Paying Teachers for Performance:
Issues and Dilemmas for Rural Schools, Part One

Last Updated: March 30, 2011

This article appeared in the March 2011 Rural Policy Matters.

This first installment in an occasional series on performance pay introduces the topic and some of the related issues that are part of the debate.

Almost everyone understands that a great teacher can have a lasting influence on a person’s life. Most of can remember a teacher who inspired our imaginations and stretched our minds. Unfortunately, most of us can also remember a teacher who lacked skills, didn’t care, or was downright mean.

In recent years, research has confirmed what most adults — and children — already knew: good teachers make a huge difference in how well students learn, and, in turn, how well they do on a number of other measures.

It is no surprise then that there would be increasing interest in identifying strong teachers and finding ways to help weaker teachers get better — or get into a more suitable career.

Pay-for-performance is one strategy that some policymakers and opinion leaders say will improve the quality of teaching in our nation’s classrooms.

This first installment in our series on pay-for-performance introduces some of the most relevant issues in the national debate. We will explore these issues in greater depth in upcoming installments.

What is pay-for-performance? At the most basic level, pay-for performance provides extra income to employees who meet or exceed goals set by the employer. Pay-for-performance goes by a number of names including performance pay, incentive pay, and merit pay.

How does pay-for-performance apply to teachers? In most states and districts, teachers are paid according to how long they have taught and the advanced degrees they have earned. In some states, local districts set teacher salary levels. Other states create statewide salary schedules, and in these states local districts can generally pay teachers more, but not less, than the schedule. In both approaches, wealthier districts tend to pay teachers more, on average, than poorer districts.

Most advocates of performance pay claim these “step” or “step and lane” salary systems, reward longevity rather than good teaching. They claim that performance pay will reward good teachers and spur weaker teachers to get better or get out of teaching altogether.

So how do we know which teachers are really good? Most people can readily describe qualities of great teachers they know. But it turns out that those qualities are not easy to measure. Further, many teachers are more effective in some settings or with some students than with others. And even great teachers have off years, periods of poor administrative support, or other circumstances that compromise their effectiveness. So, figuring out what to measure, how to measure it, who should be involved in the measurements, and over what period of time the measurements should occur are complicated questions.

What about using student test scores as a measure teacher quality? In the absence of a consistent way to measure teaching effectiveness, many performance pay advocates have proposed using student test scores as the proxy for determining how effective a teacher is.

In the simplest form, these proposals would provide higher pay to teachers whose students score higher on standardized achievement tests than to teachers whose students score lower.

But because student test scores are so closely correlated to student income levels, this approach would have the effect of rewarding teachers of the most affluent students and punishing teachers of poorer students and students with more learning challenges.

What are “Value-Added” Measures? As an alternative to rewarding teachers on the basis of students’ raw test scores, some performance pay advocates propose rewarding teachers whose students make large gains in learning, regardless of where those students start. In a very simple application of the approach a teacher might earn performance pay if her group of fifth graders who started the school year reading on the second grade level ended the year reading on the fourth grade level. These students would have made more than a year’s worth of progress, even though they still ended the school year “behind.” This approach is generally referred to as “value-added.”

Value-added approaches, however, have their own complications. They are statistically complex when structured to be useful in meaningful ways. Data is only accurate when collected over several years, and even with several years of data, value-added measures mostly identify the best and worst teachers and do little to differentiate teachers in the middle of the spectrum.

Do the levels and kinds of resources available to teachers and students affect students learning growth? The kinds of curricular and material resources available in the school do have an effect on how much a teacher is able to accomplish (for example, a school with a great science lab and one with no science equipment at all). External resources like after-school and summer programs, access to health care, and youth arts and sports programs also contribute to how much students grow academically. A teacher whose students have many supports will likely get better test scores and more test score growth than a teacher whose students have few additional resources — in or out of school.

Individual or collaborative rewards? Most performance pay proposals are based on the premise that school success is primarily related to the efforts of individual teachers. But research is confirming that improved performance and innovation are related to opportunities for collaboration. Competition, especially as related to pay, can undermine the kinds of collaboration among teachers that support dramatic and lasting improvements. In response to research on productivity and innovation, many businesses are turning away from competitive models.

What about paying teachers more in hard-to-staff schools and subjects? Some states and school districts offer salary incentives to teachers who are certified in hard-to-staff subjects like math and science or agree to work in hard-to-staff schools. Although this type of incentive pay is related to performance pay, it rewards teachers for taking on challenging circumstances not for the scores of their students.

What’s the role of teacher tenure? Tenure is frequently mentioned in policy debates related to teacher evaluations and salaries. It is often cited as an obstacle to removing ineffective teachers from the classroom. Tenure, however, is not a guarantee of perpetual employment. It simply provides due process rights to teachers faced with termination. Tenure is granted to teachers by their school districts after a certain number of years of teaching if the district believes the teacher is effective; districts are not required to grant tenure to weak teachers. Once tenure is granted, it protects teachers from malicious or retaliatory firings by requiring the district to document cause, follow established procedures, and providing the teacher with an opportunity to express their perspective on the situation. Districts that have demonstrated cause and followed the law can dismiss tenured teachers.

What is the role of collective bargaining? Collective bargaining generally refers to the negotiations unions make with employers for pay and benefits for union members. Some large cities have teacher unions that negotiate with the district on a variety of issues, including salaries. Most school districts do not have local teacher unions.

Most states do have professional teacher associations that many teachers belong do. These associations often lobby legislatures for education funding and work with state departments of education on a variety of issues. If the state has a teacher salary schedule, the education association may be involved in negotiating that schedule. In addition, education associations typically provide professional development and other services, including legal assistance to teachers who are sued or fired. Teachers choose to join education associations.

How do salaries of American teachers compare to teachers in other countries? Teacher salaries make up the bulk of school budgets. That leads many people to think of teachers as an “expense.” But compared to teachers in most countries that out-score U.S. students on international standardized tests, American teachers make much less. There are a variety of reasons U.S. students lag behind students in many other countries; relatively low pay for teachers is often cited as one of those reasons. High-scoring countries also generally give teachers plenty of time during the school day for collaboration, team planning, and learning, and they usually invest heavily in pre-service teacher preparation compared to the U.S.

Is Performance Pay Effective? The research evidence is thin on either side, but there is little evidence that performance pay effects student achievement. Trends in other aspects of the teacher pay and support system indicate that teachers tend to migrate to wealthier school systems where salaries and support as well as student achievement are high.

Critics of performance pay suggest that tying pay to student test scores will create incentives for teachers to avoid the kinds of schools and classrooms where good teachers are most needed.

What are some of the unique rural issues? Performance pay issues can be especially complicated in rural schools. Rural teachers are more likely to teach multiple subjects and grade levels, raising questions about how performance pay would be administered across this spectrum. Rural schools have fewer resources in and out of school that help boost achievement. And, rural teachers earn about $10,000 less on average than teachers in urban and suburban schools.

Incentive pay does not address these inequities.

One final issue is at play in rural schools as well. That issue is scale. Rural schools are generally smaller than other schools so teachers are more familiar with each other’s practices and often highly reliant on one another within the faculty dynamic. In such personal circumstances, paying some teachers more than others based on student test scores can be especially disruptive to the collegiality and cooperation that drive lasting improvement.

Read more from the March 2011 Rural Policy Matters.