The lack of evidence on reforms, such as determinants of principal salary, points to data and research deficiencies to be addressed in order to learn more about their effects and make sound public policies. The purpose of the study was to examine district and community determinants of principals’ salaries using a spatial econometric framework. The findings have implications for education policy development related to pay for contribution, rather than pay based on tenure, experience, or district wealth. The quantitative study used a spatial regression approach to model school, district, and community factors as determinants of Texas high school principal’s salary. Principal salaries are viewed from several lenses in this study by considering effective outcomes of pay defined by actual salaries and market considerations for pay as defined by community, organizational and human capital variables. Literature from the private sector as well as from the public school setting was used as a theoretical underpinning for the hypotheses set forth in this study. The findings provide empirical insights regarding how principal salaries are determined. The study found a statistically significant spatial autocorrelation relationship at p<.05 confirming geographic locations is a robust influence on principal salaries. After controlling for the spatial autocorrelation the study also found experience, gender, district wealth, and campus size significantly influence principal salaries. However, there was no statistically significant relationship between principal salary and student achievement. .

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