As with many things, the most important thing affecting whether and when a district can change a district employee’s salary is whether she has a contract. Where there is no contract, the district is free to increase salary or decrease salary at any time. Although it is common for raises to be announced at the beginning of the school year, the timing is due to the practicalities of the district budget process, not any legal requirement. Similarly, while it is uncommon for a district, like any employer, to reduce compensation because of the obvious impact on morale, there is actually no legal prohibition on a salary reduction. Where there is no contract, the only legal requirements regarding compensation are those found in the FLSA, for those not exempt from the FLSA.
A contract, however, limits the district’s ability to both raise and lower salary, except at certain times. It is not well-known that a contract limits a district’s ability to give a raise, but a little-known provision in the Texas Constitution prohibits a governmental entity, including a school district, from increasing the amount paid under a contract once performance of that contract has begun. Doing so is termed a prohibited “gift of public funds.” Although the purpose of the constitutional prohibition is to stop contractors from underbidding rivals on state contracts and then demanding more money once they have begun the work, the law also applies to contracts between school districts and educators.
For educators, this means that a district cannot grant a raise once the school year has started, unless the educator is doing something different, such as taking on new responsibilities. So, a district must usually establish a salary schedule before the start of the school year and stick with that salary schedule until the next school year. Again, this rule applies to an educator who remains doing the same thing. The constitution does not prohibit a raise tied to a promotion or acceptance of additional duties or responsibilities.
A district is even more restricted in when it can lower a contract educator’s compensation. Generally, a district cannot lower an educator’s salary unless the educator has received clear and specific notice of the reduction at least 45 calendar days before the first instructional day of the school year that the reduction will take place. For several decades, the commissioner of education has consistently applied this rule to contract educator compensation. The rule is based on the legal principle that an educator must know the important terms of their employment, such as what they will be paid, when they still have the legal right to “say no.”
The Texas Education Code sets a deadline of 45 calendar days before the first instructional day of the upcoming school year for when an educator can unilaterally resign without the district’s agreement. So, the commissioner has consistently held that the educator must know what they will make prior to this deadline, and if not specifically told otherwise, the educator must be paid at least as much as he was paid in total compensation for the previous year. The commissioner has ruled that it does not matter that the district can reassign and has reassigned the educator to a lower-paying position. Unless he receives notice before the deadline, his compensation cannot be reduced.
Although the commissioner has consistently held that compensation cannot be reduced, there are some specific circumstances where he has not yet ruled—for example, a situation where the salary reduction was related to something outside of the contract, such as a coaching duty that is not itself covered by a contract. So, exceptions to this general rule may, in the future, still arise.