Ever Wonder What Your Teacher Benefits Are Really Worth?
Your Complete Guide to Understanding What Your Healthcare Coverage, Pension and Other Teacher Benefits are Worth in Real Dollars.
Even if you're not a teacher or planning to be one, it's not likely you missed the big national debate about teacher compensation over the years.
Public opinion on education spending is complicated. And no wonder! The details behind district spending can be shaped by murky factors like state laws and federal rules around grant mandates. And with teacher compensation being a big part of the cost, it always seems to get tangled up in the bigger conversation about how tax dollars are spent on education.
According to the Department of Education, teacher compensation includes salary, extra pay, benefits and pension. Put them all together and they are the single biggest expense for any school district. The national tally comes to about $304 billion a year according to the Census Bureau, and as a teacher, a little slice of that massive pie belongs to you.
Figuring out base salaries for teachers isn't too complicated. They are paid on a set salary schedule that's largely determined by tenure and education level. And with a specific number of hours outlined in union contracts, even when teachers do put in those extra hours, there isn't a lot of wiggle room for additional pay.
If you're planning to become a teacher, you probably already have a handle on what your salary is going to be like. But it's the value of your benefits that can be harder to pin down.
We're going to unravel that mystery for you right here, though, and show you exactly how much all those wonderful teacher benefits add to your bottom line.
How Big a Deal Are Benefits in Your Total Compensation?
You hear it all the time: the real value in being a teacher is in the benefits. And it's true. The old iceberg analogy applies here since a big chunk of your compensation is hidden below the surface.
The Bureau of Economic Analysis estimates that the benefits portion of teacher compensation is equal to 45 percent of their annual wages. For a teacher making $64,133, that works out to almost $29,000 a year. Compare that to the 19 percent you might get working for just about any other employer that offers benefits.
Let's not kid ourselves, though. A lot of the benefits you enjoy are things you can't put a dollar value on. You love your summers off… good luck finding another career that offers that benefit! If the smiles on your students' faces blast into your soul like sunshine, that's a big deal too. Those aren't the kind of benefits you can plug into a spreadsheet, though.
Still, there are plenty of material benefits courtesy of your contract that can be penciled into a ledger. You won't always see them accounted for on your pay stub or in the public debates about teacher salaries, but they are all in there.
But just what exactly is the dollar value of those benefits, anyway? Where do they come from?
Dust off your calculators and come along with us to find out!
Your Base Salary is Your Biggest Chunk, of Course - $64,133/yr
- Total Annual Compensation So Far: $64,133
If you are currently teaching, you are probably looking at your most recent pay slip right now thinking "Wait, my base salary isn't $64,133." Well, no. That's the national average for public school teachers at all grade levels for 2019-2020 according to the 2021 NEA Rankings and Estimates Report.
Obviously, teachers are going to see some variation depending on where they are located and what grade levels and content areas they teach.
If you want to drill down a little further, these are the median levels by category for 2020 according to the Bureau of Labor Statistics:
- Elementary, Middle, and High School Principals - $98,490
- Instructional Coordinators - $66,970
- High School Teachers - $62,870
- Special Education Teachers - $61,420
- Kindergarten and Elementary School Teachers - $60,660
- Middle School Teachers - $60,810
Yeah, we threw in principals and a few others… they're kind of honorary teachers still.
But for our purposes, we're going to go with that big NEA average so we have one number to focus on. All you other folks hang tight, we'll give you the adjusted totals for your job at the end.
Skyrocketing American Healthcare Costs Can Really Boost the Value of Your Insurance - $10,598/yr
- Total Annual Compensation So Far: $74,731
Healthcare spending is going through the roof in the United States, and that makes healthcare benefits a big part of teacher compensation. According to the American Medical Association, health spending in the U.S. jumped by 4.6 percent between 2019 and 2020, and has been increasing over 4 percent per year since at least 2014. That's faster than the overall rate of inflation. Medical expenses can eat up a big chunk of savings… unless you have good healthcare coverage.
Almost all teachers get great coverage, though, and more of it than most folks. More than half of teachers have access to dental care and about a third receive vision coverage, well above what most jobs offer. And 97 percent have prescription drug coverage, a boon in times where the Centers for Medicare and Medicaid Services are projecting that drug costs will increase 60 percent by 2027.
Of course, you pay some of those insurance premiums yourself. But according to BLS, teachers on average pay only 16 percent of health insurance premiums versus the 21 percent that most workers are on the hook for.
The value of the employer contribution will vary according to your contract and probably depending on the size of your family. But that $10,598 is the average for American teachers, so we'll start with that.
Of course, the other thing about insurance is that it doesn't have a fixed pay-out. A teacher in good health may never use enough healthcare services to break even on what they put in; while others will have millions paid out in coverage if someone in their family is faced with some serious condition or injury. That's just how insurance works. Be glad if you're the former.
Another way of looking at it is the so-called actuarial value. That's the average likely payout based on the percentage of your total healthcare costs that your insurance covers so you don't have to. Although out-of-pocket expenses for healthcare may be rising, if the percentage covered by your plan remains constant, you're still coming out ahead. Your benefits provider or union should be able to give you the actuarial value of your plan.
Health insurance isn't the only kind of insurance that teachers get, however. District contracts might also offer life insurance coverage. Some pension plans come with basic or optional term life coverage that is wrapped in with your retirement benefits. Although life insurance obviously doesn't have any dollar value to you personally, the peace of mind it brings knowing your dependents will be cared for after you are gone is definitely a benefit.
There are also worker's compensation and unemployment insurance benefits, but those are included in a different category for legally required benefits discussed below.
All Teachers Love Their Paid Time Off - $5,025/yr
- Total Annual Compensation So Far: $79,756
Teachers can look to pad their paychecks by just over five grand per year by pocketing pay for hours they never actually work-paid time off. That includes sick days and personal days.
It's important to note, though, that this does not include that treasured summer vacation time. Although the details can vary from state to state and even district to district, the overwhelming norm in American teacher contracts is to deliver paychecks year round, including in the summer months. The values are based on the annualized salary, so this isn't considered paid time off.
In fact, teachers have less in the way of paid time-off benefits than most American workers… maybe because, with two months to yourself already, you just don't need to take much more.
Still, $5,000 is $5,000. And even if you are healthy as an ox and never use your sick days, many teacher contracts now include provisions to pay out unused leave at retirement. So, you can look forward to a hefty lump sum on top of your sweet, sweet pension benefits.
Pension Benefits Are Massive But Often Overlooked Until You Approach Retirement - $13,464/yr
- Total Annual Compensation So Far: $93,220 (whoa!)
As you are showing up for work and going through your day, helping your class master the works of Shakespeare or understand the preamble to the Constitution, something pretty cool and clever is going on in a back office somewhere at your district. Each hour you work, some little accounting gnome is dropping $9.22 into your pension plan.
In many states, traditional pensions are going out the window in favor of private-employer style defined contribution plans. Each of these combines some contributions from you (not counted in our analysis) and some from the employer. That's where the $9.22 comes from.
The payout for your pension is usually determined by your average annual income over your last few years of employment, with your age and total term of employment factored in.
With defined contribution plans becoming more favored, this benefit isn't necessarily as valuable as it used to be. Those types of plans guarantee the amount the employer drops into your retirement bucket, but what you receive will be limited by the total amount of contributions plus the growth of whatever the plan invests in.
Defined benefit plans, the traditional pension, actually guarantee your retirement income level. It's a subtle difference but it can add significantly to the total value of your retirement plan.
Looking Only at Annual Benefits Shortchanges the Value of Your Pension Over the Long Term
The thing about pensions is, they aren't really worth just one specific dollar amount. Unlike 401k or IRA (Individual Retirement Accounts), pensions are pooled. You don't have a specific pile of money with your name on it. You are just entitled to a certain amount each month for the rest of your life.
Most pensions have a vesting period to go through in order to get the full amount you are entitled to. In Utah, for example, to retire with full benefits you must fall into one of these categories:
- Turned 65 with at least 4 years of experience
- Turned 62 with at least 10 years of experience
- Turned 60 with at least 20 years of experience
- Earned at least 35 years of experience
If you retire before meeting any of those milestones it will reduce your monthly pension payout. That gives you some control over your pension benefits but there's another factor that is somewhat out of your hands: how long you will live.
Pensions keep paying until you cash in all your chips (so to speak). In some cases, your spouse may continue to collect. But that period between when you start taking the pension and the day you get your final report card can add up to all kinds of different totals, obviously.
Special Skills and Extra Duties Drive Extra Compensation for Some Teachers - $388/yr
- Total Annual Compensation So Far: $93,608
This averages down to a small number because not every teacher qualifies. But for those who do, these benefits can add a tidy sum to the base salary.
And unlike the long-term or occasional benefits such as health insurance and pensions, this number is tacked on to the bottom line in every single paycheck. It makes a real difference for teachers who qualify.
And what does it take to meet those qualifications? Well, it depends on the skill or duty. You can break this down into two categories. Here we'll look at the numbers individual teachers might get based on some fairly common scenarios…
Extracurricular Clubs and Sports Deliver More Dollars - $2,630 (not added to our running total)
That $2,630 is the number NCES found in their National Teacher and Principal Survey as the average paid to teachers for performing extracurricular or additional activities within their school system over and above just teaching. Those extra tasks included:
- Coaching athletic teams
- Sponsoring student activities and clubs
- Mentoring other teachers
- Conducting evening classes
Summer school is another big one. True, you have to give up those sweet, sweet summer vacay months. Spending time in the classroom when the weather is perfect and everyone else is headed to the lake is a drag. But it's a sacrifice that can drop another $2,700 into your bank account every year, according to NCES. Maybe you sunburn easily anyway!
Merit Pay Delivers More Money For In-Demand Skillsets or Stellar Results - $1,470 - $6,000 (not added to our running total)
Some districts have adopted a pay-for-performance model based on student success. Others take advantage of state-sponsored supplemental pay designed to attract teachers to come and work in struggling districts or schools. NCES found that those benefits average $1,470 per year for eligible teachers.
In other districts, special incentive pay is available for teachers with rare skillsets that are in high demand. In the Los Angeles Unified School District, for example, teachers who earn the state bilingual teaching certification can qualify for up to $5,406 annually as a reward. In the Austin Independent School District in Texas, a similar program offers up to $6,000, on top of a $1,500 signing bonus.
Finally, many teaching contracts include a negotiated clause that boosts your salary for earning the widely respected National Board Certification in your subject area. Again, using Austin ISD as an example, that's an additional $2,000 for getting through a Master of Arts in Teaching program and nailing the tough Board exams. We don't include this number because it's factored into the median base salary we started with, but it's worth mentioning because many teachers qualify for it eventually.
All The Stuff You Don't Think About Until You Need It - $4,838/yr
- Total Annual Compensation So Far: $98,446
Stuff? What stuff? Well, there is a whole category of benefits that you never think about until you need them. But when you need them, you really need them.
This is a category that BLS calls legally required benefits, and it covers mandatory contributions to programs like Social Security, Medicare, and worker's compensation and unemployment insurance.
A lot of times, retired teachers who take a state pension are ineligible for Social Security benefits, but you're not getting taken for a ride here. If you are paying into a pension alternative, there will be no SSI contribution taken out of your check over the course of your career. Most would agree, a state teacher's pension is a much better deal and a lot more reliable than traditional Social Security, which seems to always be up for discussion when congress is looking to find some extra money.
Worker's comp, however, is important and becomes a big deal if you ever need it. Usually run by the state, that's the money that's going to keep paying your bills, taking care of medical costs, and contributing to retraining if for some reason you can't get back into the classroom.
And although layoffs for teachers are rare-another unquantifiable benefit to the job-unemployment insurance is there to bridge the gap if you ever find yourself out of work. You don't think about this kind of thing as compensation, but you'll sure appreciate having it if you ever need it.
And Your Grand Total Annual Teacher Compensation with Bennies Is - $98,446
Almost six figures! For teaching! You probably weren't expecting that when you cracked this newsletter open.
If you do the easy math, you'll see your benefits alone work out to $34,313 annually… pretty darn close to that NIPA estimate.
The $34,000 question is, what does that do to the total compensation for each of the educator career categories listed earlier?
- Elementary, Middle, and High School Principals - $132,803
- Instructional Coordinators - $101,283
- High School Teachers - $97,183
- Special Education Teachers - $95,733
- Kindergarten and Elementary School Teachers - $94,973
- Middle School Teachers - $95,123
Not too shabby, considering it all comes with summers off and the warmth and joy you get from working with a classroom full of bright and creative kids.
Why You Won't Get the Full Benefit of Your Teacher Compensation Until Late in Your Career
So, despite all the controversy about inadequate teacher compensation, you can see that when it all comes together, teaching is not a half bad way to make a living. It definitely brings in more than what NEA reports as the national average of $64,133 for teachers, or even the $77,920 median salary for bachelor's degree holders across all professions.
So why the debate over higher pay? Well, it comes down to timing.
If you've been keeping track, you will have noticed that the biggest single chunk of change besides your salary is your pension benefits. This is intentional, and it helps account for the fact that starting salaries for teachers are relatively low.
According to the Department of Education, the current structure of the general teacher compensation package is back-loaded, designed specifically to reward career service. The entry level salary is artificially low in relation to the total career compensation. Districts want teachers who stick around and deliver good service. Most of the rewards in your career will be based around that ideal.
So, you can count on making pretty decent money as a teacher. You just have to count on getting a significant part of it later on. The incentive of steady salary increases along the way and the stability that comes in retirement is well worth the wait.
May 2020 Bureau of Labor Statistics salary and job growth figures shown here are for Elementary, Middle, and High School Principals, Instructional Coordinators, High School Teachers, Kindergarten and Elementary School Teachers, Special Education Teachers and Middle School Teachers. Benefit data retrieved from the National Compensation Survey published in March 2021.
Additional salary data comes from the National Education Association 2021 Rankings and Estimates Report.
Other compensation and benefit data gathered from the National Center for Education Statistics, a service of the U.S. Department of Education, using data collected for the 2019 school year, and from the National Teacher and Principal Survey.
School district budget expenditure figures come from the U.S. Census Bureau's Public Education Finances report for 2015.
These figures reflect national data, not school-specific information. Conditions in your area may vary. Data Accessed June 2021