Association for Public Policy Analysis & Management

Research illustrates that the role of school principals is both important and complex. In today’s urban school districts, it is likely that both the importance and complexity of the principal position is increasing due to policies that reduce the role of centralized school districts in favor of school autonomy. Autonomy is intended to improve student success by empowering principals to innovate, experiment, and adapt both educational programs and administrative processes. But autonomy also demands that principals take on new responsibilities previously managed by district personnel, such as writing school policies, managing budgets, fundraising, contracting for services, managing compensation and benefits, and data analysis.  In the extreme case of an independent charter school, the principal might serve as both a traditional instructional leader and a CEO, responsible not only for student success, but for the very existence of the school and its managing organization.

Because of the added complexity and workload of today’s principalships, attracting talented individuals to these positions will likely require additional compensation. However, many school districts continue to pay principals based on a pre-determined salary schedule that offers little opportunity to earn rewards for taking on more complex tasks. At the same time, charter management organizations, which have few restrictions on how or how much to pay principals, are often criticized for paying large salaries to school leaders. Prior research on principal pay offers little insight into an efficient or appropriate wage structure for principals, and several studies illustrate that principal effectiveness is not equitably distributed to high-need campuses.

In this study, we exploit a state context with a significant number of charter schools to examine the factors that influence principal pay. Louisiana contracts with over 40 charter management organizations to operate more than 100 charter schools, most of which are concentrated in a single principal labor market in the large, urban setting of Orleans Parish. Using longitudinal employment and compensation data for principals of traditional public schools and charter schools, we examine the influence of school characteristics and student demographics on principal pay, including variation in compensation strategies across sectors.  We also examine how and when principals receive additional compensation for student performance outcomes, teacher retention, teacher quality, fiscal health, and other indicators of principal performance.

Preliminary results suggest that over time, principals receive higher compensation at charter schools than traditional public schools. Charter schools are also more likely to reward performance, while traditional public schools typically reward experience.  Principals of single-site charter schools receive higher compensation than principals of schools in large CMOs, which suggests that principals receive higher pay when they serve the dual role of organizational and school leader.