The Effects and Local Implementation of School Finance Reforms on Teacher Salary, Hiring, and Turnover

Abstract

Knowing how policy-induced salary schedule changes affect teacher recruitment and retention will significantly advance our understanding of how resources matter for K–12 student learning. This study sheds light on this issue by estimating how legislative funding changes in Washington state in 2018–2019—induced by the McCleary court-ordered reform—affected teacher salaries and labor market outcomes. By embedding a simulated instrumental variables approach in a mixed-methods design, we observed that local collective bargaining negotiations directed new state funding allocations to substantially increase certificated base salaries, particularly for senior teachers with 16 years or more of teaching experience. Variability in political power, priorities, and interests of both districts and unions led to greater heterogeneity in teacher salary schedules. Suggestive evidence shows that state average teacher turnover rate was significantly reduced in the first year of reform. The McCleary-induced salary increase particularly reduces mid-career teachers’ (8–15 years of teaching experience) mobility rate and late-career teachers’ (23+ years of teaching experience) leaving rate. The McCleary-induced base salary increase has mostly null effects on teacher hiring in the first 2 years of implementation.