Personnel Salaries in District Budgets

     Throughout my administrative career, I have been told that personnel costs to a school district generally fall somewhere around 65% of the district budget.  This statement holds true in my school district.  Hico ISD has a total budget of $5,777,800 with personnel costs of $3,577,151.  The professional salaries are $2,929,511 and paraprofessional staff salaries are $647,640.  The percent of the total budget spent on salaries is 62%.  This has serious implications for districts that are struggling financially.  When struggling districts look to make budget cuts, it becomes clear that cutting in the area of salaries will have the largest impact.  When programs, supplies, etc only account for 38% of the budget, cuts in that area will have very little effect.  Therefore, administrators begin looking at staffing patterns as areas in which they can save money.

     The 5% salary increase for all personnel is a double-edged sword.  On the positive side, salary increases are sure to improve staff morale.  When teachers feel valued by their school district, their production increases as does their loyalty to the district. Offering increases each year provides an avenue to recruit and retain quality teachers.   I am certain that superintendents and school boards across the nation include salary increases in their budget as often as humanly possible.

     The negative side to the 5% salary increases is related to the cost to the district over a period of time.  Districts have a difficult time offering a salary increase one year, then taking it away the next.  This practice can have severely negative effects on staff morale and teacher attitudes.  Therefore, when a district commits to that type of increase, they are committing to the long haul.  A five percent increase each year means a 5% increase to the budget each year.  If this is not offset by a 5% increase in revenue, a district can find itself in financial crisis in a very short period of time.  For example, a 5% salary increase in Hico ISD would amount to a budget increase of $178,857 the first year, $187,800 the next year and so on.  This is a huge amount of money to a small district that is decreasing in enrollment and revenue.  Our superintendent recently created a table demonstrating the effect that step raises will have on our current budget over the next several years.  If our revenue does not increase, and we have no reason to believe it will, within 7-8 years our district would have used up nearly all of its fund balance.    That was an eye opening discovery for all of us.

    While the concept of a 5% salary increase is certainly something each district would like to apply, the reality of the budgetary impacts will most likely prevent it from happening.  This is just one of many difficult and negatively perceived decisions that must be made by school district administrators and boards.