Paying Workers: Employee Compensation

Sarah in Pennsylvania recently sent this question:

Our board is meeting soon to discuss the budget for the upcoming year and one of the main discussions will be setting salaries for teachers and administration. Is there a general rule of thumb to go by as a starting point for the Head of School and/or as a total administrative salary to be distributed on a tiered level amongst the administration and office staff (i.e., typical % of gross income for the school)? We put a statement in our 501c3 application about administrative salary percentage, are we bound to that number?

Hi Sarah!

Great question!

First, you are not bound to do exactly what put on your 1023 application. Those are more like estimates... The IRS doesn't go back and compare what you said on your application to what you actually ended up doing. As long as your activities are still in line with your mission, it's all good. In the hybrid program I direct, our payroll (including admin) is approximately 75% of our total expenses. It's a little tight for my comfort and we'll be raising tuition (but not teacher pay) in order to help increase some buffer.

Much of your question depends on the financial factors in your region, but I'll give some practical examples from my own experience. From a simple search, the average income for PA in 2020 is around $84,000. I'm in Oregon where it was $76,000. So perhaps factor that in when I give you examples of our pay:

We run a 2 day drop off program with 125 students and 9 classrooms (16 staff in all).

For 2021-2022 Annual budget:

Director: $11,560 ($17/hr)

Teacher: $17,300 ($19.50/hr)

Aide: $9,900 ($15/hr)

Aide: $7,920 ($15/hr)

Bookkeeper: $9,817 ($17/hr)

These numbers are for our current, established campus. We are expanding to add a second campus in a nearby city and we are finding we will have to start with lower numbers because the facility we will use is smaller and will limit enrollment for now. So, that is a factor as well. When enrollment is higher, there's usually more money to work with.

Something important to note: because we don't meet the qualifications for exempt employees, everyone must be paid hourly and for all the hours they work. This is near impossible for the Director position. So, the Director budget in my program needs to be increased next year. Ideally, the Director position for our program will be closer to $20,000 next year. There are things like aide work and even some of the work the bookkeeper does that I could take back which would decrease their hours/pay and increase mine. I just prefer to work very part time as much as possible so I try to delegate out a lot even if it means my pay is smaller. Here are other factors to keep in mind:

• Homeschool programs are often nonprofit and are not swimming in cash. :) Just like in a private school setting, teachers and staff members' pay will likely have to be less than the going rate in the for-profit world. It isn't usually sustainable for a homeschool group director to make the "going rate."

• Tuition generally determines how much you can pay your staff. You can raise tuition in order to pay them more, but there's a point where tuition gets so high that the group risks dying because they crossed that threshold. The board has to evaluate which they value more--the staff's pay or the program's existence.

• Homeschool programs do not need to have "qualified professionals" working for them. This allows you to pay a lower rates to teachers and staff because they could just be really smart homeschool moms and dads without bachelor's and master's degrees (which often demand a higher rate of pay). And that's great! That's what I am. :)

• People are sometimes willing to work for less if they believe in the mission of the program. This is one of the many advantages of becoming a nonprofit as well. I currently have a handful of OVER qualified professionals that work for me for a fraction of what they could make in the for-profit world. They love their jobs and are willing to work for less because they have moral convictions about who we are and why we do what we do.

I hope that helps!

~Becky

Paying employees in a homeschool organization is a big undertaking! It's totally doable but it takes hard work and lots of time and effort to learn how to do it correctly. If you need help paying employees in your organization, I offer private phone consultations. Visit my Consultation page to learn more. Keep up the good work!