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Pay for Performance: What Are the Issues?

Merit pay, performance pay, knowledge- and skill-based pay -- they are all making news as alternatives or supplements to the traditional teacher step system. But what do they mean for teachers? Education World talked with educators and analysts about these three trends in teacher pay. Included: How do these pay-for-performance/skills systems work?

Pay for Performance For decades, teachers have climbed, step by step, up the traditional pay ladder, automatically earning salary increases based on their education level and years of service.

Around the nation, most school districts and teachers recognize that traditional pay schedule for what it is -- an imperfect system. Yet, for many years, in community after community, teacher salary talks often ended up focusing on ways to adjust that system. Only in recent years has the salary-talk climate been more conducive to discussions of alternative pay structures, structures that often involve compensating teachers not just for how long they have been teaching, but how well.

The alternate proposals have various names: merit pay, pay for performance, knowledge-and-skill- based pay, or individual or group incentive pay. While a few districts have adopted or piloted one or a combination of some of those alternate pay structures, more states are talking about performance pay than using it.

"There are hundreds of districts working on performance pay plans; many states passed legislation requiring some type of performance pay for teachers, or some portion of teacher pay," said Dr. Marc J. Wallace Jr., founding partner of the Center for Workforce Effectiveness, which is allied with the Center for Policy Research.

Added Robert Weil, deputy director, education issues, for the American Federation of Teachers (AFT): "Talking about it is easier than doing it. The biggest problem is that people want to get to it next week, and then -- when they can't -- they move on to something else."


So ingrained is the current pay system in most school districts that talking about change is difficult, and making changes is excruciating. "Pay is a sensitive issue," Wallace said. "You have to get past the political agendas. Because there is a great deal of confusion and fear surrounding it, it is hard even getting a rational discussion going."

Pay for Performance

Education World examines the timely and often sensitive topic of pay for performance in this four-part series. Read the other three installments:

What Went Wrong in Cincinnati?
A look at the crushing defeat of Cincinnatis ground-breaking teacher compensation proposal.

Performance Pay Can Work -- Here's How
Examples of pay-for-performance plans that are working.

More States Brave Teacher-Pay Debate
Public, political sentiment prompt tries at performance pay.

The traditional U.S. teachers' pay system dates back to 1921, when it was introduced in school systems in Des Moines, Iowa, and Denver, Colorado, according to Allan Odden, director of theConsortium for Policy Research in Education (CPRE) at the University of Wisconsin, Madison. CPRE has been involved in a teacher compensation project, which is examining how alternative pay systems could be used to improve classroom focus and practice and the role of compensation in organizational development.

Equalizing salaries in the profession was the motivation for the step system, Odden told Education World. At the time, female teachers made less money than male teachers, minority teachers made less than white teachers, and elementary school teachers made less than high school teachers. Longevity seemed the fairest way to even out the pay scale.

"It was about the same time the private sector moved to seniority-based pay," Odden added. The system also provided incentives for teachers to further their education. Most elementary school teachers had associate degrees; the salary schedule could spur them to get bachelors degrees, and those with bachelors to earn their masters.

Since then, teachers have had no incentives to change the system, Odden said.

"If you plan too aggressively in dealing with current peoples salaries, you can cause difficulties," Eileen Kellor, a research staff member with CPRE, told Education World. "It's hard to get change if you threaten people's pay. Communication has been a really important issue; that is, how you educate people on a new pay system. You have to explain that it is not designed as punitive."


Besides coping with resistance from teachers about changing the pay structure, developing and implementing a new system is both time-consuming and expensive for school boards and unions.

"There are more costs associated with performance pay; you have to identify performances, measure those, and it is more complicated," the AFT's Weil said. "You have to ensure teachers it will be fair and objective; you are trying to make it objective with the many different roles teachers play."

Advocates of performance pay often say that implementing it will attract more people to the teaching profession and make those in the profession work harder, according to Douglas Harris, an economist with the Progressive Policy Institute, who has been studying performance pay for two years.

"The policies vary based on philosophies," Harris told Education World. "Like most reform ideas, I think it depends how you do it. If you tie a lot of it to test scores, it's not viable. It's hard to determine what a teacher contributes to test scores; there are so many other variables involved with students. Because goals for educators are so complicated, it's hard to settle on factors. We're trying to measure teachers' contributions to learning."

At the same time, a salary structure with performance pay could benefit the teaching profession, he said. "I think the idea of changing the system is a good one; low salaries keep people out of the profession. We need a little more financial incentive." Any new system, though, has to be flexible enough to pay teachers more in high-demand subjects, such as mathematics and science, and in hard-to-staff districts, such as urban areas, Harris added. "But salaries seem to be less of an issue in urban areas than working conditions."


Others in and outside of education argue that any type of system tying salaries to teacher performance or student outcomes is flawed because of a lack of objective observers and objective criteria to evaluate a teacher's performance.

Among the questions under study: Is dynamic pay appropriate in education? If so, where is it appropriate? Kellor said.

"It is not the same as business compensation," added Weil of the AFT.

"Merit pay [for teachers] does not work," said Odden of the CPRE. "Also, in the past, they [the top teachers] have been identified through fuzzy criteria."

Timothy Dedman, policy analyst in the teacher quality department of the National Education Association (NEA), said that unless certain criteria are met, the NEA opposes merit pay. "We're afraid it could be used to discriminate," Dedman said. "Administrators could look at incidents that had nothing to do with performance [in determining salary increases]."

The NEA does support additional compensation for teachers in hard-to-staff districts and those who earn national certification, added Dedman.

Brad Jupp, leader of the Denver Public Schools pay for performance design team, said that its pay system, ProComp, assumes that teacher performance and student outcomes can be evaluated objectively.

"We believe we can measure student learning with a degree of certainty," Jupp told Education World. "The industry has to accept responsibility for its product."

The AFT's Weil said the union is not opposed to alternative pay structures, but certain conditions have to be in place:

  • First thing; talk about commitment and make a commitment to a plan.
  • Take small enough steps to ensure the plan can move forward.
  • Develop a long-term goal.
  • Ensure there is ongoing funding for the plan.
  • Establish clear standards and objectives for teachers.
  • Make sure teachers are familiar with the standards and objectives.

"The best performance plans are standard operating procedure," Weil added.

Alternative Teacher
Compensation Systems

Four alternative teacher compensation systems that are in use or being discussed around the country:
  • Merit pay: Individual teachers receive bonuses based on improvements in their performance.
  • Knowledge- and skills-based pay: Teachers earn permanent increases for acquiring new skills and applying those skills.
  • Performance pay: Teachers earn increases tied to improvements in students' performance measured by standardized tests or other criteria.
  • School-based performance pay: All professional staff in a school earn a bonus if students meet particular goals.

Article by Ellen R. Delisio