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Teachers are the foundation of all other education reform efforts, and improving the quality of the teaching workforce is essential for their success. Research demonstrates that having an outstanding teacher is valuable for all students, but particularly for those living in poverty. In fact, having an excellent teacher as opposed to a weak teacher can make a full year’s difference in students’ learning.
School districts spend more on teachers’ salaries and benefits than any other expenditure, yet they frequently don’t spend these funds in a way that would improve the performance, quality, or distribution of the teacher workforce. Most teachers are still paid according to the single salary schedule, in which teachers’ earnings increase as they acquire more educational credits and years of experience. Yet there is growing recognition that this method of compensating teachers isn’t helping to attract or retain the best teacher candidates, particularly in high-poverty schools.
Alternative compensation strategies have seen a significant resurgence in recent years as state and district policymakers acknowledge that the single salary schedule isn’t meeting their needs.
The Center for American Progress supports differential compensation for teachers—that is, paying teachers differently based on their teaching assignments, skills, and ability to improve student achievement. Differential compensation has the potential to improve teacher quality, address teacher shortages in specific subject areas and schools, and ensure a more equitable distribution of effective teachers.
In CAP’s recent report, “Teacher Pay Reforms,” researcher Dan Goldhaber found that teacher pay reform is much more likely to be successful if it takes place at the state level. States are more likely to implement successful reforms because they have greater capacity to implement the data systems needed to identify areas of need, assess teacher performance, and implement a differentiated pay system.1 This paper therefore focuses on how state-level policies and programs are currently implementing differential pay.
Debates about performance pay are central to current discussions of how to use federal policy to improve teacher quality and distribution, particularly as Congress works to reauthorize the Elementary and Secondary Education Act. Critics contend that performance-pay programs would be too focused on test scores, create a divisive atmosphere among teachers, be unfair to teachers, and do little to improve teacher performance. Proponents claim that they would motivate teachers, attract and retain effective candidates, and—if used within the context of other strategies like professional development—improve the quality of instruction and consequently student achievement.
This report informs the national debate by analyzing current state programs to find answers to the following questions posed by both critics and advocates of performance pay: Are current programs designed in ways that are overly reliant on test scores? How are teachers evaluated within these programs? What other strategies are incorporated within performance-pay programs that work to improve teachers’ skills and performance?
This paper defines five types of differential pay policies, summarizes the research evidence on their efficacy, and describes the design and structure of a number of state programs. While pay for performance is at the core of several state programs, and will be the primary focus of this report, states are implementing other types of differential pay policies that can and should complement performance-pay programs and help states meet their goals of increasing the quality of the teaching workforce.
Pay for Performance
Pay-for-performance policies are designed to improve teacher performance and attract and retain higher quality teacher candidates. They pay teachers in part for improvements in student achievement and many also reward teachers for demonstrations of knowledge, skills, or instructional performance. Bonuses are generally paid on top of a base salary, and programs may reward individual teachers, groups of teachers, or both.
The programs chosen for this examination are state-level programs that have already begun implementation and have a significant performance-pay component: the Alaska Public School Performance Incentive Program; Arizona Classroom Site Fund; Florida Merit Award Program; Minnesota Q Comp; North Carolina ABC’s; Ohio Teacher Advancement Program; Ohio Toledo Review and Alternative Compensation System; South Carolina Teacher Advancement Program; and Texas Educator Excellence Grants.
The programs are evaluated using the primary elements of the Working Group on Teacher Quality’s design framework and other common elements between programs that are also identified.
Other Types of Differential Pay Policies
Pay for Knowledge and Skills
These policies reward teachers for obtaining additional knowledge or demonstrating specific skills. The most widely used example provides additional compensation for teachers who become certified by the National Board for Professional Teaching Standards. Other state policies include knowledge and skills components primarily by incorporating evaluations or observations of teachers.
Career Ladders
Career ladder programs provide new roles for teachers with additional pay and responsibilities as they increase their knowledge and skills. Some states incorporate additional responsibilities for increased pay into their performance-based compensation systems by including designations for master and mentor teachers. These teachers participate in the school leadership team, evaluate other teachers along with the principal, and lead professional development activities.
Pay for Teaching in High-Needs Subject Areas
Financial and other incentives are targeted to teachers in subject shortage areas, frequently math, science, and special education. They may be bonuses, housing subsidies, tuition assistance, or tax credits.2 Some state programs offer loan forgiveness for students who agree to teach in subject shortage areas.
Pay for Teaching in High-Needs Schools
Incentives such as additional pay are awarded to teachers who agree to work in high-needs schools. These generally take the form of recruitment or retention bonuses to teachers who commit to teach in hard-to-staff schools for a period of time. In addition, a number of state performance-pay programs have a high-needs component or are targeted specifically to high-needs schools.
Program Trends
The nine state-sponsored programs examined in this report take a variety of approaches to performance pay, but there are a number of common elements among them, including:
- Most of the programs incorporate professional development to some extent. Several of the programs incorporate job embedded professional development, while others allow program funds to be used for professional development activities.
- All programs base performance rewards in part on objective measures of student achievement, but most also include other criteria. The objective measures of student achievement are state standardized assessments and other national or local assessments in subjects for which there aren’t state assessments. Other criteria used by most of the states are evaluations or observations of teachers conducted by principals and/or teacher leaders and professional responsibilities or assignments.
- All programs include a group performance component. Programs either incorporate group performance as a basis for the reward or allow districts to reward teachers in groups.
- All programs ensure that all classroom teachers are eligible for bonuses. Specialists such as music and art teachers are usually included either in group rewards or through locally developed assessments or rubrics.
- Most of the programs include a teacher evaluation component. Programs generally base rewards in part on evaluations conducted by principals and/or teacher leaders.
- Most of the programs incorporate career ladders or additional responsibilities for teachers to some extent. Programs generally compensate teachers that serve in leadership positions, serving as masters or mentors, or participating in school planning.
- Most of the state programs have a high-needs component. Several of the state programs are targeted to high-needs districts. Other programs allow districts to increase teachers’ pay in high-needs schools.
Recommendations for State Policy
While there is insufficient research to conclusively identify the necessary elements of a successful differential pay program, there is evidence from research, policy, and practice about elements that would bolster state policies.
- Programs should require teacher participation in their development and adoption and should be voluntary for districts. State-level programs that have encountered the least opposition are those that have involved teachers either in developing district applications or at the school level in choosing to participate in state programs. Moreover, participation should be voluntary for districts, in order to ensure support for implementation.
- Programs should incorporate differential pay policies within a comprehensive strategy for reforming how teachers are recruited, evaluated, trained, compensated, and retained. In order to develop a successful strategy for improving teacher quality, states should develop statewide policies that incorporate all of the elements that research and practice would indicate are necessary for ensuring a high quality teaching work force. Performance-pay policies should be integrated with policies for evaluation, professional development, and recruitment and retention.
- State policy should encourage districts to develop and pilot test alternative salary schedules. Policymakers, researchers, and practitioners agree that the single salary schedule is ineffective, but few districts are testing alternatives as part of their differential pay policies. State policy should encourage, and certainly not prevent, districts from experimenting with alternatives to the single salary schedule.
- States should develop and pilot test differentiated pay programs in high-needs schools. Research suggests that targeting significant bonuses to attract and retain successful teachers in high-needs schools would be an effective method of improving teacher quality, yet few states have policies that do so. States should experiment with different criteria for teacher candidates and different levels of bonuses.
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