The Alberta Teacher’s Association recently ratified a tentative two-year agreement with the provincial government after a four-day voting period last week. Yesterday, the Calgary Sun reported that Alberta's school boards also ratified the agreement.

Alberta’s provincial government currently faces a budget deficit of more than $10 billion. Since compensation costs for public employees are, by far, the largest expense for the provincial government, managing these costs prudently is a necessary condition for the government to begin repairing its battered finances.

Furthermore, education costs generally, and compensation costs in public schools specifically, represent a substantial component of the provincial budget and growth within these envelopes can have a significant impact on the health of government finances over time.

These factors mean that the terms of the new agreement have important implications not just for directly affected teachers, but also for provincial government finances and therefore taxpayers. So let’s go over some of the terms of the deal.

• It has been widely reported that the new deal includes a “wage freeze.” This may lead some Albertans to believe that individual teachers will not be getting any raises at all in the years ahead. But that’s not quite right. Teachers will still move up the existing salary grid as they gain experience. Many, especially those in the first half of their careers, will still see their salaries increase as they gain seniority.

• The deal also includes a $75 million classroom improvement fund, which school boards will be able to spend on additional resources including more staff, equipment or training.

• The agreement contains an uncommon “me too” clause. Under this clause, teachers will receive matching pay bumps (on top of gains as they rise through the grid) if salaries are increased for other public sector workers. So how big of a raise teachers actually get will likely hinge on future government negotiations with other unions. This clause makes it all the more important for the government to exercise spending discipline in its upcoming talks with other unions, since pay increases awarded in those deals could trigger a raise for teachers and higher education costs for taxpayers.

Teachers and other government employees provide valuable services for their communities and the province—no reasonable person begrudges them fair compensation. But the province’s fiscal circumstances are dire, and the government has a responsibility to taxpayers to keep this reality in mind in upcoming negotiations.

Recent research shows that, after controlling for a slew of variables, public-sector workers earn on average 7.9 per cent more than comparably educated and experienced workers in the private sector, in addition to better non-wage benefits. Gradually shrinking this gap over time through wage restraint is one way the government can help shrink the deficit while ensuring fairness for taxpayers working in non-government sectors.

Given the difficult fiscal circumstances facing the province the need for a disciplined, frugal approach to upcoming collective bargaining sessions is clear. The teachers’ “me too” clause further heightens the need for discipline going forward, since the fiscal effects of any wage hikes may be compounded by matching raises for the province’s teachers.

David Watson, a Fraser Institute research intern, contributed to this post.