Performance-Pay-Lite Won't Cut It

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School district budgets are tight, and that's unlikely to change in the near future. So what's the best way to ensure school districts' long-term fiscal health? In an Ed Week commentary, Eric Hanushek says it's not by making cuts to smaller budget items like procurement, security and transportation, but by rethinking the big ticket items in district budgets: compensation. Hanushek argues that districts can't really bring efficiency to this giant portion of their budgets unless it's connected to performance.

Part of this efficiency would both demand and allow that we pay our very best teachers a lot more. And although plenty of districts have a toe in the performance pay water, few seem ready to really take a swim. While 40 percent of the 114 districts we track in our Tr3 database offer teachers extra pay for good performance, we know of only seven in which performance pay amounts to $10,000 or more for top performing teachers. And in only a few districts we track--Harrison County, Colorado; Washington, D.C.; and Newark, New Jersey--is performance a major factor in movement on the salary schedule.

If districts truly want to get the most bang for their buck, they'll have to do better. A few thousand dollars a year might not be enough to keep a true star in the classroom.