Performance Pay: California

Retaining Effective Teachers Policy


The state should support performance pay but in a manner that recognizes its appropriate uses and limitations.

Nearly meets goal
Suggested Citation:
National Council on Teacher Quality. (2011). Performance Pay: California results. State Teacher Policy Database. [Data set].
Retrieved from:

Analysis of California's policies

California supports a performance pay initiative. The state's Certified Staff Performance Incentive Act awards one-time financial incentives to teachers in underachieving schools who contribute to the significant improvement of academic performance beyond the "minimum percentage growth target." California requires that the State Board of Education establish criteria for determining the eligibility for schools to receive awards. The maximum amount of the award is $25,000. To qualify for this program, a school's aggregate score for student performance must fall below the 50th percentile on the state's performance index.  


Recommendations for California

Allow districts to define criteria for performance pay plans.
California should give local districts the flexibility to define specific criteria by which performance is rewarded.

Consider expanding beyond one-time awards.
California should consider offering teachers ongoing opportunities to receive financial compensation for effective teaching.  

State response to our analysis

California recognized the factual accuracy of this analysis.

Research rationale

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 year's worth of schooling higher on international math and science tests than students in countries without such policies (2011). 

Erik Hanushek found that a teacher one standard deviation above the mean effectiveness annually generates $400,000 in student future earnings for a class size of 20. See Hanushek, Erik A. "The Economic Value of Higher Teacher Quality," National Bureau of Economic Research, Working Paper 16606 (December 2010).

In addition, numerous conference papers published by the National Center on Performance Incentives reinforce the need to recognize the limitations and appropriate uses of performance pay. See: