Salary Schedule Lanes: How Much Difference Do They Really Make?

Many school districts have a salary schedule for teachers where your pay increases based on a combination of the number of years you have taught in the district (“steps”) and the educational level you attain (“lanes”). While steps are automatic (well, except for the occasional bad budget year where steps are frozen), lanes are dependent on whether teachers get additional education (and how much they get). Most teachers are aware that if they get additional education and move across the lanes they can increase their salary, but many may not know the huge difference that can make over time.

Again, inspired by a slide Ben Johnson created, I thought it might be helpful to take a look at Littleton Public Schools’ (LPS) salary schedule. LPS has a Schedule A and a Schedule B, with most folks (I believe) on Schedule B, but with Schedule A retained for some veteran teachers who it is more advantageous to stay on the older schedule (LPS pays you whichever schedule is higher for you). For this example, I’ll just focus on Schedule B.

While the salary schedule is generally “set” (at least until there is some kind of major negotiated change like when they added Schedule B), the schedule itself (usually) changes from year to year as each cell is inflated by a yearly increase to help offset inflation. I’ve created a spreadsheet that takes the current Schedule B and inflates future year salaries by 1% each year (as those increases have been rather sparse lately), but you can change that to a different amount if you wish (cell E2, outlined in purple). The first table in the spreadsheet shows what the (projected) salary will be for each step and lane for the next 40 years.

The second table (as you scroll to the right, beginning with Column N) shows the cumulative sum of the salaries in each lane. For example, if you look in cell P11, you’ll see that a teacher in the BA+40 lane will have a total cumulative salary of $368,598 after seven years of teaching. This assumes they are in that lane for all seven years (and that the 1% yearly increase in the schedule is accurate). An important point to keep in mind when looking at this spreadsheet is that very few teachers will remain in the same lane for their entire career (unless they are already at BA+40 or MA+90/DOC when they begin teaching). Because teachers have to complete continuing education credits to remain certified, it is almost a certainty that they will occasionally move horizontally across lanes.

But there is a hard break between BA+40 and MA. If you don’t get your Master’s degree, then you are “stuck” at BA+40, those continuing education credits don’t do you any good (in terms of salary, they obviously hopefully help you become a better teacher). Once you have your Masters, then you can continue moving lanes until you max out at MA+90 (or if you get a Doctorate).

The final table (as you scroll to the right, beginning with Column X) is the “difference” table. This shows the difference between the cumulative salaries in each lane as compared to the MA+90/DOC lane after 10, 20, 30 and 40 years of teaching. For example, here is the difference after 30 years of teaching:

So, after 30 years of teaching, you make about $1 million more (cumulatively) in the MA+90/DOC lane than in the BA lane. (And, likely a more helpful comparison, about $668,000 more if you compare BA+40 to MA+90/DOC).

As you scroll through the table, you’ll notice those numbers start to increase somewhat dramatically as you pass 10, 20, 30 and perhaps head toward 40 years. Again, a reminder that teachers will likely receive salaries in multiple lanes throughout their career, so these numbers won’t match anyone exactly (even if the 1% projected yearly increase was exactly right for 40 years). But it’s still very illustrative of the financial difference moving horizontally across the lanes (and moving horizontally as quickly as you can) can make (and getting your Master’s degree as quickly as you can.) I think focusing on the difference between the BA+40 column and the MA+90/DOC column (because of the hard break if you don’t get a Master’s degree) is probably the most impactful.

A couple of caveats, however. First, getting those additional hours is generally not free (especially getting a Master’s degree), so there is some cost associated with moving horizontally across lanes (but some of that cost is unavoidable, as you have to get recertification hours).

Second, money isn’t everything. Really. So having the time, opportunity and energy to pursue these additional hours has to fit into your life circumstances, as well as what you value and want to do with your life. So please don’t feel “shamed” if you haven’t moved across lanes or if you choose not to. This has to be part of the “good life” that you want to live.

With those caveats in mind, hopefully this spreadsheet shows you the financial impact moving across lanes can have and that will hopefully help inform your decision making. And one more thing, keep in mind that your PERA Defined Benefit is based on your highest average salary (either highest 3 or 5 years, depending on when your PERA membership started), so not only does moving across lanes increase your cumulative salary while you’re working, it continues to increase your cumulative retirement income once you start drawing that PERA benefit for the rest of your life (and possible your co-beneficiary’s life if you choose an Option 2 or Option 3 benefit).

Does this information spur you to accelerate moving across lanes? Or do you feel like you have “enough” and your time and energy is better spent elsewhere? Feel free to leave a comment below or reach out with questions or suggestions.

Fees Matter: Vanguard, PERA, TIAA and MetLife Comparison

Inspired by some of the work Ben Johnson has been doing, I decided to revisit two posts I’ve previously done on the retirement plans (401k/403b/457) available through Littleton Public Schools and Douglas County Public Schools. (Note that the expense ratios are slightly lower now than when I wrote those posts.)

It’s probably worth reading at least one of those posts for context, but I basically compared the fees you would pay for investing in PERA’s 401k/457 plan with those you would pay in the other vendor offered (TIAA for LPS, MetLife for DCSD). In this post I thought I’d take that a step further by showing the compounded effects of those fees over time, as well as throw in a comparison to an IRA at Vanguard.

Important note: IRA’s have much lower contribution limits than 401k/403b/457 ($6,000 vs. $19,500 if you are under the age of 50), so you can invest much more each year into your workplace plans. And there are also income limitations on whether you can contribute to an IRA, whereas there are no income limitations on 401k/403b/457 plans. And don’t forget the behavioral aspect – some folks need to have the money taken directly from their paycheck otherwise they won’t ever end up investing it.

So I created this spreadsheet to illustrate the impact of fees over time. Like all spreadsheets of this nature, it is based on many assumptions and those assumptions may be incorrect. Feel free to make a copy of the spreadsheet and change any of the assumptions you wish. For example, for the return on different asset classes, I put in the long-term compounded average return, but many folks think those will be lower in the future, so feel free to adjust. You also can adjust your asset mix between the different asset classes (I kept it fairly simple by limiting to US Large Cap Stocks, US Small/Mid Cap Stocks, International Stocks, US Bonds, and a Target Date fund choice.) Make sure the asset allocation mix adds up to 100%!

You can also change the initial amount you have invested (currently $0 in my examples) and the amount you are adding to your investment each year (currently $6,000 in my examples). You should not change the fees charged by Vanguard, PERA, TIAA or MetLife (unless you are reading this enough in the future that those have changed as well), nor the columns that keep track of your running totals with each vendor. Note that the fees for each are based on the lowest-cost fund offered within each asset class with each vendor.

You can change any of the numbers that are in cells with a purple outline, leave the rest alone.

So, let’s look at some selected results. First, what if you had an aggressive, all-equity allocation of 40% Large Cap, 30% Small/Mid Cap and 30% International? This is what it look like after 10 years:

As you can see, investing at Vanguard is going to get you the best overall return, and investing with PERA is going to be a better choice than either TIAA (LPS) or MetLife (DCSD).

How about after 30 years?

Wow. You’d have over $110,000 more in Vanguard than with MetLife, and over $90,000 more if you choose PERA over MetLife. And if you take it out to 50 years (think starting when you are 22 and not withdrawing until age 72 when you have to start taking Required Minimum Distributions):

Almost $1.5 million more in Vanguard than in MetLife, $1.2 million more with PERA than MetLife. (Note that these numbers get even further apart with contributions that are greater than $6,000 per year, although the percentage differences will be the same.)

Okay, well what if you just chose a Target Date fund (which is the default option in your 401k/403b/457 plans, and a good, simple choice for lots of folks) and put 100% of your money into that? Here’s after 10 years:

Note that here PERA is actually ahead of Vanguard due to the lower expense ratios on their Target Date funds, but both Vanguard and PERA are still doing much better than TIAA or MetLife.

30 years?

50 years?

Play around with the assumptions in the spreadsheet, including the asset mix that most closely reflects your desired asset allocation. But no matter what mix you choose, Vanguard and PERA will come out the best (usually Vanguard as the best, with PERA only if you go with just a Target Date fund). TIAA will come in a distant third, and MetLife a very distant last place. (And keep in mind that the negotiated fees with TIAA and MetLife are actually pretty good compared to many folks’ 403b choices around the country.)

And yet many employees in LPS and DCSD choose TIAA and MetLife. Why? Perhaps because a sales rep contacted them and was kind, concerned, and “helpful”. Perhaps because they think they can choose investments and “beat the market”. Or perhaps they just chose without much knowledge.

So, now that you know a bit more, what changes might you make with your investments? In general, if your adjusted gross income is not too high (varies depending on Traditional vs. Roth, and increases slightly each year), opening up an IRA at Vanguard is going to be your best choice to fund first (this is assuming you are disciplined enough to invest the money when it doesn’t come directly out of your paycheck).

If you max that out (remember, IRA’s have much lower contribution limits each year), then fund your PERA 401k or 457 next. In LPS, I would choose the 457 over the 401k, as it’s a bit easier to access the money before age 59.5 (unfortunately, DCSD has not chosen to offer the PERA 457), but otherwise the 401k and 457 are essentially the same.

If you are able to max out your personal IRA and your 401k or 457, then you can invest in the one you haven’t yet, as the 401k and 457 are different “buckets” and they each have their own, separate contribution limit (note that the 401k and 403b draw from the same contribution “bucket”). This means that in 2021 if you are under the age of 50 (if your income isn’t so high that you can’t contribute to an IRA), you can contribute up to $6,000 to an IRA, $19,500 to a 457, and another $19,500 to a 401k, for a total of $45,000. If you are 50 or older, you get “catch up” contributions, which gives you an extra $1,000 for your IRA and $6,500 for both the 401k and 457, for a total of $59,000. (And, depending your plan, there may be special catch up contribution provisions in your last 3 years of work that can let you contribute even more.) Keep in mind that for all of these you have the option of doing a Traditional (pre-tax) contribution or a Roth (post-tax) contribution, which is a complicated and entirely different conversation.

As always, feel free to reach out with questions (or comment below).

Free (for Federal Taxes) Alternative to TurboTax

Thanks to Courtney Petros, today I learned about FreeTaxUSA tax preparation software. We were discussing filing taxes and I mentioned that I used to file by hand using the paper forms, but when the IRS stopped mailing them I gave in and switched to TurboTax.


At the time, I think it was about $30 and I convinced myself that was okay. Since then the price has continued to go up (especially because I have a little bit of self-employment income which means I have to upgrade to a more expensive version of TurboTax). While the product itself is fine, I was still frustrated with the expense and the fact that we can’t file for free directly with the IRS.


Courtney said that she used FreeTaxUSA and, at least initially, it looks like a good alternative. (I already filed our taxes this year, so I haven’t used it myself yet, although I may go in and mess around with it later this week.) It appears to be easy to use, although with fewer bells and whistles than TurboTax, so you have to be reasonably confident about what you are doing. The big advantage, of course, is that it’s free. They do charge $14.99 to file your state taxes (I submit Colorado taxes for free through the Colorado state website), and the deluxe version of the federal return is $6.99 which gets you some additional support, which is how they make their money. They are an authorized IRS e-file provider, so they should be secure and legitimate.

I took a look at several reviews (specifically this one and this one and glanced at a few others), and they all seem to agree that it’s exactly what it purports to be and works well as long as you feel fairly confident about what you are doing.


So, I thought I’d share it for those of you who may not have completed your 2020 taxes yet, or who might want to explore using it in the future. If any of you have used it, please leave a comment below and share your experiences.