April 9, 2002
School-Based Merit Pay
The case that merit pay for teachers might improve public schools usually receives short shrift from educators, who argue that it encourages competition rather than co-operation among colleagues. Would it be possible, though, to establish a system that based pay at least partly on the performance of each school rather than the results achieved by individual teachers?
Successful schools by definition employ excellent teachers, while those deemed poor are commonly staffed by less competent ones. As in any other organization, employees make the difference. Why not construct a framework in which all teachers in schools that concretely improve learning are compensated more than teachers in schools that do not? In other words, measure and compare student performance at the beginning and the end of the year and then base rewards on the actual improvement students have made in critical core courses like mathematics and language, English or French. This would create an incentive for teachers to perform and to work together co-operatively.
Thomas Hruz, a research fellow at the Wisconsin Policy Research Institute, documents numerous instances where school-based performance pay has been successfully put into practice. In the Cincinnati public system, schools are ranked in five categories based primarily on specified gains in student achievement, but which also take into account attendance, high school dropout, and student promotion rates. Teachers at top performing schools in that city receive an annual bonus of $1400. In 1999-2000, two schools made it into the highest category. While one of these was traditionally a leader, the other had originally started out in the bottom rank. Since overall improvement is the principal criterion, these incentives are equally open to all schools in the district.
Douglas County school district in Colorado has integrated individual and school-based performance pay into its salary structures since 1994. The group incentive method has proven the most popular. Under this arrangement, teachers can submit annual school achievement goals to the district. In the main, these deal with improvements in academic achievement, although they have also encompassed student behaviour, mentorships for at-risk students and technological skills. The key requirements are that they be challenging and clearly measurable. If a school attains them, all its teachers receive a bonus. In 1998-99, 33 out of 36 applicant schools won the performance premium.
The Dallas public system has operated a similar scheme since the early 1990's. Schools are evaluated on an Effectiveness Index that employs three measures: student achievement as indicated by test results, school-wide attendance and dropout rates and, at the high school level, enrolment in advanced placement classes. The heaviest weighting, from 70 to 80% of the merit evaluation, goes to academic achievement. Principals and teachers at schools that meet the targets receive an annual bonus of $1000, while their schools' overall budgets are supplemented by $2000. A significant component of Dallas's achievement index is a focus on students with limited English. The bonuses give schools a direct incentive to meet their special needs.
Hruz's research leads him to make specific recommendations. One of these is that the primary criterion for evaluating schools should be student achievement in core content areas. According to his findings, standardized testing remains the most efficient, reliable and accurate means of assessment. Another is that factors such as attendance rates (for both students and staff) and dropout rates should be included in the evaluation.
Compensating employees partly based on their company's success is nothing new. Business firms regularly award bonuses and stock option plans when the bottom line improves. Surely teachers deserve to be paid more when their hard work has resulted in measurable increases in student achievement. What could be better for collegiality than working together towards an attainable goal and being rewarded for success?
In 1985, five universities -- Pennsylvania, Harvard, Stanford, Michigan and Wisconsin -- combined forces to conduct research under the auspices of the Consortium for Policy Research in Education (CPRE). The findings of its Teacher Compensation Project confirm the conclusions reached separately by Hruz. They indicate that teachers working in districts with school-based performance pay are more focused on academic achievement, view setting and meeting measurable targets as a legitimate way to evaluate schools, and believe that, given adequate support, they can improve student performance.
In short, rewarding successful public schools for their collective effort works. It also meets the objections of those who find internal competition distasteful or unproductive. A system that simultaneously enhances student achievement, re-invigorates failing schools, encourages staff to co-operate and confers badly needed raises on effective educators deserves serious consideration from all stakeholders, teachers, administrators and concerned parents.
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."