Relationships between salary levels and community and teacher characteristics were analyzed for public school districts in New York State in order to determine the causes of variation in salary levels paid and to examine the consequences of those variations. A strong relationship was found between socioeconomic status and salaries paid, especially in metropolitan areas. Teacher experience was weakly related to salary levels; teacher training was found to be directly related to salaries, particularly in metropolitan areas. The quality of school districts' teaching staffs was found to be independent of salaries. Weak relationships were found between either teacher experience or training and student achievement; thus, it does not appear that those characteristics rewarded in salary schedules are the same ones that affect student learning. Conclusions and recommendations are made for improving the social equity and efficiency of the public education system. (Author)