Contingent Pay Increases

Many districts are considering pay increases for next year that may occur after the start of the school year because they’re contingent on availability of funding — either from student enrollment increases or from passage of a voter-approval tax rate election (VATRE).

These pay increases may not hit employee paychecks until November or December, so districts are concerned with how to make sure the increase is allowable. To remain compliant, any pay increase should be approved by the board of trustees before the start of the school year as part of the compensation plan. For districts with a September 1 fiscal year start, budget adoption and compensation plan approval may occur after school starts but no later than the end of August.

Process Considerations

TASB Model Contracts in the HR Library include language at 6.1 that communicates the educator will be paid “according to the compensation plan adopted by the board each school year.” No changes are required to contract language to accommodate for a pay increase after the school year begins, as long as the compensation plan provides for an increase.

When adopting a compensation plan that includes the possibility of a mid-year increase, the language should include specifics about the contingency (e.g., “two percent pay increase contingent on passage of the district’s November VATRE”) and should include clarification of the pay increase effective date (e.g., “two percent pay increase first reflected in the November paycheck, with catch-up for pay already distributed for the 2023–2024 school year”). This also makes the delayed payments more likely to be considered creditable compensation for Teacher Retirement System (TRS) purposes.

A district incorporating an increase of pay that is contingent on other factors should work with local counsel to ensure the language is defensible. As always, districts can contact TASB HR Services or TASB Legal Services for more guidance, and additional guidance also can be found in the eSource document Mid-Year Pay Increases of School District Employees.