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

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 2018-19—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-level funding allocations toward certificated base salaries, particularly among more senior teachers. Variability in political power, priorities, and interests of both districts and unions led to greater heterogeneity in teacher salary schedules. Teacher mobility rate was reduced in the first year of the reform, and subsequently new hiring rate was reduced in the second year. Suggestive evidence indicates that a $1,000 salary increase would have larger effects on junior teachers’ hiring and their transfers between districts to a greater extent than late-career teachers.