Nearly 85% of a school’s budget is salary and fringes. In many cases, 80% of the staff is at the top of the pay scale and going nowhere but up in salary. Quality, Step 1 - 3 replacements are waiting on the sidelines for an opportunity to teach, at lower salaries. Why pay a position $60,000 if a quality replacement can be recruited at $30,000?

Many districts will be paying top of scale teachers an excess of $80,000 in salary alone by the year 2000. The obvious economic driver for salary budget reduction is replacing top of scale staff with lower salary staff, as illustrated below. This occurs normally with annual retirement turnover. However, if a significant number of staff can be transited 3 to 5 to 15 (or more) years early, the budget reduction that would have taken place years from now is brought forward, rather than paying the position a high salary for years to come. Simply put, the shorter the time a position is being paid top dollar, the less costly the position. The budget reduction is magnified when applied to many positions.

The key to the success of an incentive plan is to greatly accelerate the number of exits by 500% to 1200%. The number of exits with an incentive plan must attract true early outs, not just those who were going to exit in the next 1 to 3 years. Therefore, the incentive must be a "severance" package that is not tied to "retirement", and attractive enough such that top of scale staff exit as young as age 35. A modest lump sum "bonus" will not do it.

The first chart illustrates the difference in the cost of a position with a top of scale staff, compared to a Step 2 replacement. The second chart illustrates the gross budget reduction over time, assuming the top of scale staff person would have taught 35 years, but instead elects to leave after 28 years.