Teacher Compensation Policy


While giving local districts authority over pay scales, the state should ensure that effectiveness is a factor in teachers' compensation. This goal is reorganized for 2021.

Best practices

NCTQ continues to not award "best practice" honors for performance pay. Past studies of implementation at the district level found that state-level policies were not necessarily effectively executed in ways that support performance pay. NCTQ encourages all states not only to implement strong performance pay policies, but also to ensure that, once these policies are implemented at the local level, teachers who are effective in the classroom are compensated in a meaningful way.

Suggested Citation:
National Council on Teacher Quality. (2021). Performance national results. State Teacher Policy Database. [Data set].
Retrieved from:
Best practice 0


Meets goal 4


Nearly meets goal 6


Meets goal in part 29


Meets a small part of goal 8


Does not meet goal 4


What role do states play in deciding teacher pay rates?

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Figure details

State allows districts to set their own salary schedules.: AK, AZ, CA, CO, CT, DC, FL, IN, KS, LA, MD, MI, MN, MT, ND, NE, NH, NV, NY, OR, PA, RI, SD, UT, VA, VT, WI, WY

State sets the minimum salary a teacher must earn but leaves the rest to districts.: IA, ID, IL, MA, ME, MO, NJ, NM, WA

State sets minimum salary schedule: AL, AR, DE, GA, HI, KY, MS, NC, OH, OK, SC, TN, TX, WV

CO: Colorado gives districts the option of a salary schedule, a performance pay policy or a combination of both.
RI: Rhode Island requires that local district salary schedules are based on years of service, experience and training.
TN: Districts must differentiate teacher compensation based on at least one of the following criterion: additional roles or responsibilities, hard-to-staff schools or subject areas, and performance based on teacher evaluations.

Do states explicitly require districts to consider teacher performance in awarding pay?

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Yes. State requires districts to consider performance in teacher pay. : FL, GA, HI, LA, MI, MN, NV, NY, TX, UT

Partially. State explicitly encourages or allows districts to consider performance in teacher pay.: AR, AZ, CO, DE, ID, IL, IN, KY, MA, MO, MS, NM, OH, OK, TN

No. State does not explicitly support performance pay.: AK, AL, CA, CT, DC, IA, KS, MD, ME, MT, NC, ND, NE, NH, NJ, OR, PA, RI, SC, SD, VA, VT, WA, WI, WV, WY

AR: However, program is not currently being funded.
AZ: Arizona allocates funds for teacher compensation increases based on performance and employment related expenses; there is no clear requirement for compensation connected to evidence of effectiveness.
GA: Teachers do not get credit on the salary schedule for unsatisfactory or ineffective overall ratings, or for the second year in which two consecutive needs development ratings are earned. Although not technically performance pay, this policy effectively ties evaluation scores to compensation.
ID: Due to a freeze in the career ladder, advanced professional endorsements are not being issued.
IN: The state no longer requires objective measures of student growth in its teacher evaluation system.
KY: However, there is no guaranteed connection to student achievement.
MN: For districts implementing Q Comp
MO: Not currently being funded.
NM: The state's program is not currently being funded.
NY: Annual teacher evaluations must be a "significant factor for employment decisions including but not limited to...supplemental compensation."
OK: However, the state's evaluation system does not require objective evidence of student growth.
VA: The Alternative Teacher Compensation Grant allows school districts to explore alternative teacher compensation approaches that "move away from tenure-based step increases toward compensation systems based on teacher performance and student progress."

Updated: March 2021

How we graded

8A: Performance 

  • Evidence of Effectiveness: The state should:
    • Not require districts to adhere to a state-dictated salary schedule that defines steps and lanes and sets the minimum pay at each level, although the state may find it appropriate to articulate teachers' starting salaries.
    • Eliminate state salary schedules that establish higher minimum salaries or other requirements to pay more to teachers with advanced degrees. Accordingly, the state should also discourage districts from tying additional compensation to advanced degrees.
    • Support performance pay efforts that reward teachers for demonstrated classroom effectiveness and allow districts flexibility to define the criteria for performance pay, provided that such criteria reflect student growth.
    • Adjust its base pay requirements according to changes in the state's cost of living at least every three years.
Evidence of Effectiveness
The total goal score is earned based on the following:

  • Full credit: The state will earn full credit if it supports performance pay efforts that reward teachers for effectiveness and if it allows districts the flexibility to define the criteria for performance pay, provided that such criteria require teachers to contribute to student growth to earn performance pay awards.
  • Three-quarters credit: The state will earn three-quarters of a point if it does not dictate salary schedules, and if it offers some performance incentives to teachers. 
  • One-half credit: The state will earn one-half of a point if it does not dictate salary schedules, and if it allows districts to determine how to pay teachers. The state can also earn half credit if it has policy relating to performance pay, even if a salary schedule is required. 
  • One-quarter credit: The state will earn one-quarter of a point if it considers performance, but that performance is not necessarily tied to student growth. 
**States will lose a quarter point overall for lack of funding. 

Research rationale

Compensation reform can be accomplished within the context of local control. Teacher pay is, and should be, largely a local issue. Districts should not face state-imposed regulatory obstacles that prevent them from paying their teachers as they see fit; different communities have different resources, needs, and priorities. The state can ensure that all teachers are treated fairly by determining a minimum starting salary for all teachers. However, a state-mandated salary schedule that locks in pay increases or requires uniform pay deprives districts of the ability to be flexible and responsive to supply-and-demand problems that may occur.

While leaving districts flexibility to decide their own pay scales, states should promote compensation tied to teacher effectiveness and discourage districts from basing pay solely on criteria not correlated with teacher effectiveness. Across the country, state and district salary schedules are based primarily on just two criteria: advanced degrees and years of experience, neither of which is correlated with teacher effectiveness. The impact of advanced degrees on teacher performance has been studied extensively, and research has shown that such degrees generally do not make teachers more effective.[1] Years of experience do have an impact on teacher effectiveness very early in a teacher's career, but this effect appears to fade out after the first few years of teaching.[2] Because of their predominance in current salary schedules, states need to take a proactive role in preventing districts from basing teacher pay primarily on these two criteria.

Performance pay is an important recruitment and retention strategy. Performance pay provides an opportunity to reward those teachers who consistently achieve positive results from their students. The traditional salary schedule used by most districts pays all teachers with the same inputs (i.e., experience and degree status) the same amount regardless of outcomes. Not only is following a mandated schedule inconsistent with most other professions, it may also deter talented individuals from considering a teaching career, as well as high-achieving teachers from staying in the field, because it offers no opportunity for financial reward for success.[3]

States should set guidelines for districts to ensure that plans are fair and sound. Performance pay plans are not easy to implement well. There are numerous examples of both state and district initiatives that have been undone by poor planning and administration.[4] As the use of value-added models now allow for the development of a more meaningful understanding of teacher effectiveness, districts should ensure that performance pay systems consider both qualitative and quantitative measures in order to fairly assess and compensate teachers for their performance.

States can play an important role in supporting performance pay by setting guidelines (whether for a state-level program or for districts' own initiatives) that recognize the challenges in implementing a program well.[5] A few states now require that districts build performance into salary schedules, moving away from bonus structures that teachers know may be subject to budget constraints and competing priorities.

[1] For evidence that degree status does not increase teacher effectiveness and should therefore not be automatically rewarded in teacher salary schedules, see the following: Boyd, D., Lankford, H., Loeb, S., Rockoff, J., & Wyckoff, J. (2008). The narrowing gap in New York City teacher qualifications and its implications for student achievement in high-poverty schools. Journal of Policy Analysis and Management, 27(4), 793-818.; Henry, G. T., Bastian, K. C., and Fortner, C. K. (2011). Stayers and leavers: Early-career teacher effectiveness and attrition. Educational Researcher, 40(6), 271-280; Papay, J. P., & Kraft, M. A. (2015). Productivity returns to experience in the teacher labor market: Methodological challenges and new evidence on long-term career improvement. Journal of Public Economics, 130, 105-119. Ladd, H. F., Clotfelter, C. T., & Vigdor, J. L. (2007). How and why do teacher credentials matter for student achievement (NBER Working Paper 142786). Retrieved from; Rivkin, S. G., Hanushek, E. A., & Kain, J. F. (2005). Teachers, schools, and academic achievement. Econometrica, 73(2), 417-458. Retrieved from; For research showing that increases in the percentage of teachers with master's degrees is associated with lower gains among white students but higher gains among black students, see: Ehrenberg, R. G., & Brewer, D. J. (1994). Do school and teacher characteristics matter? Evidence from high school and beyond. Economics of Education Review, 13(1), 1-17.; Murnane, R. J. (1975). The impact of school resources on the learning of inner city children. Retrieved from; Kiesling, H. J. (1984). Assignment practices and the relationship of instructional time to the reading performance of elementary school children. Economics of Education Review, 3(4), 341-350.; Rowan, B., Correnti, R., & Miller, R. J. (2002). What large-scale, survey research tells us about teacher effects on student achievement: Insights from the Prospects study of elementary schools. Teachers College Record, 104(8).; Ferguson, R. F. (1991). Paying for public education: New evidence on how and why money matters. Harvard Journal on Legislation, 28, 465.; Goldhaber, D. D., & Brewer, D. J. (1996). Evaluating the effect of teacher degree level on educational performance. Developments in School Finance, 199-210. Retrieved from; For data on the high cost of salary differentials based on advanced degrees, see: Roza, M., & Miller, R. (2009). Separation of degrees: State-by-state analysis of teacher compensation for master's degrees. Center on Reinventing Public Education. Retrieved from
[2] For evidence that experience does not directly correlate with teacher effectiveness, and therefore should not be the sole determinate of the highest steps on a pay scale, see the following: Rice, J. K. (2010). The impact of teacher experience: Examining the evidence and policy implications (Brief No. 11). National Center for Analysis of Longitudinal Data in Education Research. Retrieved from; Rivkin, S. G., Hanushek, E. A., & Kain, J. F. (2005). Teachers, schools, and academic achievement. Econometrica,73(2), 417-458. Retrieved from; Ladd, H. F., Clotfelter, C. T., & Vigdor, J. L. (2007). How and why do teacher credentials matter for student achievement (NBER Working Paper 142786). Retrieved from; Kukla-Acevedo, S. (2009). Do teacher characteristics matter? New results on the effects of teacher preparation on student achievement. Economics of Education Review, 28(1), 49-57. Retrieved from; Hanushek, E. A., Rivkin, S. G., Rothstein, R., & Podgursky, M. (2004). How to improve the supply of high-quality teachers. Brookings Papers on Education Policy, (7), 7-44. Retrieved from
[3] Research on merit pay in 28 industrialized countries from Harvard's Program on Education Policy and Governance found that students in countries with merit pay policies in place were performing at a level approximately one quarter standard deviation higher on international math and science tests than students in countries without such policies. See: Woessmann, L. (2011). Cross-country evidence on teacher performance pay. Economics of Education Review, 30(3), 404-418. Retrieved from
[4] Walsh, K., Lubell, S., & Ross, E. (2017, August). Backing the wrong horse: The story of one state's ambitious but disheartening foray into performance pay. National Council on Teacher Quality. Retrieved from
[5] For information about alternative compensation for teachers, see: University of Southern California. (2005). Understanding alternative teacher compensation: Expert insights from USC California Policy Institute's California K-12 School Finance Policy Symposium. Sacramento, CA: USC California Policy Institute.; Azordegan, J., Byrnett, P., Campbell, K., Greenman, J., & Coulter, T. (2005). Diversifying teacher compensation (Issue Paper). Washington, DC: Education Commission of the States and the Teaching Commission. Retrieved from; Minnesota Department of Education. (2009). Q Comp: Quality compensation for teachers. Retrieved from