TEP has created a sustainable financial structure that supports its educational vision and its unique focus on teachers of exceptional quality. This begs the obvious question: How is TEP able to finance its teacher compensation program (teachers receive a $125K salary and are eligible to receive an annual bonus of $25K) while relying almost exclusively on the public funding it receives as a New York City Charter School?[i]

In order to answer this question, TEP prepared a detailed analysis comparing TEP’s expenses to that of a typical New York City middle school. This analysis uses as its source material the 2004-05 New York City DOE School Based Expenditure Reports for Middle Schools (the most recently available report), which shows the percentage of total funds that NYC public schools spend on each line item.

The comparison shows that in 2013, when TEP reaches full capacity and no longer receives any special start up funding, it will spend nearly 55% of its total operating budget on teacher compensation and fringe benefits (this includes all base salary, annual bonuses, health insurance, retirement benefits, payroll taxes, and workers compensation). In contrast, the average NYC public school spent approximately 47.5% of its yearly per-pupil funding on teacher compensation and fringe benefits in 2004. In dollar terms, TEP will spend over $2.2 million more on teacher compensation in its 5th year of operation than a typical NYC public middle school of the same size spent on teacher compensation in 2004.

On one level, TEP is able to accomplish this because New York City per-pupil funding has increased substantially (even after adjusting for inflation) since 2004. However, the fact that New York City public schools (including TEP) now have substantially more resources than they did several years ago only partially explains TEP’s ability to finance its teacher compensation program.

The other core component that allows TEP to make a radical investment in teacher compensation is that, in doing so, TEP accrues significant cost savings that result from the tremendous quality and productivity of its teachers. Whereas a typical public school spends a significant percentage of its annual funding on line items such as instructional supervisors, extended-day activities, contracted services and the like, TEP avoids these costs because they are either unnecessary given the instructional quality of its teachers (e.g. assistant principals) or already integrated into its teachers responsibilities (e.g. extended-day programs).

Learn about TEP's 5 key savings areas

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