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In a time period where performance based compensation is hotly contested in the arena of educational reform, this dissertation seeks to help improve our understanding of pay for education employees. This is accomplished by examining the existing relationship between the salaries and performance of education employees via three studies.The first study: "The Efficiency of Negotiated Labor Markets as Compared to Empirical Labor Markets within the Public School Setting" seeks to provide guidance as to the efficiency of four relevant teacher salary labor markets defined by various criteria. Although a similar study has been conducted in the past, the present study is conducted in a different time period (during an economic downturn) and state (California). In addition this study incorporates the examination of the negotiated labor markets that districts actually used for the purpose of setting teacher salary rates and uses a randomized block design with a sample of California school districts (5 target districts used for comparative purposes and 200 object districts selected to fit with the criteria of the various labor markets for the target districts).The second study: "Does District Performance and the Regional Labor Market Influence how Districts Pay Principals in California" uses regression analyses to examine whether a) principals' salaries in California are influenced by past performance - as defined by their districts' test scores from the previous year, and b) whether that relationship changes after accounting for wages of the principals' regional labor market. The third study: "The Relationship between High School Principals' Pay Satisfaction, Turnover Intentions and School Achievement" examines the relationship between principals' degree of pay satisfaction and a proxy for principal performance -California's defined school achievement score known as schools' Academic Performance Index (API). The model was complicated by the additional examination of whether the relationship between principals' pay satisfaction and school achievement might be mediated by the turnover intention of principals, after appropriate controls are accounted for. The importance of potential referent sources (i.e., teachers within the school districts, other high school principals within the school district, and other high school principals in different school districts) for pay satisfaction was also tested. This study uses a two-stage structural equation modeling approach by first examining the measurement model related to facets of pay satisfaction and then testing the overall structural models. Taken together, these studies help improve our understanding of employee salaries in education.