One of the greatest challenges school boards face in contract negotiations is how to meet employee demands for increased salaries and benefits. It is an ever-ascending spiral, as compensation in public education is seen in comparison to other schools, rather than the community at large. In other words, educators seem to live in their own economic world, where community, state and world events are seen as irrelevant. Helping educators to see that they do not live in isolation, and that public backlash is entirely possible if the evolution of salary and benefits does not mirror the community’s, is a noble function of a board.

Complicating the challenge of meeting expectations is the actual relationship between salaries and benefits, both substantively and strategically.

Former teacher and union leader Myron Lieberman has noted that unions encourage increases in benefits over salary increases so that "the salary schedule doesn’t look as high, which helps unions maintain public support."[206] Other union leaders contend that they have already taken salary concessions in order to sustain their benefits.[207] Likewise, the argument is sometimes set forth that teachers simply aren’t getting paid enough salary — giving voters the sense that schools are somehow underfunded.[208] In any event, when benefits are raised to compensate for perceived lower salaries, teachers are then informed about the success of the union in obtaining a terrific deal on their behalf.[209]

In reality, Michigan teachers appear to be well-paid in comparison to their peers nationwide. The "Survey and Analysis of Teacher Salary Trends 2004," released by the AFT, showed that Michigan educators were paid an average of $54,474 in 2004, placing them behind teachers in Connecticut, California, Rhode Island and New York as the best compensated in America.[210] The AFT study ranked Michigan first in teacher salary within the Great Lakes region and second, at $34,377, in average starting teacher pay.

The AFT study corresponded well to a December 2005 study from the NEA, which found that Michigan teachers rank fourth in the nation, with an annual average salary of $55,503 in 2004 and $56,973 in 2005.[211] In addition, Michigan ranked ninth nationally when comparing average teacher salaries against the average private-sector income. The state’s $54,474 average was 138 percent of the average annual private-sector income of $39,484.

Richard Putvin: "In our last contract that was settled with the teachers, we moved away from [the MEA-affiliated] MESSA. We are now into a private-sector [health plan], getting Blue Cross from another unit. And we explained to [teachers] what the savings was and this was how we were going to be able to give them the raise that we were going to give them. If they didn’t want to go with it, then we couldn’t give them the raise that they were asking for because the dollars just weren’t there. They finally understood that MESSA was costing us a great deal more than what we could get for the same kind of coverage outside of MESSA. Then we could give them a great deal of the savings that we were getting. It was a 91 percent vote, and they agreed to it."

Nationally, the average teacher’s salary of $46,597 is 123 percent of the private-sector average income of $37,765.[212] While comparison to the private sector in general may not tell the whole story — the average private-sector income does not necessarily reflect similar education and experience as teachers — it does give some indication of the relative strength of teacher salaries in Michigan.

Salaries and benefits are by far the largest expenditure in every school district. Health insurance is typically the second-largest item, just behind salaries and wages.[213] Nationally, a 2004 Bureau of Labor Statistics survey indicated that the fringe-benefits cost per teacher amounted to 20.2 percent of total salary, in contrast to 17.0 percent in the private sector.[214] With health-care costs rising and school district revenue projections remaining flat, there are few easy solutions.