustments must be made. First, because much of the earnings gained from completing high school (and any other degree) reflect higher intelligence, ability or socioeconomic status rather than the actual knowledge gained in high school, these estimates must be adjusted by an “alpha factor” measuring the share of the earnings gain due solely to educational attainment. In the Comptroller’s higher education study (January 2003), these estimated alpha factors ranged from 65 percent for a one-year community college certificate to 90 percent for doctoral and professional degrees. Thus, to be consistent with this report, the alpha factor for a high school degree is estimated at 60 percent.

Exhibit 18
Estimated Lifetime Earnings Gain from a High School Degree
(All Workers, 40-Year Work History)
Group Not High School Graduate High School Graduate Gain (Real 99$) % Gain
All Workers $766,951 $1,037,759 $270,808 35.3%
Men $926,740 $1,292,447 $365,707 39.5%
Women $532,755 $768,866 $236,111 44.3%
Source: U.S. Census Bureau.

Exhibit 19
Estimated Cost of High School Dropouts to the Texas Economy
2000-01 School Year Annual Dropouts Lifetime Wage Loss Education/Ability Share Employment Rate Total Lost Wages (Bil $) Total Lost GSP (Bil $)
Male (57.4%) 26,963 $365,707 60.0% 77.0% $4.6 $8.3
Female (42.6%) 20,010 $236,111 60.0% 59.9% $1.7 $3.1
Total 46,973 $310,499 60.0% 69.7% $6.3 $11.4
Source: National Center for Educational Statistics, U.S. Bureau of the Census and Texas Comptroller of Public Accounts.

Second, since not all high school graduates end up working, this estimate must also be adjusted by the appropriate employment rate. Based on figures from the U.S. Census Bureau Current Population Surveys for 2002, 2003 and 2004, the employment rate for high school graduates in Texas is 77.0 percent for men and 59.9 percent for women.

After multiplying the number of male and female dropouts by the estimated lifetime earning loss, and applying adjustments for the “alpha factor” and average employment rates, the total lifetime wage loss for Texas high school dropouts can be estimated at about $6.3 billion annually.

But this tells only part of the story. Since lower wages are almost always associated with lower productivity and economic output, this wage loss estimate can be translated into an overall impact on Texas’ economic output. According to the U.S. Bureau of Economic Analysis, in 2001 (most recent consistent data available) earnings accounted for about 55 percent of the Texas gross state product.

Thus, dividing our annual $6.3 billion wage loss by 55 percent indicates that each year’s class of high school dropouts will directly reduce Texas economic output by about $11.4 billion over the next 40 years (Exhibit 19).

This process, moreover, is cumulative; every additional year of dropouts increases the long-term cost on the Texas economy. Ten years of dropouts at the current rate, for example, would cost Texas $114 billion in long-term economic output, 20 years would cost it $228 billion and so on. Clearly, educational failures exact an enormous and growing price from society as a whole.

Public Assistance Costs

In addition to the lost economic output, the state and federal governments also must pay dropouts higher amounts for public assistance, compared to high school graduates.

Texas Department of Criminal Justice data from 2004 indicate that Texas dropouts are six times more likely to be incarcerated than are high school graduates. If Texas dropouts in 2004 had been incarcerated at the same rate as high school graduates, 84,595 fewer persons would have been in Texas prisons. Based on the Criminal Justice Policy Council’s estimated cost of $44.01 per day to incarcerate prisoners in fiscal 2002, incarcerating an additional 84,595 prisoners costs the state and federal governments nearly $1.4 billion per year.

As with the calculations concerning income effects on the economy, completion of high school (and any other degree) may tend to reflect higher intelligence, ability or socioeconomic status rather than the actual knowledge gained in high school. Again, gains attributable to completing high school must be adjusted by an “alpha factor,” reflecting behavioral change due solely to educational attainment. As already noted, the Comptroller’s office estimates the alpha factor for a high school degree at 60 percent. Accordingly, the additional costs of incarceration that might be avoided through lower dropout rates are assumed to be 60 percent of the theoretical total, or $816.0 million.

High school dropouts also are 2.7 times more likely to receive Temporary Assistance for Needy Families (TANF) than are those with a high school diploma, and 3.7 times more likely to receive food stamp assistance.

If persons without a high school degree were represented in the main TANF caseload at the same rate as those with a degree, TANF would have served 31,037 fewer Texans in 2004, representing a total cost of $55.9 million that could have been avoided. If the same pattern had held for the food stamp caseload, there would have been 332,286 fewer food stamp cases in 2004, representing a total cost to the state and federal governments of $864.2 million that could have been avoided. Adjusting both of these costs by the “alpha factor” to reflect the portion that could reasonably be expected to be affected by higher graduation rates lowers the estimated annual impacts to $33.5 million in TANF expenditures and $518.5 million in food stamps.


Teacher salaries in Texas are low, and have contributed to significant and continuing shortages of high-quality, seasoned teachers. In their absence, student performance suffers and the likelihood of students dropping out increases. Student dropouts and poorly educated workers have a tremendous detrimental impact on the state’s economy and the cumulative effect on the economy over time could be catastrophic.

Exhibit 20
Economic Impact of Texas Teacher Shortages
(Amounts in millions)
Element Annual Cost
Teacher Turnover Cost to Federal, State and Local Governments
Cost to School Districts to Recruit, Hire and Train New Teachers When Teachers Leave the Profession $478.0
Cost to State for Higher Education Investment Lost When Teachers Leave the Profession $59.0
Economic Cost of Dropouts
Reduction in Economic Output $11,400.0
Cost to State and Federal Governments for Public Assistance to Dropouts
Incarceration Costs $816.0
Temporary Assistance for Needy Families (TANF) $33.5
Food Stamps $518.5
Total Costs $13,305.0

If new dollars are to be directed to Texas public schools, it is imperative that they be directed to attract and retain the best teachers to the classrooms offering the greatest potential for improved student performance.

Adequate pay, a system of support for new or struggling teachers and incentives for top-performing teachers who work in schools with hard-to-educate populations would result in an expanded pool of applicants to fill vacancies, reduce turnover rates, increase the supply of higher-quality teachers, improve student performance, reduce the dropout phenomenon and provide a host of future economic benefits to the state.


  1. State law should be amended to grant teachers an across-the-board $3,000 annual pay increase.

    This increase for FY 2006 should be provided to every teacher regardless of their years of service and in addition to any local supplements currently paid above the state’s minimum salary schedule. This raise should position Texas at or near the national average for teacher salaries.

  2. The state’s minimum salary schedule should be adjusted to reflect the $3,000 increase and biennial increases should be made to the minimum salary schedule and fully funded by the state to maintain average teacher salaries at or near the national average.

    A biennial competitive salary schedule adjustment mechanism should be implemented that automatically adjusts the teacher salary schedule every two years. Fully funding the increases will insure that districts actually give teachers those increases, and in doing so would allow Texas to remain at or near the national average for teacher salaries.

  3. The state should appropriate additional monies to fully fund mentoring programs and to fully fund stipends for quality, certified teachers who serve as mentors to new teachers as they enter the profession.

    Federal funds currently support SBEC’s TxBESS program, which is having a significant impact on teacher retention in the early years. Additional state dollars should be dedicated to supplement what is already federally funded through SBEC’s TxBESS program to expand that program and help the state maintain its current teaching work force and retain new teachers.

  4. State law should be amended to pay bonuses to all teachers at schools that raise their ratings under the Texas Public School Accountability System from Academically Unacceptable to Acceptable.

    All teachers in a school that achieves this improvement should receive a bonus of $2,500 each. The Comptroller would issue the checks for these bonuses directly to the teachers.

Fiscal Impact

Recommendation A would conservatively cost the state $1 billion during the 2006 fiscal year, based upon a $3,000 salary increase plus 6 percent for the state’s contribution to the Teacher Retirement System, for approximately 315,509 teachers, librarians, counselors and nurses impacted by the minimum teacher salary schedule. Growth in the student population and the number of teachers would cause this number to increase by about $20 million each year thereafter.

Recommendation B would cost $625 million in fiscal 2008, based upon an average teacher salary of $43,494 after the initial $3,000 pay raise for 328,702 teachers, librarians, counselors and nurses and a projected 4.1 percent national inflation rate for lack of a better measure at this time. Each biennium, the amount of the increase would depend entirely upon national salary statistics and the amount needed to maintain Texas teacher salaries at or near the national average, and therefore cannot be estimated at this time.

Recommendation C would cost the state $58.5 million annually; assuming that 23,000 first-year teachers will enter the workforce each year, 1,000 of which are currently being served by SBEC. This estimate not only includes dollars for teacher stipends, but also release time, training and costs to SBEC for administering the program. Assuming this program is successful, there would be declining need for funding in the future.

Recommendation D could cost the state $10 million annually if all of the 102 campuses currently rated academically unacceptable were brought up to acceptable status. The estimate assumes an average of 40 teachers per campus. The estimate also assumes that the first bonus would be paid during the 2007 fiscal year based on 2006 ratings. As the number of academically unacceptable schools declines the need for funding will drop accordingly.