The Impact of Large Revenue Infusions on Teacher Salaries in High-Poverty Districts

This paper examines how school districts change teacher salaries in response to large changes in revenue. Using district-level salary schedule data for nearly all California school districts, we analyze two time periods: one with a decrease in funding (2007-08 to 2011-12 marked by the Great Recession) and one with a significant increase in funding (2011-12 to 2018-19 marked by full implementation of the Local Control Funding Formula -- LCFF -- finance reform). During the period of revenue growth, revenue increased in all districts, but the LCFF directed substantially more to high-poverty school districts. We use a difference-in-differences analysis to compare the changes in teacher salaries in these high-poverty districts net of changes in low-poverty districts to determine if high-poverty districts use the extra funding to increase salaries and become more competitive employers. We focus on three distinct points in the salary schedules representing typical early-, mid-, and late-career stages. For each career stage, we find little evidence that high-poverty districts used additional funding from the LCFF to increase teacher salaries more than low-poverty districts did. In both high- and low-poverty districts, real salaries decline significantly and by similar amounts between 2007-08 and 2011-12. Salaries rebound similarly between 2011-12 and 2018-19, such that salary growth is largely stagnant over the decade for both types of districts. These shifts are smallest for early-career teachers and largest for late-career teachers. Our results highlight that high-poverty districts are not prioritizing salaries with the extra funding from equity-oriented reforms.