Approaches to Alternative Teachers Compensation

About 95% of public school districts use a uniform salary schedule. But merit pay and performance-based pay programs are attracting the attention of policymakers and educators across the nation(1). Critics of traditional compensation systems and newer alternatives point out the strengths of the system they support, but the limitations of individual systems are frequently misunderstood or unrecognized. To improve the viability of a new plan, WCER Fellow Debbi Harris suggests that policymakers and stakeholders conduct extensive analyses before implementation. In a recent Policy Brief(2) Harris examines ways that different compensation systems are likely to affect teacher behavior and student learning.

Three kinds of teacher compensation systems are prevalent: the uniform salary schedule used in most districts, performance-based systems, and outcome-based systems. Systems similar to the uniform salary schedule are typical in unionized professions, where hours worked and years of service primarily influence compensation rates. Performance-based systems (also known as behavior-based systems) tie some portion of salary to observable teacher behavior, such as demonstration of a specific pedagogical technique. Outcome-based systems (also known as pay for performance) link compensation to student performance, such as test scores and attendance.

The Uniform Salary Schedule

Under the uniform salary schedule, teachers can take pedagogical risks without facing corresponding financial risks. Teachers generally believe that the uniform salary schedule is objective. The uniform salary schedule requires minimal monitoring. It is easy to determine a teacher’s years of experience, particularly when a teacher remains in the same school for many years. When teachers apply for salary credit based on coursework they can be required to submit a certified transcript. Districts can predict anticipated teacher salary outlays with a high degree of accuracy (unless union negotiations force an unexpected change in the salary schedule).

But the uniform salary schedule provides no financial incentive for teachers to work hard. Salary depends on experience and education; performance is not a factor. High-quality teachers may feel unappreciated and unrewarded because they know that low performers in their district receive the same compensation.

The uniform schedule does not necessarily attract the best candidates into teaching. Many bright and talented young students choose careers in business and other professions that pay a premium. The commonly rewarded characteristics—experience and attainment of advanced degrees—are not necessarily the characteristics of high-quality teachers.

Merit Pay Systems

The two most common forms of merit pay systems each have unique advantages and disadvantages. Performance-based systems reward teachers for what they do, and outcome-based systems reward teachers for student performance. Both performance-based and outcome-based systems provide financial incentives to improve skills that affect student learning, rather than to the acquisition of advanced degrees. Performance- and outcome-based systems also may encourage desirable candidates to enter and remain in teaching: Highly talented candidates and teachers want to teach in systems that provide additional pay for their superior performance. Compensation systems that tie pay to performance may also enjoy political support: Taxpayers and legislators may be more willing to approve school funding increases if they know that the money will be used to reward high-performing teachers.