Texas Teacher Salaries: Part 2 – Adjusting for Cost of Living

In Part 1 of this series, we compared the average salaries of school districts in Texas that are similar to Austin ISD, and we concluded that the average salary for Austin ISD is materially lower than its peer districts. In order to get a more complete picture of salary differences, we would need to account for the cost-of-living in each district; in theory, districts with higher cost of living would have to offer a higher salary in order to attract and retain teachers, who would otherwise look for higher paying employment. However, geographic variances in cost-of-living can be difficult to measure; not only is it conceptually hard to define, but existing data to support an analysis of any particular measure can be elusive or even non-existent. Luckily, a body of research exists that we can use to find answers to our questions.

In order to measure cost-of-living in any particular geographic region, we would ideally have location-specific price data on all of the individual products and services that are commonly consumed. We could then compare the cost variation from geography to geography in proportion to the amount typically consumed. For instance, we could measure the relative difference in cost for food-services, fuel & utility costs, housing, etc. and then weight those differences based on the percent of the typical household budget that each category represents; the resulting number would be the aggregate cost-of-living difference. There are a number of challenges with actually doing this type of analysis; many people could disagree on the list of products and services to use in such an analysis, data on location-specific price levels for most product categories is not readily available, and household budget composition is similarly fluid and difficult to measure.

If we cannot get a perfect measure of cost-of-living, then we should at least look for approachable alternatives. To start, we could look at housing costs. Not only are data and research readily available that show geographic variation in housing costs, but housing is a dominant factor in nearly all household budgets, so variances in this cost category should be highly correlated to variances in overall cost-of-living, however it’s defined.

The online real-estate company, Zillow, is a great source for research and data on housing market trends. In order to understand the geographic variation in housing costs, we can utilize their home value index and rental price index, both of which are readily available in the research section of their website. In comparing the most recent (June 2016) average house values in the metropolitan areas that surround Austin ISD and its peer districts, we can see that Austin has significantly higher average home values than the others: ZHVIBarplot2While this difference is stark, and tells us a lot about geographic variations in affordability, we may instead want to look at rental cost variation. Many factors can contribute to the relative attractiveness of renting or buying in a given market, but the cost of renting could be a more appropriate factor in the cost-of-living since it does not account for future expectations of home values, and so better represents the marginal cost of housing in a given area. In this comparison, Austin is still the most costly, but the difference is less pronounced:ZRIBarplot2


Another approach to measuring the cost-of-living is found in the research of Dr. Lori Taylor of the Bush School of Government & Public Service at Texas A&M University. This method focuses on the measurement of variations in salaries earned controlling for factors that commonly dictate wages, such as job type, age, and other demographic information. In theory, geographic wage variation should be largely driven by cost-of-living differences. Dr. Taylor has developed a ‘Comparable Wage Index’ (CWI) to measure these geographic wage differences using data from the U.S. Census (and other sources, see here for details).

When we use either the CWI methodology or Zillow’s rental price index to adjust the district-level average salaries, Austin ISD remains the lowest of its peer districts: AdjAverageSalaryBarplot


The data are painting a grim picture for Austin ISD teachers; they face the highest housing costs and are paid the lowest salary among their peer districts. It’s natural to ask how this can be; what force is acting against the Austin ISD budget that makes it impossible to pay their teachers a fair wage. One clear candidate is the so-called ‘Robin Hood’ law that forces Austin ISD to pay a substantial portion of it’s revenue into a general state fund. In the next post, we’ll look deeper into the relationship between these payments and the salary gap for Austin ISD.

Texas Teacher Salaries: Part 1 – Comparing Salary Levels

In the first post of this series, I outlined the questions that I hoped to answer about teacher salaries in Texas. The first question was, “does Austin ISD have a truly lower salary than other comparable Texas school districts”. In this post, we will dig into the data to see if we can answer this question.

The Texas Education Agency (TEA) is a rich source of information and data on all education-related topics in Texas, including teacher salaries. One report in particular contains staff counts and aggregate salary information by school district and grade-level for each school year going back to 2011 (see Staff FTE Counts and Salary Reports). The latest report (2015 – 2016 school year) has teacher-staff information on 1,203 school districts, but many of these districts are small; only 77 employ more than 1000 full-time teaching staff, and a large majority employ fewer than 100 full-time teachers:
It might not be helpful to compare salaries across all of these school districts, given that most are very small and specialized. Fortunately, the TEA groups these districts into categories that differentiate school districts by region type and size. These categories are:

  • Major Urban
  • Major Suburban
  • Other Central City
  • Other Central City Suburban
  • Independent Town
  • Non-Metropolitan: Fast Growing
  • Non-Metropolitan: Stable
  • Rural
  • Charter School Districts

Austin ISD is classified as a ‘Major Urban’ school district along with 10 others, such as Dallas ISD and Houston ISD. If we compare the average salaries of the ‘Major Urban’ school districts, we can quickly see that Austin ISD does indeed have a comparatively low average salary:AverageSalaryBarplot2
This supports my impression that Austin ISD salaries are lower than Dallas ISD. I was surprised to find that Austin is materially lower than all other districts in the ‘Major Urban’ cohort, and even lower than the average of the ‘Major Suburban’ districts.

It’s understandable that average salaries would vary across school districts. In comparing salaries in school districts of similar size, we should be careful to adjust for factors that would be expected to contribute to meaningful differences; factors like regional cost-of-living, teacher tenure, and unobserved benefits beyond base salary. In the next post, I plan to review salary differences net of such adjustments.

Texas Teacher Salaries: How Does Austin Stack Up Against the Rest of the State?

As both an Austin, TX resident and a spouse of a public elementary school teacher, I have a particular interest in the way we fund our education in Texas, and specifically how that funding translates into salaries for teachers. My wife, Emily, and I have recently moved back to Austin after living in Dallas for a few years, where she also worked as an elementary school teacher. We were surprised to find out that she would actually be taking a pay-cut with the move to Austin ISD; to us, it seemed that the cost of living was higher in Austin (especially housing costs) and it seemed natural that the pay would be at least equal or even more than it was in Dallas ISD.

After digging a little deeper, I quickly found that Texas school funding is a many-layered onion that has been covered and debated exhaustively. Just this summer, the Texas Supreme Court released a ruling that upheld the constitutionality of the way we fund our schools. One of the more controversial aspects of Texas school funding is a law that requires a redistribution of funds between districts in an effort to equalize “property-wealth per student”.  This law seems to have an out-sized effect on Austin ISD; a relative increase in property values has caused Austin ISD to pay the largest amount into the recapture fund each year since 2007. From 2007 to 2014, Austin ISD paid an average of ~$130M into the recapture fund. This amount has jumped to over $180M in 2015 and $230M in 2016, and according to preliminary estimates, the district is expected to pay a whopping $358M in 2017!

I find it hard to reconcile these two impressions: on one hand, Austin ISD is considered a wealthy district, one that can afford to send excess revenue to other, poorer districts; and on the other hand, teachers are paid less in Austin ISD than teachers in Dallas ISD, who according to the reports on the Texas Education Agency’s website, have never paid into the recapture fund. I’d like to look deeper into this issue to try to resolve my conflicting impressions, and to see what story the available data can tell. Does Austin ISD have a truly lower salary than other comparable Texas school districts? If so, does this effect disappear after we control for cost of living or other factors, like tenure? What is the relationship between recapture payments and teacher salaries in various districts across the state? How large is recapture in comparison to the overall school district budget for Austin, and how does this payment affect the average tax-payer in the district? I hope to answer these questions and more on this site. I’ll also host any code used for analysis in a public repository on GitHub (https://github.com/blincoe/Texas-Teacher-Comp) along the way.

If you have any expertise in this area, please feel free to email me and let me know your thoughts / share guidance.