Study Recommendations: Regional Cost Adjustment - PowerPoint Presentation

1. Study Recommendations:Regional Cost AdjustmentAmanda Brown and Justin Silverstein, APA

2. District Characteristic AdjustmentsIn any base and weight scenario, the study team also recommends providing three additional adjustments to address school/district characteristics: district size, cost of living through a comparable wage index (CWI), and necessarily small schools.2

3. Presentation OverviewReview of different types of regional cost adjustmentsReview of Comparative Wage Index (CWI) from studyNext steps for January meetingReview of stakeholder feedback areas3

4. Regional Cost Adjustment ApproachesThere are three types of indices that can be used to make a regional, or geographic, cost adjustment:Cost-of-Living Index (CLI). Usually created by determining the cost for a given set of goods — often termed a “market basket” — in different locations. Hedonic Wage Index (HWI). Uses regression analysis to predict wages by dividing the variation in actual wages across districts into spending that is and is not within control of the districts.Comparable Wage Index (CWI). Uses regional differences in non-educator wages based on the recognition that if wages in comparable professions are higher in a given region, then teacher wages will also have to be higher.4

5. Comparative Wage Index (CWI)The study team, supported by current school finance research, believes that the CWI is a good metric to use in looking at the differential in costs facing school districts related to personnel, as long as other district characteristics, such as size, are being taken into account elsewhere. Uses Census Bureau data so easy to update.Calculated by measuring the variation in non-teacher wages across localities.By examining the regional wage differentials of a large sample of workers who have characteristics similar to teachers, the CWI implicitly accounts for a wide range of factors that influence the salary levels necessary to attract teachers to live and work in particular districts or regions, such as cost of living and desirability of place, including climate, cultural amenities, safety, commute times, and recreational opportunities.5

6. Comparative Wage Index (CWI) ContinuedAt the time of the study, the most recent national data on CWI was from Lori Taylor of Texas A&M University and has been updated through 2013. Every district in the country and each state has an identified CWI figure. For the Commission, APA will be updating the CWI for Nevada.6

7. Next Steps for January Commission MeetingUpdate of CWI is underway and will be shared at January Commission meetingUsing most recent year of data (2017)Considering the use of expanded pool of professionsWill not be able to get to a county-based or smaller unit factorCWI analysis are based on the public use microdata area in the American Community Survey (ACS). PUMAs are county areas with at least 100,000 residents.The ACS also contains a place of work variable that gives some more detailed information, but sample sizes for many counties are too small.CWI factors will be developed for:Storey, Carson City, Lyon, Douglas CountiesWashoeClarkRest of state7

8. Next Steps for January Commission Meeting ContinuedWill provide examples (including specific formula mechanics) of other states that incorporate non-wage information into their regional cost adjustmentIdentify other factors that could be included in a regional cost adjustmentCollect stakeholder feedback8

9. Areas for Stakeholder FeedbackRegional Cost AdjustmentWhat cost areas should be considered?Currently, the proposed Comparative Wage Index (CWI) is based upon wages of similar professions, with similar education requirementsAny concerns about salary competitiveness in your district?Other?9