Let's be clear: both explanations are that higher salaries result in better teachers which in turn results in higher student performance. It's not that saying that paying a teacher more results in higher performance.
My first thought when I read the article title is that teachers would have more money to pay out of pocket to get materials for their students.
A lot of teachers do this, from kindergarten to high school. I've had to hang out in a educational supply store more than once in my life when I and <pick any friend that is a teacher> have passed by one. That teacher then blows a sizable chunk of coin without fail.
Arts & crafts, books, lined paper, sci calculators, and of course... stickers for that job well done.
Some US states have 60/40 plans built into their education budgets. What that means is 60% of the money the state gives to local schools must go to the "classroom." Now, how a state defines classroom is very loose. Most of the time, supplies, working facilities, new desks, books, and teaching materials fit into it. What is the other 40%? Administrative and teacher salaries, lunch programs, and transportation.
In my experience, schools in the US actually waste a huge sum of money because they have incompetent administrative staff (with the added bonus that they're overpaid).
