Although almost half of the new policy spending in Gov. Inslee’s 2023–25 budget proposal would be used to increase employee compensation and provider rates, a relatively small portion of that would be for school employees.

The state increased allocations for school salaries as part of its response to the McCleary decision on school funding (beginning in school year 2018–19). The state operating budget sets the statewide minimum salary allocation for school employees. (Actual salaries are bargained locally.) In school year 2022–23, the minimum allocation is $72,728 for certificated instructional staff; $107,955 for certificated administrative staff, and $52,173 for classified staff.

Statute requires the state to fund annual salary inflationary increases for school employees, based on the implicit price deflator (IPD). Further, beginning in 2023 (and then every four years), the Legislature must “review and rebase state basic education compensation allocations compared to school district compensation data, regionalization factors, what inflationary measure is the most representative of actual market experience for school districts, and other economic information.” Then, the statewide minimum salary allocations, regionalization factors, and inflationary measure must be revised “if necessary to ensure that state basic education allocations continue to provide market-rate salaries and that regionalization adjustments reflect actual economic differences between school districts.”

The annual inflationary adjustments are also set in the state operating budget, based on the IPD as forecasted by the Economic and Revenue Forecast Council. Because the budgets are forward looking, actual inflation has sometimes been lower and sometimes higher than the funded inflationary adjustment. The discrepancy between the funded inflation adjustment and actual inflation was greatest in fiscal year 2022. When the 2021–23 budget was adopted, IPD for 2022 was expected to be 2.0%, so that was the funded salary adjustment for SY 2021–22. Ultimately, though, IPD was 5.8%.

By the letter of the law, the 2022 supplemental should have made the SY 2022–23 inflationary increase 2.8%, which was the estimate for FY 2023 IPD at the time. Instead, the Legislature chose to fund an increase of 5.5%, to help make up for the mismatch in SY 2021–22.

Meanwhile, the 2021–23 budget created an advisory committee to make recommendations in preparation for the 2023 salary review. The committee recommended setting the minimum state allocation for certificated instructional staff to $86,000 in SY 2023–24—an increase of 18.2%. After that, the committee would change the inflationary measure from IPD to the consumer price index (CPI).

The budget request from the Office of Superintendent of Public Instruction (OSPI) did not go so far. OSPI proposed increasing salaries by 6.0% in SY 2023–24 and tying them to CPI instead of IPD.

The November 2022 revenue forecast estimates that IPD will grow 5.2% in FY 2023, 2.6% in FY 2024, and 2.0% in 2025. Gov. Inslee’s 2023–25 budget proposal would set the inflationary increase at 4.5% in SY 2023–24 and 2.0% in SY 2024–25. This would increase spending from funds subject to the outlook by $351.9 million.

The chart shows actual base salaries for certificated instructional staff, what those salaries would have been if they had grown by actual IPD or CPI (rather than forecasted IPD at the time the budgets were enacted), and what they would be under the three proposals going forward.