Using data on mean achievement of third and sixth graders in individual California schools, coupled with salary data for those students' teachers, this study tested whether teacher salary variables are associated with student achievement, when socioeconomic characteristics are controlled. Differences among schools in the amount of teachers' pay per pupil are the result of differences in the level of district salary schedules, placement of each school's teachers on the local salary schedule, and the number of teachers per pupil. The study also introduced a novel procedure for using daily student class hours (instead of average daily attendance) as a more refined measure of student attendance. Several versions of the regression model were estimated for two different grade levels and three separate subjects in two different years. Results showed that achievement was positively and significantly associated with local salary schedule level, positively associated with placement of the school's teachers on the salary schedule, and negatively associated with the teacher-pupil ratio. Possible reasons for these associations are discussed. Results clearly imply that raising teacher salaries would be more cost-effective than reducing class size in California schools. Included are 15 references and 5 tables. (MLH)