How to Create
World Class Teacher
Compensation
How to Achieve
World Class Teacher
Compensation
Allan Odden
Marc Wallace
University of Wisconsin-Madison
Teacher Effectiveness through
Compensation (TEC)
How to Achieve World Class Teacher Compensation, Allan Odden and Marc Wallace
Allan Odden, University of Wisconsin-Madison
Marc Wallace, Teacher Effectiveness through Compensation (TEC)
Copyright ©2008 Allan Odden and Marc Wallace. Published and distributed by Freeload Press. All
rights reserved.
Illustration used on cover © 2008 JupiterImages Corporation
ISBN 1-930789-03-3
No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form
or by any means, electronic, mechanical, recording, photocopying, or otherwise, without the prior
written permission of the publisher.
Printed in the United States of America by Freeload Press.
10 9 8 7 6 5 4 3 2 1
About the Authors viii
1 The Challenge and the Opportunity 1
Getting Strategic with Teacher Pay 2
This Time It’s Different 3
Why the Concern with Teacher Pay Systems? 3
Effort to Raise Average Salary Levels 4
Performance Pay—Knowledge- and Skills-Based Pay 5
Performance Pay—School-Based Bonuses 8
What Have We Learned 9
Observations for the Future 9
The Opportunity for a Trifecta 9
A Guide to the Book 10
2 First Things First—What Should We Expect
from Teacher Pay? 13
The Need for a Total Compensation Strategy 15
What Is Total Compensation? 16
What Is a Total Compensation Strategy, and Why Do We
Need One? 18
How Can a District Develop a Total Compensation
Strategy? 24
Use of a Total Compensation Strategy 25
Manager’s Practice Guide 26
3 Getting Ready—Making the Case for
Change 27
Gap Analysis—What Is It and Why Do We Need It? 28
External Scan 29
Internal Scan, Part A—Adequacy of Current
Compensation Program 37
Internal Scan, Part B—Assessing Barriers to Change 40
Manager’s Practice Guide 43
4 Designing New Pay Systems: Base Pay for
Teachers 45
How Much Should Teacher’s Get Paid? 46
How Can States and Districts Determine Adequate
Beginning and Average Teacher Pay Levels? 47
What Special Circumstances Require a Wage Premium
Above General Teacher Salary Schedule and How Large
Should Those Premiums Be? 51
What Should Be the Basis for Pay or Pay Increases? 54
How Much Change to Make in the Teacher Salary
Schedule? 59
Knowledge- and Skills-Based Pay Basics 68
Notes 70
5 Defining and Assessing Teacher Knowledge
and Skills 71
What Is Needed for a Performance-Based Teacher
Assessment? 73
A Perspective on Good Instruction 74
The TEC Standards and Rubrics 75
Other Performance Evaluation Systems 79
Management Guidelines for Choosing a System 80
6 Designing New Pay Systems: Performance
Incentives for Teachers 83
Group-Based Performance Awards 85
Examples of Performance Awards in Education 98
Conclusions 104
Notes 105
7 Making the Financial Case for Teacher Pay 107
Benefits of New Teacher Compensation Structures 108
Costs of Teacher Compensation 110
8 Implementing and Reaping the Benefits of
New Teacher Pay 127
The Need for Flawless Implementation 129
What Does a Good Implementation Look Like? 129
Qou Vadis?—A Future Direction for Teacher Pay 135
Notes 138
Appendix Teacher Evaluation System: Portfolio
Development Handbook A-1
References R-1
Index I-1
v
Allan Odden is a professor of educational leadership and policy analysis at the
University of Wisconsin–Madison. He is a co-director of the Consortium for Policy
Research in Education (CPRE) and principal investigator for the CPRE Teacher
Compensation project. He formerly was a professor of education policy and administration at the University of Southern California (USC), director of Policy Analysis
for California Education (PACE), and a member of the Educational Policy Studies
Consortium of USC, Stanford University, and the University of California,
Berkeley.
Odden worked with the Education Commission of the States for a decade, serving as assistant executive director, director of policy analysis and research, and
director of its educational finance center. He was president of the American
Educational Finance Association in 1979–80 and served as research director for
special state educational finance projects in Connecticut (1974–75), Missouri
(1975–77), South Dakota (1975–77), New York (1979–81), Texas (1988), New
Jersey (1991), Missouri (1992–93), Arkansas (2003), Arizona (2004), Wyoming
(2005), Washington (2006), and Wisconsin (2006).
Odden is an international expert on education finance, school-based financing,
resource allocation and use, educational policy, school-based management, teacher
compensation, district and school decentralization, and educational policy implementation. He has written widely, publishing over 220 journal articles, book chapters, and research reports, and 30 books and monographs. His recent books include
Paying Teachers for What They Know and Can Do: New and Smarter Compensation
Strategies to Improve Schools (with Carolyn Kelley), Financing Schools for High
Performance: Strategies for Improving the Use of Educational Resources (with
Carolyn Busch), and School Finance: A Policy Perspective, 3rd edition (with Larry
Picus).
He has consulted for governors, state legislators, chief state school officers,
national and local unions, the National Alliance for Business, the Business
Roundtable, New American Schools, the U.S. Congress, the Secretary of
Education, and many local school districts. He is now staffing the Compensation
Committee of the Teacher Union Reform Network (TURN).
Professor Odden was a mathematics teacher and curriculum developer in New
York City’s East Harlem for five years. He received his doctorate and master’s
degrees from Columbia University, a master’s of divinity from the Union
Theological Seminary, and his bachelor of science degree from Brown University.
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Table of Contents
Marc J. Wallace, Jr. is a founding partner of Teacher Excellence through
Compensation (TEC). He is based in Lake Bluff, Illinois, where he serves clients with
his extensive consulting and research experience in compensation, workforce effectiveness, human resource strategy, and labor relations. From 1992 to 2002, he was
president of the Center for Workforce Effectiveness (CWE) in Northbrook, Illinois,
serving clients in both the private and public sector.
From 1971 to 1992, Wallace was the Ashland Oil Professor of Management,
College of Business and Economics, University of Kentucky. He also served as chairman of the Department of Management and as director of graduate studies. His
research and teaching centered on human resource strategy and compensation. In
1983, he was named a Great Teacher by the university’s alumni, becoming the second
professor in the college’s history so honored.
During his career, Wallace’s client engagements have been conducted in a wide
variety of settings, including education, government, durable and nondurable goods
manufacturing, financial services, insurance services, telecommunications, and utilities. His experience embraces a wide variety of occupations, including industrial and
administrative positions, managers, executives, and technical/professionals. He is an
internationally recognized expert on human resource strategy, legal compliance, compensation, and labor relations. He is a frequent speaker and has keynoted conferences
for World at Work, the American Management Association, the Conference Board,
and numerous trade and industry associations. With Allan Odden, he has pioneered the
successful adaptation of proven compensation strategies and techniques in the field of
education. His work has resulted in the successful introduction of teacher pay for performance in a variety of schools, school districts, and states.
Wallace has co-authored over sixty articles and ten books on management and
human resources, including Organizational Behavior and Performance, 5th edition;
Administering Human Resources, Compensation Theory and Practice, 2nd edition;
and Research Based Decisions. His book Work and Rewards in the Virtual Workplace:
A New Deal for Organizations and Employees was published by the American
Management Association and was honored by the Society for Human Resource
Management (SHRM) as “Book of the Year” in 1999. McGraw-Hill Business Books
published his latest book, The Headcount Solution, in 2003. Wallace is a member of
the World at Work (formerly American Compensation Association) certification
faculty and is co-developer of several certification courses. In 1995, the American
Compensation Association honored Wallace with the Keystone Contributor Award,
recognizing a lifetime contribution to the fields of compensation and human resources.
Wallace holds doctorate and master’s degrees in industrial relations from the
University of Minnesota and a bachelor’s degree from Cornell University.
The Challenge
and the
Opportunity
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Chapter 1
We sat down to lunch with the superintendent of a large school district in a
Middle Atlantic state. “I’ve got demands coming from all directions,” he said.
“NCLB (No Child Left Behind) and AYP (Adequate Yearly Progress) and the state’s
accountability standards have us under the gun to get student scores up–and
we’re nowhere near it now. The teachers believe that they are being underpaid,
compared to surrounding districts–and there’s probably some truth to that. The
teachers’ union has served notice that pay and benefits will be a big issue in our
upcoming negotiation. On top of that we have chronic staffing problems in math
and special education. Finally, I’m faced with a board who doesn’t want to spend
any more money. I think they might listen to an argument for more pay if we can
show that spending the money will result in gains in meeting our student achievement accountability goals. You guys have any good ideas?”
The superintendent is facing the same challenge experienced by thousands
of school districts across the United States: manage to a higher performance in
a time of limited resources. The opportunity presents itself in the form of the following principles:
1.
The key accountability for schools is to improve student performance.
2.
Teachers in the classroom (including those in hard-to-staff fields such as math and
special education) and their instructional practice are the single most important
factors that will lead to improved student performance.
3.
Teacher compensation is the single biggest part of the education budget (often more
than 60%).
4.
Therefore, linking pay to teacher performance–instructional practice that produces
student learning gains–is the best way to expend money in a way that ultimately
improves student performance.
This book will show how the connections among those principles are playing
out today. We wrote this book to show how we believe that you can use these
principles to achieve dramatic improvements in student achievement through
teacher pay changes and through improvements in related systems needed to
operate new teacher salary structures, like revised professional development and
standards-based teacher evaluations. Based on our experience and research, we
will urge you to get strategic about teacher pay. We believe that better schools
are becoming the best schools by unleashing teacher knowledge, and those skills
and instructional expertise that will lead to world-class student performance by
attracting, retaining, and motivating the best teachers through compensation.
Getting Strategic with Teacher Pay
During the 1990s, states and local districts began to experiment with new approaches to
teacher compensation that were different from traditional single salary schedules and
merit pay. These pay innovations included knowledge- and skills-based salary schedules,
salary increments and/or bonuses for certification by the National Board for Professional
Teaching Standards, incentives for teachers in subject area shortages or working in low
performing/high poverty schools, signing bonuses, moving expenses, school-based
The Challenge and the Opportunity
performance award programs, individual teacher-based student performance bonuses and
others (Odden & Wallace 2004). These approaches have now expanded in adoption and
use across the country and portend a new era in how teachers are paid.
Moreover, just as teacher pay changes in the late nineteenth century and early
twentieth century followed pay structure changes in the private sector, today many of
the recent teacher pay changes followed similar pay changes in the private sector
(Odden & Kelley 2002). Both sectors, for example, had unsuccessful experience with
merit pay. Merit programs failed because (a) they were rarely strategic and did not
connect with organizational mission and objectives, (b) managers were unwilling (or
unable) to adequately conduct the performance management and assessments required
of such programs, (c) they often degenerated into biased and low-quality appraisals of
performance, (d) they were poorly designed, and (e) they were underfunded.
Many private-sector businesses moved away from merit programs in the 1980s
and redirected pay for performance towards pay programs that rewarded their workers
for the acquisition and use of “core” competencies related directly to organization
mission and objectives. Such knowledge- and skills-based programs focused on
human capital value rather than merit. In addition, organizations directed their variable
or bonus pay programs towards group-based incentives earned for the accomplishment
of unit and/or organizational goals. They also adopted methods (including two-tier pay
systems and bonuses) to attract and retain workers in “hot labor markets,” such as
information systems and health care (Crandall & Wallace 1998, 2003).
This Time It’s Different
Education is making similar changes in teacher pay today. The pay innovations begun
in the 1990s and continuing in the first decade of the twenty-first century are different
from the old merit pay efforts. Indeed, the most recent proposal to enhance teaching
as a profession suggested a change in teacher compensation–both higher pay levels
and a more performance-oriented pay structure–as its lead recommendation (The
Teaching Commission 2004). The main difference this time around is that teacher pay
is not being cast narrowly as a human resources issue but rather as a strategic issue
with a bearing directly on the mission and objectives of education.
In spite of the strategic direction being taken, it is not yet clear how these pay
innovations will play out in education. Although teacher pay innovations have expanded in scope and number across the country, we don’t yet know which particular structural changes will be most successful or whether a new typical approach, like the “single salary schedule” that emerged in the twentieth century, will emerge in the twentyfirst century.
In this chapter, we explore why changes in teacher pay are being pursued,
describe the types of teacher salary schedule changes that are being tried, comment on
the successes and failures of the various efforts, and suggest some directions that will
likely be fruitful in the next five to ten years.
Why the Concern with Teacher Pay Systems?
The concern with teacher pay systems emerges from a logic in thinking about how to
improve student learning–the challenge expressed by our superintendent at lunch.
First, the needs of the knowledge-based global economy require much higher levels of
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cognitive expertise. Second, education is under pressure to improve student learning.
Each state’s standards-based education reform and the more strident federal No Child
Left Behind Act have the goal of dramatically improving student learning. Third, there
is strong consensus (based on empirical research) that teachers, particularly the curriculum they teach and the quality of their instructional practice, are most critical to
accomplishing these goals (even more important than demographic and classroom factors) (Sanders & Rivers 1996; Wright, Horn & Sanders 1997). Thus, education leaders and policymakers view what teachers know (their knowledge) and can apply (their
skills and instructional practice) as the keys to producing the desired higher levels of
student achievement. Fourth, because teacher pay is by far the biggest part of most districts’ operating budgets (often 50% to 70%), it is compelling to ask if those dollars
can be redirected more closely to teacher human assets, such as their instructional
practice, which will result in improved student learning, as well as bonus programs
directly linked to increases in student academic learning.
Getting strategic with teacher pay means taking those steps with compensation
that will contribute to teacher quality. Teacher quality, in turn, means ensuring that:
(1) all teachers have sufficient knowledge, skills, and instructional skills to boost student learning; (2) shortages in “hot” subject areas (mathematics, science, and technology) and hard-to-staff schools (e.g., high poverty, low performing, and geographically isolated schools) are eliminated; and (3) the education system does a better job
of recruiting, developing, placing, and retaining its teacher workforce. These three
qualities, then, become the objectives embodied in a compensation strategy for
directing teacher pay.
Creating this level of teacher quality is a complex substantive as well as fiscal
challenge. Aligning how teachers are paid with the acquisition of these elements of
teacher quality would enable the teacher salary structure to lead and to reinforce other
system strategies (e.g., district and school leadership, a strategic human resources system, and effective professional development), targeting on developing and retaining
this needed teacher expertise (Heneman & Milanowski 2004).
Districts and states are trying multiple strategies to restructure teacher pay systems to enhance teacher quality, including raising teacher pay levels, creating a wide
variety of performance-pay structures, and paying bonuses to teachers when student
performance improvement goals are met.
Efforts to Raise Average Salary Levels
Many states and districts see one aspect of the teacher quality “problem” as salary levels that are simply too low. Arkansas, California, Iowa, New Mexico, North Carolina,
Virginia, and Wyoming, to name a few states, concluded that teacher shortages and a
decline in overall teacher quality were due, at least in part, to salary levels that had not
kept up with the market. Several urban districts, including Baltimore, Long Beach,
Milwaukee, and New York City, concluded that teacher salary levels had to rise in
order for them to compete for teacher talent with their surrounding suburban districts,
nearly all of which paid higher salary levels. Though each state and district might have
defined the competitive market differently, the conclusion was the same–teacher
salary levels had to rise in order for those districts to be more effective in recruiting
and retaining the quality of teachers needed.
The Challenge and the Opportunity
When salary increases were proposed, however, both state and district
policymakers faced the dilemma, noted by Ballou and Podgursky (1997) after studying
the impacts of the 1980s teacher salary raises, that across-the-board raises for all
teachers do not improve teacher quality much (if at all), and that to work, teacher pay
increases need to be provided through some type of “performance-” or “market-based”
structure in order to change teacher quality in ways that boost student performance.
For the latter, for example, higher salaries should focus on specific categories of
teachers for which there are shortages: generally, secondary teachers in “hot subject
areas,” such as mathematics, science, and technology; and/or teachers in “hard-to-staff”
schools, such as high-poverty or geographically isolated schools (Goldhaber 2002;
Goldhaber & Player 2005). Today, numerous districts (e.g., Baltimore, CharlotteMecklenburg, Cincinnati, Fairfax County, Houston, New York City, San Francisco) and
states (e.g., California, North Carolina, and Virginia) across the county provide incentives for teachers in subject area shortages and/or who teach in low-performing or geographically isolated schools. Sometimes, the extra pay is permanent: sometimes, such
teachers start at a higher step on the salary schedule but top-out at the same level as
other teachers; and sometimes, there is a “signing” or “hiring” bonus. This incentive,
while somewhat controversial, is an idea catching on all over the country.
Performance Pay—Knowledge- and Skills-Based Pay
A second approach to enhancing teacher quality with pay has focused on pay for performance. Pay for performance, in turn, has two primary forms. The first (discussed
here) is to use salary increases to reward teacher performance. This approach is most
frequently referred to as knowledge- and skills-based pay (KSBP). The second (discussed later in this chapter) is to reward teachers with bonuses based on improvements
in student performance, usually on a schoolwide basis. This approach is most frequently called school-based performance awards (SBPA). Sometimes, though, the
bonus is focused on individual teachers.
The first form is to tie pay increases to teacher quality levels. The notion is to link
teacher pay to instructional expertise and practice. Such raises can be driven by
involvement in specified professional development activities, two-tier licensure,
National Board certification, achievement of skill levels defined by standards-based
assessments, or even student learning gains–or some combination of these factors.
Increases are often tied to performance through the introduction of new salary schedules that replace or augment the traditional single salary structure based on years of
service (steps) and education units/degrees (lanes).
States and districts have varied a great deal in creating performance pay structures. Some have tried quite modest changes, others “extreme makeovers,” and still
others have made more middle-of-the-road changes.
A Modest Approach to Performance Pay
Douglas County, Colorado, was the first district to adopt elements of performance pay,
following suggestions in an early 1990s policy brief on how knowledge- and skillsbased pay could be adapted to the education system (Odden & Conley 1991). Douglas
County retained the bulk of their traditional single salary schedule and added several
“knowledge and skill” bonuses. And, the new system required teachers to obtain a satisfactory evaluation in order to earn their annual “years of experience” increase. But
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the district retained rather than redesigned the schedule and provided several options
for teachers to earn one-time bonuses for various new competencies. The district provided $400–$500 bonuses for numerous skill areas, such as getting trained in a computer “office suite” or learning how to score student work to a performance standard.
The district also created an “outstanding teacher” reward based on a portfolio submission that initially provided an annual bonus of $1,000, which rose to a higher level for
each of three years.
The performance elements were voluntary, on top of a modestly changed single
salary structure, and rarely represented more than 1% of the total salary budget.
Nevertheless, the skill areas identified were popular with teachers, and their enthusiastic response to the plan showed that pay for knowledge and skills could work
(Hall & Caffarella 1996, 1998).
Extreme Makeovers
The next pay structure changes were “extreme makeovers.” The Vaughn Charter School
(Kellor 2003), Cincinnati (Kellor & Odden 2000), Iowa (White 2002), Philadelphia,
Steamboat Springs, and most recently Denver (http://denverprocomp.org/) designed
brand-new salary structures that completely changed the ways teachers would earn
salary increases.
Vaughn, Cincinnati, Iowa, Philadelphia, and Steamboat Springs linked major pay
increases to a score earned on a “standards-based” teacher performance evaluation. To
earn the highest pay, teachers would need to show that their instructional expertise met
the highest benchmarks of the newly created performance evaluation systems. The
evaluation systems in Vaughn, Philadelphia, and Cincinnati were generally based on
Charlotte Danielson’s A Framework for Teaching (1996). Iowa and Steamboat Springs
chose to design their own systems.
Of those implemented (Cincinnati, Denver, Philadelphia, and Vaughn), only two
remain; all others were dropped. Denver’s took about four years to create; implementation began in January 2006. The Vaughn structure, which is supported by both teachers and administrators, had some initial problems, but the school quickly fixed those
problems, and in subsequent years had a system that teachers felt was fair, reliable,
and retainable (Kellor 2005).
Cincinnati, however, had communication and technical implementation glitches,
despite extensive training of assessors and administrators. Teachers also faced large
salary decreases if their performance scores placed them on the new schedule at a
category with a lower pay level. After three years, the teachers voted out the leaders who
had helped design the system and then voted down the pay system itself. The
implementation glitches and potential salary loss led to ongoing teacher perceptions that
the evaluation system was not good enough to use for consequential decisions, even
though considerable research has shown high levels of reliability across both principal
and teacher assessors, and significant linkages between teacher evaluation scores and
value-added student learning (Milanowski 2004; Milanowski, Kimball, & Odden 2005).
As of 2005, the district was negotiating how to link salary to teacher performance.
The Iowa program immediately faced funding problems with the onset of the
early 2000 national recession, which led to significant underfunding of the schedule,
and a less-than-desired level of funding to develop the entire assessment system for
the three levels of teacher performance. With strong continued support by the governor, however, by summer 2005 the system continued, the first two levels of the assessment system had been developed, and only the mechanism for the highest performance level remained to be developed.
The Challenge and the Opportunity
The Steamboat Springs system faced delayed implementation as the district
worked to create its own performance-assessment system, a very substantial task.
Designing their own assessment system took so long that after three years the district
discontinued the effort.
The Denver program, with a 59% teacher approval rate in a March 2004 vote,
became the most recent “extreme makeover” teacher salary structure. The structure
emerged from a four-year pilot and design effort and is very different from the previous
three structures. Rather than base all pay increases on the result of a standards-based
performance evaluation, the Denver plan has multiple factors to trigger pay increases
and no salary maximum. Implementation began in January 2006, after a voter-approved
referendum in November 2005 to provide additional funding. Teachers hired before then
have the option of joining the system; all teachers hired after January 2006 are required
to join.
We know from Cincinnati’s experience that Denver still faces significant implementation challenges, as the new structure offers a totally different way to earn salary
increases. The key to success will be a smooth implementation.
Districts face a dilemma in the form of the trade-off between the modest approach
of Douglas County and the extreme makeovers of Vaughn, Cincinnati, and Denver.
The modest approach is more feasible and liked by the teachers, but unlikely to produce significant improvements in student learning–it is not very strategic. The extreme
makeover, by contrast, leads to significant strategic accomplishment–when it works
(witness Vaughn). But it is difficult to implement.
A Middle-of-the-Road Approach
The middle-of-the-road option is less risky than the extreme makeover approach but
more robust than the modest approach. A middle-of-the-road approach might be best,
as districts may not always get the tools and instruments needed for the extreme
makeovers to operate smoothly in the initial years.
Minneapolis provides a good example (White 2003). Its new professional pay
plan retains the single salary schedule and provides several lucrative options for
adding to that base. Additions can derive from improving student performance, taking
focused academic credits, taking content courses in subject area shortages, taking
district-provided professional development courses focused on critical skills teachers
in the district need, getting National Board certification, and assuming additional
responsibilities. These salary additions can total up to $27,000 per teacher, and all are
optional.
Because a performance- and standards-based teacher evaluation system is such a
strong anchor element for a KSPB programs that works (i.e., pays the most effective
teachers the highest salary), an alternative “middle-of-the-road” approach would be to
retain the single salary schedule and use the scores on a standards-based performance
evaluation to increase the base salary by a percentage that rose as the performance or
skill level rose. During the time the district (or state) was perfecting the operation of
this more complex evaluation system, the percentage increases for the performancebased add-on could be small. As the evaluation system became more smoothly
operational, those percentages could be increased, and the evaluation score could
become the prime factor that triggered teacher salary increases over time. We show
how such a salary structure can be designed in later chapters.
Another middle-of-the-road approach is represented by the states of Arizona and
Minnesota. Arizona in 2003 and Minnesota in 2005, through a new state-funded QComp
program, provided up-front funding for districts to design their own performance pay
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systems. Both the up-front financing and the locally designed programs are quite popular. And, even though Minnesota specified more structures for the programs, only time
will tell whether local discretion in designing new pay structures for teachers produces
rigorous designs that work.
Linkage to the Instructional Improvement Strategy
Nearly all of the previously discussed efforts struggled with the challenge to link the
pieces of the new pay system to their instructional improvement strategy. Most districts, however, spent too much time developing the new salary system and the new
evaluation system and too little time on the instructional improvement strategy. The
exceptions were Minneapolis and the Vaughn Charter School, the two systems with
the most fully operating systems. Going forward, systems should first create an
instructional improvement strategy and then make sure any new evaluation used to
operate a new pay system draws directly from the various elements of that strategy.
One such strategy would have teachers working together to create or hone “standardsbased curriculum units,” a professional development strategy that has powerful
impacts on teachers’ classroom practice and student learning (Cohen & Hill 2001).
And such a professional development strategy links well with the type of standardsbased teacher evaluation system we describe in Chapter 5.
Performance Pay–School-Based Bonuses
The second type of pay for performance is to provide incentives (that are paid as
bonuses—not increases in base salary) for improved student performance. They are
often referred to as school-based performance awards (SBPA). States (e.g., California,
Florida, Kentucky, North Carolina) and districts (e.g., Charlotte-Mecklenburg,
Houston, New York City, Steamboat Springs) created several versions of salary bonuses paid on the basis of preset targets for improved student learning.
Nearly all bonuses are provided on a schoolwide basis–when the school meets
the target, everyone in the school gets a bonus, and sometimes, support staff and
administrators as well. One exception is the Milken Teacher Assessment Program
(TAP), which provides small bonuses to individual teachers. This approach, however,
has proved contentious and only lasted a year in Colonial, Pennsylvania.
Nevertheless, both Houston and the state of Florida adopted individual teacheroriented performance bonus programs in early 2006, and each initially faced stiff
teacher opposition.
Both knowledge- and skills-based pay (KSBP) and student-based performance
awards (SBPA) are excellent complements to each other as components of a complete
strategy for paying teachers for performance. KSBP focuses on the teacher personally,
rewarding him or her for human capital value—the worth of the skills, knowledge, and
instructional expertise the teacher brings into the classroom. A good KSBP program
pays teachers individually for what they know and can do (Odden & Kelly 2002).
Student-based performance award programs, in contrast, focus on the performance of
the team of teachers, or individual teachers, and reward them for what they have
produced in the way of improved student learning and achievement. An SBPA
program pays teachers as a team for what they produce, though as noted there also are
new experiments with individual teacher-focused bonus programs.
The Challenge and the Opportunity
What Have We Learned?
These examples show a huge variation in how far districts are willing to go in terms
of two issues: How large a change in the pay structure is made (modest, middle of the
road but significant, or extreme makeover), and how teacher performance is defined
and assessed (credentials and higher education courses, participation in various professional development activities, or standards-based performance assessment), and
how the latter is linked to an instructional improvement strategy.
When considering how far to go with changing the teacher pay schedule or how
far to take the definition of performance or skill levels, you should consider the following issues that have emerged from the experience of others:
• First, minimal is certainly easier to do and keeps everyone in their comfort zone.
• Second, the impact on ultimate outcomes such as student learning gains has only
been empirically shown where true, standards-based teacher evaluations have
been used.
• Third, a stronger link is needed between all elements of a new compensation
structure and the instructional improvement strategy.
• Fourth, only time will tell if Denver weathers implementation, is affordable over
the medium term, and produces improvements in student achievement.
• Fifth, each district will need to decide how “ready” it is for major change and
tailor compensation change to its local context.
Observations for the Future
Looking to the future we can make several observations.
First, pay for performance is not going away. State standards-based education
reforms, NCLB, the knowledge-needs of the global economy, and budget
pressures will continue the focus on student learning gains, instructional
improvement, high-quality teachers, and teacher pay—a huge part of any
operating budget.
Second, more experimentation with different alternative salary structures
will characterize change. No single approach has emerged as the best. We can
expect to see many “middle-of-the-road” variations.
Third, more knowledge about what works and what doesn’t will
accumulate–if states and districts encourage and then allow their innovations to
be researched. As experience accumulates and is documented and analyzed, we
will be able to take surer steps in designing and transitioning to effective payfor-performance systems.
Finally, pay for performance will be extended to classified and
administrative staff, as Steamboat Springs (Colorado), Kyrene (Arizona), and
New York City have done. The logic is that support staff and administrators also
contribute to the accomplishment of an organization’s mission and objectives
and thus it makes sense to create incentives and rewards for their efforts.
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The Opportunity for a Trifecta
We’ve said that teacher pay represents both a challenge and an opportunity. The opportunity is for a trifecta—in horse racing, a bet on win, place, and show that pays off
three times. The trifecta in teacher pay promises a win-win-win for teachers, school
districts, and students. Teachers win by earning higher levels of pay and reaching
career high pay levels more quickly. School districts win by attracting, retaining, and
motivating teachers of the highest caliber and skill levels. They also win because of
students achieving and surpassing AYP goals. Finally, students win because they have
the benefit of skilled teachers and achieve higher levels of learning.
A Guide to the Book
The balance of this book will show you how to successfully make changes in teacher
compensation.
Chapter 2: “First Things First–What Should You Expect from Teacher Pay” will
show how to establish a compensation strategy. We will define what a compensation
strategy is and why you need one. We will show how to establish objectives for teacher
compensation and how to use them in establishing policy for compensation. We will
also explore compensation architecture, which defines principles regarding what
teacher compensation should look like in your state, district, or school. Chapter 2 will
provide you with the principles to define a game plan for teacher compensation. The
teacher compensation strategy will serve as a standard for evaluating current compensation practices and a guide to follow in making changes to the pay program.
Chapter 3: “Getting Ready–Making the Case for Change” will show you how to
decide if a change in the pay program is necessary. We will define and describe a
process called gap analysis and show how to use it to analyze your current compensation practices. We will show how to assess the competitiveness of your pay levels
externally (the external scan) and how to look at your current schedule and practices,
and their relationship to your instructional improvement strategy (the internal scan).
We will discuss the merits of using an employee survey as part of the internal scan to
identify where the implementation “land mines” are.
Chapter 4: “Designing New Pay Systems: Base Pay for Teachers” will explore the
variety of alternative schedules to the single salary schedule being tried today. We will
examine how far you should go in changing the way you pay teachers (from small adjustments to extreme makeover). We will lay out the three basic questions to consider:
1.
How much should we pay teachers?
2.
What do we pay for?
3.
How far do we go in changing the schedule?
We first will discuss the level of teacher pay, how to link teacher pay levels more
to the market for instructional expertise, and the rising need to provide incentives for
teachers in “hot” subjects, such as mathematics and science, and hard-to-staff, lowperforming schools. We then will show the major types of knowledge- and skill-based
pay (KSBP) systems that have been adopted. This chapter will define KSBP basics
and lay out a process to follow in designing a KSBP system that will work for you.
We will ask if KSBP makes sense for administrators and support staff as well.
The Challenge and the Opportunity
Chapter 5: “Defining and Assessing Teacher Knowledge and Skills” will look in
more detail into the definition of what you want to pay for under a KSBP system. You
will see that there are many choices, ranging from certifications, to professional development activities, to standards-based assessments of teaching skills. We will explore
the trade-offs among the various approaches, as well as the important principle to link
the key elements in the new pay system to the key elements in your instructional
improvement strategy. We also will discuss the problems of using student test scores
as a basis for identifying effective teachers and suggest ways to incorporate this complex, controversial but, among the public, popular approach to identifying effective
teachers. This chapter will allow you to determine the approach or combination of
approaches that will work best for you.
Chapter 6: “Designing New Pay Systems: Performance Incentives for Teachers”
will explore a variety of financial bonuses or incentive payments that go beyond base
pay and the salary schedule. The primary type of variable-pay program is called a
school-based performance award (SBPA). It rewards an entire school or district for
achieving student performance improvement goals.
Chapter 7: “Making the Financial Case for Teacher Pay” will discuss how to
assess the costs and benefits of the changes contemplated in teacher pay. We will
explore models for costing new schedules and KSBP over a multiyear period. We will
explore how to assess the incremental cost of changes in a new teacher pay structure.
Chapter 8: “Implementing and Reaping the Benefits of New Teacher Pay” will
explore the single most critical factor determining success or failure—the effectiveness with which change in pay is implemented. We will explore what good implementation looks like and how the school board, administration, and unions must work
together. We will discuss the importance of effective communication. This chapter will
also explore the use of pilot programs, show what a good pilot program looks like, and
explore formative evaluations of pilot programs. Finally, this chapter will explore what
a summative evaluation looks like and how to make such an evaluation an ongoing
process, assuring that the teacher compensation program continues to achieve the
objectives you have established for it.
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