Economists tell subcommittee inflation‑adjusted teacher salaries fell while pension and health contributions pushed up total compensation

Two retired economics professors told the Budget Review Subcommittee on Education that Kentucky classroom teacher base salaries have declined when adjusted for inflation while large increases in pension and health contributions have driven growth in reported total compensation.

John Garren, a professor emeritus at the University of Kentucky and a scholar with the Bluegrass Institute, and Paul Coombs, an emeritus professor of economics at the University of Louisville, presented a multi‑decade analysis they said began in 2005 where data were available. Garren summarized the presentation by saying the inflation‑adjusted salary line "has fallen in the last decade or so," while the series of state 'on‑behalf' payments for pensions and health insurance rose sharply beginning about 2017.

Why it matters: the presenters argued that teachers and prospective recruits consider the full compensation package — salary plus employer‑paid health insurance and pension contributions — when assessing the attractiveness of teaching jobs. That matters for policy debates about shortages, pay equity and budget priorities.

The data the presenters highlighted included three linked findings. First, Garren said salaries measured in current dollars show year‑to‑year changes, but after adjusting for inflation "they've fallen in the last decade or so," with only a modest uptick at the end of the series. Second, the so‑called on‑behalf payments (pension and health contributions paid by the state on behalf of school employees) rose by roughly 61% in inflation‑adjusted terms from the series' base year, a jump the presenters traced in part to greater legislative pension contributions beginning around 2017. Third, when the presenters combined base salary and fringe benefits into a single 'total compensation' metric (inflation adjusted), they reported a roughly 10.5% increase in total compensation and cited an average total compensation figure "over $94,000" in 2024 while noting base salaries were much lower (they cited salary averages in the high‑$50,000s to low‑$60,000s).

The presentation also contrasted local differences: Garren said Jefferson County total compensation per teacher was about $118,000 (up ~21% since 2006) and Fayette County about $112,000 (up ~31%). He called attention to per‑pupil funding — which the presenters showed rose about 40.5% (inflation adjusted) over the period — and to staffing trends: teacher counts rose roughly 15% while non‑teacher staff rose about 23.4% and central district staff rose roughly 62%.

Committee members pressed for methodological detail. Representative Tina Bojanowski raised a technical challenge to the presenters' $1.929 billion 'on‑behalf' total and the $35,000 per‑teacher figure that the presenters calculated. She said the health‑insurance component covers classified (non‑certified) employees as well as certified teachers, and that TRS payments include contributions that benefit retirees as well as active teachers; she suggested those elements could inflate the per‑teacher allocation. The presenter response was procedural: "We divided the total contributions to TRS and to the health care system ... by everybody who benefited from it, including the non‑certified," and they agreed to recheck the method and send explanatory notes to members.

Representative Truett challenged the presentation's headline figures and said the suggestion that "the average teacher salary is $94,000" was misleading for practitioners in his district. The presenters immediately clarified they did not intend to present $94,000 as a base salary: as Coombs put it, that higher figure reflected total compensation (salary plus fringe) while the base salary figures presented were closer to $58,000 earlier in the series and around $61,000 in the most recent fiscal year. Coombs emphasized the relevance of the full benefits package to candidates: "When they see health insurance premiums are largely paid by taxpayers ... and the pensions are quite generous ... that becomes something that's very attractive to someone looking for a job."

On pensions and budget context, Chairman Tipton and Senator West framed the issue around long‑term TRS funding and past periods of underfunding. Members noted legislative contributions in recent years intended to reduce unfunded liabilities, and several said the rate of administrative and central office staffing growth nationally and in Kentucky deserved scrutiny as a potential driver of rising per‑pupil costs.

What the presenters will provide next: Garren and Coombs agreed to provide a written methodological note clarifying how the on‑behalf totals were allocated across staff groups, and to supply supporting tables and industry comparisons requested by members.

The committee did not take any formal votes on the presentation. Chair Banta scheduled the next subcommittee meeting for November 5 and closed the session.