Last update: February 26, 2007

Analyzing Vermont Public Education Cost Drivers

This analysis looks at changes in Vermont public education expenditures and staffing over the years 2001 through 2003. Many of the core expenditure trends outlined here appear to hold up for a number of years prior to 2001, but this analysis is specifically limited to 2001-2003 because detailed staffing data could be obtained only for that time period. Expense data for this analysis was gathered from the U.S. Department of Education's National Center for Education Statistics Web site. Staffing information is from the Vermont Department of Education's Web site.

Summary of Key Findings

Employee benefits is the second largest contributor to increased spending (after salaries) and is the fastest growing category of expense
Apart from year-over-year pay increases for existing employees, salary expense growth (the largest contributor to increased spending) is driven by high rates of staffing growth in specific functional areas

Overview

From 2001 to 2003, total Vermont spending for public education grew from $1,010,090,922 to $1,128,547,807, an increase of $118,456,885 or 11.7%. The vast majority of this increase (77.4%) is from growth in salary and benefits expense. Some of this growth is due to the growth in staffing (i.e. new positions), while some is due to salary increases. Growth in benefits expense is due both to benefits associated with new positions as well as the rapidly increasing cost of benefits (most notably the cost of health insurance).

Education Expense by Type	2001-2003 change	% of Total	Growth %	Comments
Salaries	$ 52,575,742	44.4%	8.9%
Benefits	$ 39,122,485	33.0%	23.7%	primarily health care driven
Purchased Services	$ 15,292,385	12.9%	12.7%	driver?
Tuition	$ 9,152,742	7.7%	19.5%	driver?
Supplies	$ 2,918,952	2.5%	4.6%
Property	$ (423,226)	-0.4%	-2.4%
Other	$ (182,195)	-0.2%	-3.0%
Grand Total	$ 118,456,885	100.0%	11.7%

Benefits Expense Growth

It is noteworthy that while total salaries expenditure increased by 8.9%, total benefits expenditures increased by 23.7% (about a 2.5 times higher growth rate). As a result, though benefits in 2001 accounted for only 16.3% of total expenses, growth in benefits accounted for 33% of total growth in expenses. Had benefits grown at a rate equal to salaries (instead of 2.5 times higher) total spending growth would have been lower by approximately 20.6%. Clearly, any effort that can successfully reduce the cost of providing benefits will have a significant impact on education spending.

Salaries Expense Growth

Growth in salaries expense is the result of both increases in staffing (i.e. new positions) and increased rates of pay for existing staff, both of which differ across functional areas. Direct instructional positions account for approximately 70% of all salary expense, 63.2% of the growth in total salaries expense, and 28.1% of overall education spending growth. As such, it is worth taking a more detailed look at the makeup of direct instructional salary expense to see what the specific drivers are.

Salary Expense by Category	2001-2003 change	% of Total	Growth %
Instructional Expenditures	$ 33,249,866	63.2%	7.9%
School Admin	$ 5,457,942	10.4%	11.7%
Student Support	$ 5,532,068	10.5%	12.5%
Instructional Staff Support	$ 2,662,573	5.1%	14.8%
Operations & Maintenance	$ 2,425,876	4.6%	9.7%
Food Services	$ 1,001,806	1.9%	11.9%
Other	$ 1,313,107	2.5%	13.2%
Student Transportation	$ 634,701	1.2%	10.4%
General Admin	$ 232,304	0.4%	1.9%
Enterprise Operations	$ 65,499	0.1%	26.4%
Grand Total	$ 52,575,742	100.0%	8.9%

Instructional Expense Growth

Approximately 73% of the increase in salary expense for direct instruction positions is due to increases in pay, rather than additional positions. From 2001 to 2003, average teacher salaries increased by 8.4% (to $41,463) and average teacher aide salaries increased by 11.2% (to $12,403). By comparison, during this same time period Vermont median income increased by 6% (to $43,261).

The remaining 27% increase in direct instruction salary expense is due to the addition of new positions. In general, the new positions were not regular classroom teaching positions:

Teacher aide positions increased by 7.5% (about 296 FTE), representing a payroll increase of $3.7 million (using the 2003 average teacher aide salary).
Ungraded teaching positions increased by 10.3% (about 144 FTE), representing a payroll increase of $6 million (using the 2003 average teacher salary).
Pre-school and kindergarten positions grew by about 39 FTE (an increase of about 10.6%). Using the 2003 average teacher salary, this represents about $1.6 million in increased salary expense.
Elementary and secondary (i.e. grades 1-12) teaching positions increased by approximately 34 FTE (an increase of about 0.6%). Using the 2003 average teacher salary, this represents about $1.4 million in increased salary expense.
Itinerant teaching positions declined by 11.2% (about 80 FTE), representing a payroll decrease of $3.3 million (using the 2003 average teacher salary).