If you ask most superintendents or CFOs why they can’t give their teachers a substantial raise, they will likely point to the same culprits: shrinking revenues, state tax caps and the rising cost of doing business. The consensus is that without a massive infusion of new tax dollars, our hands are tied.
In South Bend, Indiana, we decided to challenge that consensus.
This month, our school board unanimously approved a budget that transforms our district from one of the lowest-paying in the state to the No. 1 highest-paying district in our region. We approved a flat $9,000 base salary raise for every teacher and a 20% wage increase for our bus drivers and support staff.
We didn’t do this by winning the lottery or passing a massive referendum. We did it within a standard 3% inflationary budget increase.
How? We stopped accepting “fixed costs” as fixed. We conducted a ruthless, data-driven audit of our operations and found that millions of dollars were trapped in legacy contracts, outdated insurance plans and administrative bloat.
Liabilities become retention tools
Here is the blueprint we used to unlock over $15 million in savings—money we took from operations and put directly into the pockets of our people.
1. We reclaimed our facilities operations. This is the most significant step we took. For years, like many districts, we outsourced our facilities management to a large, national third-party vendor. The industry logic is that outsourcing saves money and headaches.
We ran the numbers and found the opposite. We were paying a premium for overhead and profit margins while losing control over the cleanliness and safety of our buildings. The “convenience” was costing us millions.
So, we made the strategic decision to terminate the $20 million contract. We are bringing our 200-plus custodial and maintenance staff back in-house as district employees.
Critics might argue that managing hundreds of blue-collar employees is a burden a district shouldn’t take on. I argue that it is an opportunity. By insourcing, we are projecting $3 million to $5 million in annual savings.
But more importantly, we are turning contracted labor into “brand ambassadors.” We are giving them better benefits, the stability of district employment and a sense of ownership over the schools they maintain. We found that investing in our own capacity was far more efficient than renting someone else’s.
2. We challenged healthcare inertia. In the public sector, we often treat double-digit healthcare premium hikes like the weather—something we have to endure.
We refused to accept that. Our district hadn’t competitively shopped its medical insurance plan in years. We broke that inertia and took our plan to the market. The result was a transition to a central health fund that is projected to save us $6 million to $7 million annually.
Crucially, we didn’t achieve these savings by cutting benefits. We structured the deal to reduce premiums for both the district and our employees. We turned a budget liability into a retention tool simply by refusing to renew the status quo.
3. We starved the bureaucracy to feed the classroom. Finally, we looked at our own internal plumbing. In Indiana, districts can transfer money from the “Education Fund” (meant for instruction) to the “Operations Fund” (meant for overhead).
It is a common accounting lever used to plug administrative holes, but it structurally drains resources from the classroom.
In 2024, our transfer rate was over 9%. We attacked it aggressively. Through the savings generated from insourcing and stricter internal controls, we slashed that rate to just 1.0% for 2026.
This simple, data-driven change keeps millions of dollars where they belong: in the fund dedicated to student learning and teacher pay.
Teacher raises achieved
By pulling these three levers, we fundamentally changed our expense ratios. In our 2026 budget, 82% of our general fund is now dedicated to employee wages and benefits, up from just 70% the year before.
The cultural impact of this shift was immediate. Because we could prove to our unions that we were true partners in finding savings, our teacher contract negotiations—which usually drag on for months—were settled in just four days.
Our budget passed with a 7-0 unanimous vote, the first time that has happened in five years.
The money to solve the teacher pay crisis is often already in our buildings. It is hidden in the vendor contract that nobody has audited in a decade. It is buried in the healthcare plan nobody has challenged. It is trapped in administrative transfers.
We don’t need to wait for a bailout. We just need to stop acting like glorified accountants managing a decline and start acting like strategists hunting for value.
