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"Show Me The Money!"

"A stable source of funding is essential to the success of teacher bonus systems based on student performance," says Allan R. Odden, co-director of the Finance Center at the Wisconsin Center for Education Research (University of Wisconsin-Madison). "Lack of funding and a lack of long-term funding commitment have been key aspects of the downfall of many efforts to reform compensation in education," he adds.

"Secure funding is one of ten keys to success for performance pay systems", Odden states in Reinventing Teacher Compensation Systems, a U.S. Department of Education report which he co-authored with the Finance Center's director Carolyn Kelly.

To be successful, Odden and Kelley suggest that one percent of a community's total education budget should be allocated to its performance-based teacher bonus system. They make that suggestion in their new book, Paying Teachers for What They Know and Do (Corwin Press).

And where, exactly, will the money for such programs come from? Funding can come from a variety of sources.

  • The largest number of programs, of course, will be funded by state and/or local tax dollars.
  • In some states, lottery revenues are turned back to communities to use as they choose; some communities use that revenue to fund their performance pay programs.
  • The business community is another potential source of funds; afterall, funding programs that promote educational excellence--and an educated pool of potential employees--is in the best interest of business.

Re-inventing Teacher Compensations Systems presents case studies of four performance pay programs, including one in Dallas, Texas. There a school-based performance reward program is part of the district's accountability program, the report notes. The program, created by a 1990 Commission with substantial business community involvement, provides cash awards to teachers based on standardized test results. Each winning school receives $2,000; each teacher in the school receives $1,000; and each nonprofessional staff member receives $500. In 1994, a second tier of awards was added to provide incentives to those lower ranked, but improving, schools.

The state of South Carolina has the longest-running state-sponsored, group-based performance plan in the United States. The School Incentive Reward Program, begun in 1984, awards performance bonuses to be used for instructional purposes. Schools that have demonstrated outstanding levels of student achievement, or that have shown significant improvement in student performance, receive the awards. The 1996-97 school incentive program awarded $5 million to 301 schools, according to State Superintendent of Education Barbara S. Nielsen. Awards, based on a per-student formula, ranged from $2,500 to $72,000.

Nielsen notes that 42 schools that had been targeted to receive special assistance had won incentive rewards, meaning that they had shown improvement from last year. "That's encouraging," she says. "It shows that a lot of hard work is being done in those schools, and it's paying off for children."

Related Resources

Performance Pay Programs

  1. All participants whose compensation is being affected must be involved.
  2. All participants must agree on the valued educational goals.
  3. Sound, comprehensive evaluation systems must be in place.
  4. Adequate long-term funding must be committed to the program.
  5. Investments must be made in professional development.
  6. All schools that meet performance improvement targets should be rewarded.
  7. General work conditions must be favorable.
  8. A good working relationship between the school board, adminstrators, and teachers is essential.
  9. Teachers associations and their members must be committed.
  10. Persistence--until the plan is perfected--is key; it takes time to work out the "bugs."
Source: Reinventing Teacher Compensation Systems, by Carolyn Kelley and Allan R. Odden

Article by Gary Hopkins
Education World® Editor-in-Chief
Copyright © 2006 Education World

Originally published 06/23/1997