Feature

Compensation Reform in the Schools

The burgeoning interest in using teacher pay as a strategic tool for competitive recruitment and retention of effective teachers by SABRINA LAINE, AMY POTEMSKI AND CORTNEY ROWLAND

One of the most frequently discussed topics in education reform circles is teacher pay — how much money teachers make, for what work and who decides teachers’ salaries. Over time, educator pay reform has included many different reward structures and goes by as many different names, such as merit pay, performance pay and differentiated pay.

Despite the variations in reward structures and names, one thing remains constant and has been reaffirmed in the most recent Phi Delta Kappa/Gallup poll on public education: Most Americans consistently respond that teacher salaries are too low. The number of respondents who favor some form of performance-related compensation for teachers has increased from 65 percent in 1984 to 72 percent in 2009.

Sabrina LaineSabrina Laine is director of the National Comprehensive Center for Teacher Quality in Washington, D.C.


The increase in public awareness of alternative compensation for teachers has resulted in greater interest among elected officials at the state and local levels, forcing superintendents to consider performance-based pay as part of their overall reform strategy.

Quality and Pay
The 2002 reauthorization of the Elementary and Secondary Education Act, better known as the No Child Left Behind Act, placed the federal government squarely in the middle of the conversation on what constitutes a highly qualified teacher — a conversation previously reserved for school districts, teacher preparation programs and state certification and licensure agencies.

Although NCLB’s highly qualified teacher provisions required states to report on teacher qualifications going into the classroom (inputs), little attention was given to outputs — teacher practices that resulted in greater student learning from their time in the classroom.

Motivated by research indicating that teacher qualifications have little predictive value for how well students achieve, the federal focus has moved from requiring states to report on teacher inputs to thinking about how to measure teacher outputs and make decisions based on this information.

In recent months, the new federal administration has made one thing clear: It is time to rethink how teachers and principals are prepared, recruited, hired, compensated and supported throughout their careers, as these steps are integral to the overall success of school reform efforts. One of the four umbrella goals of the American Recovery and Reinvestment Act is “making improvements in teacher effectiveness and in the equitable distribution of qualified teachers for all students, particularly students who are most in need.”

The new federal funding streams available through ARRA, specifically the Race to the Top Fund and Teacher Incentive Fund programs, provide state and local education leaders with an opportunity to push back on historical barriers that have prevented states and districts from defining and measuring teacher effectiveness, but also to align decisions about educator pay with evidence of effectiveness.

Further, NCLB reporting requirements have illuminated the inequitable distribution of qualified teachers. Students in low-poverty, low-minority districts are more likely to have more qualified and experienced teachers, while students in high-poverty, high-minority districts are more likely to have less qualified, less experienced teachers and more teachers teaching out of field. School systems that are experimenting with teacher pay are looking for levers for improving the quality of instruction to improve student achievement as well as for attracting and retaining the most effective teachers.

Following a period of failed experimentation with merit pay in the 1980s, state- and district-level compensation reforms have re-emerged in the last decade in greater numbers and currently cover a broad range of approaches nationwide. Currently, 26 states have legislation that supports district-level implementation of alternative compensation programs.

In 2006 the federal government authorized $500 million for Teacher Incentive Fund grants to be allocated at $100 million per year for five years to 34 grantees. The 34 sites affect 1,315 schools, more than 54,000 teachers and nearly 2,400 administrators. In addition, 16 school systems have implemented TAP: The System for Teacher and Student Advancement (formerly known as the Teacher Advancement Program), designed and supported by the National Institute for Excellence in Teaching and backed by the Milken Family Foundation.

Across the country, many districts currently implement programs meant to change the way teachers are paid, independent of statewide, federal or foundation initiatives. In a 2008 commentary in Education Week, James Guthrie and Patrick Schuermann indicated that programs for teacher incentive pay existed in about 10 percent of school districts, impacting at least 20 percent of students and teachers nationwide.

Compensation Reform
Since the early 20th century, most school districts have used the single salary schedule to determine teacher compensation, advancing teachers based on years of experience and educational attainment. The single salary schedule was developed at a time when arbitrary decisions by local employers, typically school boards, were the norm and not the exception. Opportunities for women in the workplace and pay structures in the private sector have evolved over the past century, but compensation in the education community has remained fairly stagnant.

Further fuel for educator compensation reform was generated by a 2008 report titled “The Teaching Penalty” from the Economic Policy Institute that claims teacher pay, relative to other professions, lags behind. The authors predict that, in the long run, the current teacher salary structure will not be able to sustain automatic and significant salary increases based solely on teacher years in the profession and educational attainment. This situation has two major consequences: First, if teacher pay is not competitive, potential teachers may not be attracted to the profession in the first place. Second, the lack of career and pay advancement may lead good teachers to exit from the profession.

Even if public opinion supports across-the-board raises for teachers, given the current economic climate — with state and district budgets in crises and education programs threatened — it is not financially feasible to bring all teacher salaries up to a competitive level. However, states and districts are using performance-based pay as a policy lever to incentivize certain teachers to enter the profession and stay where local need is determined to be the most important. Although teachers do not often cite salary as the most important factor in their decision to enter or stay in the profession or at a certain school, it is usually a component in the decision-making process.

In addition, performance-based pay programs, when implemented using multiple measures of teacher perform-ance, provide a powerful opportunity to reform teacher evaluation practices and build a professional learning community in the school, both of which foster a system of support in the school and thus improve teacher retention.

Gauging Success
Despite the growing interest in performance-based compensation, no simple answer exists about its effectiveness as a reform strategy. Research indicates teachers are the most important school-based factor contributing to student achievement, while acknowledging that those school-level factors still only account for a small percentage of what influences student academic performance.

Based on these two theories — teacher pay may not be competitive enough to recruit and retain the most effective teachers in all schools, and effective teachers are the most important school-based factor affecting student achievement — one ought to ask two things: Does the compensation program work to improve student outcomes? Does the compensation attract and retain effective teachers and leaders?

Some evidence, mostly from other countries, indicates financial incentives for teachers can have a positive effect on student achievement. However, research from the United States has had more mixed results. The National Center on Performance Incentives, a national research and development center based at Vanderbilt University, is examining the impact of alternative compensation programs. A 2008 NCPI report found teacher incentive pay in Texas led to positive gains on student achievement scores in the elementary grades; however, most effects dropped off in later years.

Another NCPI report in 2008, examining a teacher bonus initiative in North Carolina, found a correlation between incentive pay and a small positive impact on student scores on high-stakes tests, mostly in mathematics. The most recent entry, a 2009 NCPI report on the Texas Governor’s Educator Excellence Grant Program, indicated incentive pay did not have a significant effect on student achievement scores. However, in comparing teacher turnover rates, the researchers did find fewer teachers left the targeted schools.

Because the research evidence is still emerging, additional experimentation should build on the practical lessons learned to date. As in most education reform efforts, pinpointing the specific effects of a well-designed compensation program is difficult, especially because most of the well-designed programs are not stand-alone — they are folded into a larger system of teacher quality reforms.

Sabrina Laine is chief program officer and director of the National Comprehensive Center for Teacher Quality at Learning Point Associates in Naperville, Ill. E-mail: sabrina.laine@learningpt.org. Amy Potemski is a policy associate specializing in educator effectiveness at Learning Point Associates, where Cortney Rowland is a senior policy associate.