Idea of the Day: Experiment with Co-payments and Incentive Schemes

October 29, 2008

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Contractual provisions guaranteeing paid leave for various reasons represent a type of social insurance. Discretionary absence trends, however, bolster the case that an entitlement mentality tends to prevail. One way to help reorient thinking about leave provisions is to introduce a co-payment scheme. Politically, the introduction of co-payments is something of a non-starter. However, evidence from North Carolina, where teachers pay co-payments for absences over and above the standard allocation, suggests that a more complete implementation of co-payments could reduce students’ exposure to teacher absences without costing districts more and without taking money out of the average teacher’s pocket.

The key idea is to increase teachers’ salaries to account for a reasonable need to make co-payments. In North Carolina, a $400 increase in teachers’ salaries would ensure that the average teacher does not have to dip into his or her own pocket to handle co-payments. And students would experience 1.1 fewer teacher absences per year, on average. Clearly, experimentation with co-payments should be encouraged, where it suits local tastes.

Another category of local policy initiatives centers on rewards for excellent attendance. In contrast to co-payment schemes, many examples of reward schemes exist. In Aldine, Texas, for example, a teacher who maintains an excellent attendance record over a school year, defined as two or fewer days of absence, receives a bonus equivalent to 0.5 percent of his or her annual gross compensation in the form of a deposit to a 401(a) retirement plan. This bonus amounts to somewhere between $200 and $400, depending on a teacher’s experience and credentials. The districts’ costs are more than offset by the reduction in substitute stipends corresponding to lower levels of teacher absence—savings amount to roughly $5 per pupil, per year.

This and other bonus schemes are vulnerable to criticism. Female teachers, for instance, are less likely than male teachers to qualify for bonuses because they tend to be absent more often. Yet programs like the one used in Aldine are legal, and the sums of money involved are relatively small. Moreover, reducing students’ exposure to teacher absence is a social benefit that may outweigh identified drawbacks.

For more information on this topic, please see:

• Tales of Teacher Absence by Raegan Miller