Last summer, the Indiana Department of Education reported a nearly 63 percent drop in the number of licenses issued to first-time teachers, The Star Press reported.
Superintendents say more teachers have moved districts over the summer, more teachers are resigning within days of the start of school and there's a smaller pool of applicants.
"There is such a shortage right now with teachers around the state, what happens is a lot of veteran teachers now are shopping around," said Scot Croner, superintendent of Blackford County Schools. "It's more advantageous to jump to a different district."
A state law in 2012 began requiring teacher pay to be tied to performance evaluations, meaning that teachers would no longer get a pay increase for staying at a district another year.
In the past, teachers were able to increase their pay as they added years of experience, which was separate from a base raise. Now, they have to be rated "effective" or "highly effective" instead.
"There's obviously a system-wide issue and in Indiana there's this flaw in the compensation system," said Greg Hinshaw, Randolph Central Schools superintendent.
Some local districts, including Muncie Community Schools, aren't able to give teachers further compensation as tax caps eat budgets and state funding dips with enrollment.
"Nowadays, with the way the state has funded us and the way teachers' salaries are determined, they move more often from district to district," he said. "I don't think the legislature fully grasps the magnitude of the problem."