Financial Incentives for Staffing Hard Places

Because low salaries are widely believed to be one of the chief deterrents to becoming and remaining a teacher, financial incentives have become an increasingly popular teacher recruitment and retention strategy.

In addition to increasing teacher pay, states and districts are offering bonuses, housing subsidies, tuition assistance, tax credits, and other monetary incentives in hopes of luring more teachers to their ranks and keeping the ones they already have.

A new report by Cynthia Prince, “Higher Pay in Hard-to-Staff Schools: The Case for Financial Incentives,” argues that targeted financial incentives—not just across-the-board pay raises—are essential to attract and retain well-prepared teachers in the most challenging schools. The report examines what is known about the effectiveness of financial incentives as a policy remedy, where the teachers’ unions stand on this issue and whether more money is likely to overcome teacher reluctance to work in hard-to-staff schools.

The report can be found on the AASA website in PDF format here.

The report describes examples of financial incentives currently offered to attract certified teachers to low-performing and hard-to-staff schools, such as the following:

• Targeted salary increases

The traditional salary schedule that determines how teachers are paid generally prohibits districts from offering higher salaries to teachers who teach certain subjects or work in certain schools. Some districts, such as Boston and Hartford, are circumventing this problem by bringing in new teachers in hard-to-fill subject areas at higher steps on the salary ladder.

New York City circumvents this problem by offering higher pay in exchange for extra duties. Teachers in 39 of the city’s lowest-performing schools receive 15 percent pay raises in exchange for teaching 40 extra minutes a day and participating in an additional week of training at the beginning of the school year.

• Bonuses

These are a more common means of increasing teacher compensation because they do not attempt to alter the traditional teacher salary schedule.

In North Carolina, for example, middle and high school teachers certified in mathematics, science or special education who agree to teach in high-poverty or low-performing schools earn $1,800 bonuses. Experienced teachers in Louisiana who transfer to the state’s lowest-performing schools receive $2,500 bonuses in addition to 125 hours of professional development. New York awards $3,400 bonuses to teachers willing to teach in a designated teacher shortage area or subject shortage area. Florida grants annual bonuses of up to $3,500 to high-quality teachers who teach in the state’s lowest-performing schools.

• Housing incentives

A broad range of housing incentives have been created to help districts attract and retain teachers, including relocation assistance, reduced or free rent and utilities, teacher housing, housing loans and grants, reduced-price homes, low-interest mortgages, tax credits and assistance with down payments and closing costs.

Several of these programs are targeted specifically to teachers and principals who agree to work in low-performing schools or in urban areas, where housing costs tend to be higher and schools tend to have greater difficulty filling teacher vacancies.

The Teacher Homebuyer Program in San Jose, Calif., offers interest-free loans of up to $40,000 to help teachers in the city’s public schools purchase homes. Seattle’s Hometown Home Loan Program offers low-interest home loans to teachers, financial counseling, low down payments and discounts on closing costs.

Mississippi’s Employer-Assisted Housing Teacher Program offers up to $1,000 in moving expenses to licensed teachers willing to move to areas of the state experiencing the most severe shortages of teachers. Mississippi also provides forgivable housing loans of up to $6,000 toward the down payment and closing costs on a home. The loan is forgiven and converts to an interest-free grant if the teacher remains at least three years in a critical teacher-shortage district.

The Teacher Next Door program, administered by the U.S. Department of Housing and Urban Development, aims to reduce the cost of home ownership for teachers and to attract them to urban communities. The program sells federally owned homes in more than 600 designated revitalization areas at half price to certified teachers and administrators.

• Tuition assistance

College scholarships and loans are another way to channel teachers to the subject areas and locations where they are most needed.

Mississippi’s Critical Needs Teacher Scholarship Program provides full scholarships to candidates who pledge to teach in areas of the state experiencing severe teacher shortages. Virginia’s Teaching Scholarship Loan Program awards stipends to prospective teachers who agree to teach in public schools with high concentrations of low-income students, in rural or urban districts with teacher shortages or in a high-demand academic discipline.

California grants $20,000 Governor’s Teaching Fellowships to career changers with bachelor’s degrees who wish to become teachers, provided they commit to teach in low-performing California schools.

South Carolina forgives state loans and federal Perkins loans if teachers remain for at least five years in what it terms “critical needs schools”— those enrolling large percentages of poor students. In North Carolina, student loans obtained through the Prospective Teacher Scholarship Loan Program are forgiven after recipients teach for four years in North Carolina public schools, but the loans are forgiven faster, in three years, if recipients teach in low-performing public schools.

California’s Assumption Program of Loans for Education assumes up to $11,000 in student loans if teachers serve in California schools full-time for four years. Up to $8,000 in additional loans are assumed if teachers work in low-performing schools and teach mathematics, science or special education.

• Tax credits

Teacher tax credits are another type of financial incentive that has caught the interest of a growing number of policymakers.

California offers two kinds of tax credits. The first is a state income tax credit of $250 to $1,500 per year for any credentialed California teacher in active service who has at least four years’ teaching experience.

The state also offers a federal tax credit through its Extra Credit Teacher Home Purchase Program. Participating teachers and principals who are first-time homebuyers and agree to serve for a minimum of five years in a low-performing school can reduce their tax liability by taking 15 percent of their annual mortgage interest payments as a dollar-for-dollar federal income tax credit.

Additional federal income tax credits recently have been proposed by AASA, as well as members of Congress, to attract teachers and administrators to hard-to-staff schools. In January, AASA proposed an annual federal income tax credit of up to $4,000 for certified teachers and principals who serve in high-poverty, low-performing schools. Rep. Heather Wilson, R-N.M., introduced a similar proposal in March. Wilson’s proposal, the Teacher Tax Credit Act, would allow teachers and principals who work in Title I schools to claim a $2,000 federal income tax credit.