The inflation rate in May was 8.6 percent, the highest since the bad old days of the Great Inflation 40 years ago. We’re all paying higher prices. So are our school districts.

School districts face some costs that increase as prices rise, and other costs that don’t. Food, fuel and equipment prices rise, and schools must pay. But teacher salaries are set in contracts, and until those contracts expire, inflation won’t have an effect.

In 2021, Indiana public schools paid 62,000 teachers $4.4 billion in salaries and benefits. That’s more than one-third of total school budgets. Teacher contracts run for one or two years, and until they expire, pay will rise at rates set before inflation increased. After a year or two contracts will be renegotiated, and it’s likely that teachers will expect their pay to keep up with higher inflation.

Okun, Phillips and Our Economy

Capital CommentsBy Purdue AgricultureFeb 17, 2021