The Lone Star State recently took steps towards a new salary system for teachers, setting aside $10 million in salary incentives for highly effective teachers in economically disadvantaged areas. The program is designed to send $100,000 grants to individual schools with 75 percent of the pot directed at particularly effective teachers.

A recent report by the Texas Public Policy Foundation, Better Salaries for Teachers in Texas Public Schools, lays out a strong case for the investment. It reports that the effect of a high quality teacher is twice as beneficial as a 10 percent class size reduction. This effect is greatest for low-achieving students, who can achieve an additional year of growth on top of expected academic gains when assigned to high-quality teachers.

The study also claims to debunk the myth that Texas' teachers are underpaid, since the salary averages commonly reported by the nation's two main teachers' unions "do not take into account the economic value or spending power of the dollars." For example, in San Francisco, the average annual salary for elementary teachers ranks among the highest in the nation at $59,824; but when adjusted for cost of living, that value falls to $32,663. In this study, teacher salaries in Texas public schools were close to the top of the list when adjusted for cost of living. Salary averages also only represent base pay, and omit salary supplements such as hiring bonuses and incentives for working in shortage areas.

Economist Michael Wolkoff applies the cost-of-living factor to teacher pay in Wyoming and concludes that the state's teachers are paid adequately. Wolkoff also points out that Wyoming does not have a problem with teacher recruitment or retention, salaries must be appropriate in relation to the cost of living. Wyoming teacher salaries averaged $40,982 in 2004-2005, 36th in the nation; however, the cost of living in that state is also near the bottom, and residents pay no state income tax.