Public school funding has reached historic highs, but teacher salaries have declined in real terms even as spending surged, according to a new analysis published by the Fordham Institute. Between 2002 and 2023, the average inflation-adjusted teacher salary dropped while per-student funding climbed 36 percent in real dollars, the report found. The gap comes from a dramatic shift in how schools spend money: increasingly toward non-teaching positions rather than classroom instructors.
Non-teaching staff—including instructional aides, counselors, and social workers—grew by 23 percent during the period studied, the report says. State categorical grants have fueled much of this expansion: Arizona's school safety program allocates $82 million for social workers, counselors, and resource officers; Michigan directs $428 million toward mental health and school safety; and Minnesota spends $45 million on student support personnel. Community schools, which now represent an estimated 6 to 8 percent of all public schools, also drive staffing growth through health care, adult education, and counseling services that demand costly investments in non-teaching roles. Maryland lawmakers appropriated $572 million for community schools in fiscal year 2027—more than the state spends on school construction and roughly 50 times the budget for its math and literacy coach program.
The report argues that research identifies teachers as the most important in-school factor shaping student outcomes, making the opportunity costs of this staffing surge significant. State categorical grants that funnel money toward non-teaching staff prevent local leaders from weighing tradeoffs between higher compensation, additional hires, and other resource uses, the authors write. Master's degree pay premiums also waste money, the report contends, because studies show teachers with advanced degrees aren't generally more effective than those with bachelor's degrees—yet 135 of the nation's 148 largest districts pay novice teachers with master's degrees an average of $3,581 more and experienced teachers $9,315 more, according to National Council on Teacher Quality data cited in the analysis.
The staffing growth stems from multiple forces, including special education mandates, technology needs, wraparound services, and administration, the report explains. State laws that dictate staffing inputs compound the problem: Virginia requires one counselor per 325 students, one librarian per 300 students, and one assistant principal per 600 high schoolers; Arkansas and New Hampshire have similar counselor and librarian mandates; and Idaho, West Virginia, and North Carolina use funding formulas based largely on staffing positions rather than outcomes. Most school budgets revolve around staffing slots, which pushes school leaders to lobby for additional full-time positions instead of higher teacher salaries, the analysis notes. The report also points to flawed compensation structures: nearly one-third of states—including Alabama, Indiana, Mississippi, Ohio, Oklahoma, and West Virginia—mandate master's degree pay bumps in state law.
The report recommends decentralizing spending authority by eliminating state categorical grants, auditing laws that dictate staffing inputs, and giving principals more budget control. On teacher pay, the authors urge states to stop mandating master's degree premiums, remove collective bargaining constraints that limit compensation flexibility, and pilot performance-based systems like Texas's Teacher Incentive Allotment, which showed early gains in teacher retention and student achievement. The most promising approach may be sending dollars directly to principals and letting them reward top performers or fill hard-to-staff positions—a model already used in private schools and charters, the report says. If policymakers want to slow staffing growth and redirect money toward teacher paychecks, they need to decentralize decisions and rethink how teachers get paid.