Differential Pay: Indiana

Retaining Effective Teachers Policy


The state should support differential pay for effective teaching in shortage and high-needs areas.

Does not meet goal
Suggested Citation:
National Council on Teacher Quality. (2011). Differential Pay: Indiana results. State Teacher Policy Database. [Data set].
Retrieved from: https://www.nctq.org/yearbook/state/IN-Differential-Pay-9

Analysis of Indiana's policies

Indiana neither supports differential pay by which a teacher can earn additional compensation by teaching certain subjects nor offers incentives to teach in high-needs schools. However, the state has no regulatory language that would directly block districts from providing differential pay. 

Recommendations for Indiana

Support differential pay initiatives for effective teachers in both subject shortage areas and high-needs schools.
Indiana should encourage districts to link compensation to district needs. Such policies can help districts achieve a more equitable distribution of teachers.

State response to our analysis

Indiana pointed out that the state's budget includes Excellence in Performance Awards for Teachers with a total operating expense of $6,000,000 for FY 2011-2012 and $9,000,000 for FY 2012-2013. "The above appropriations may only be used to make grants to school corporations and charter schools to be used to make cash awards to effective and highly effective teachers. The department shall develop a program to administer the program. The program shall include guidelines that permit all school corporations and charter schools to apply for a grant. The guidelines must specify that in order to receive a grant a school must have a system of performance evaluations that meets the requirements of IC 20-28-11.5. The above funds are available for allotment by the budget agency after review by the budget committee." Indiana added that it has a federal Teacher Incentive Fund grant through which participating schools award teachers in hard-to-staff subjects.

Last word

The programs cited by the state do not address incentives for teaching in high-need schools or shortage areas and are addressed in Goal 4-F, which deals with performance pay.

Research rationale

Two recent studies emphasize the need for differential pay. In "Teacher Quality and Teacher Mobility", L. Feng and T. Sass find that high performing teachers tend to transfer to schools with a large proportion of other high performing teachers and students, while low performing teachers cluster in bottom quartile schools (CALDER: Urban Institute 2011).  Another study from T. Sass et al found that the least effective teachers in high-poverty schools were considerably less effective than the least effective teachers in low-poverty schools.

Charles Clotfelter, et al., "Would Higher Salaries Keep Teachers in High-Poverty Schools? Evidence from a Policy Intervention in North Carolina," Sanford Institute of Public Policy, Duke University, May 16, 2006 at:

Julie Kowal, et al., "Financial Incentives for Hard to Staff Positions," Center for American Progress, November 2008.

A study by researchers at Rand found that higher pay lowered attrition, and the effect was stronger in high-needs school districts. Every $1,000 increase was estimated to decrease attrition by more than 6 percent. See S.N. Kirby, et al., "Supply and Demand of Minority Teachers in Texas: Problems and Prospects," Educational Evaluation and Policy Analysis, 1999; 21(1): 47-66 at: http://epa.sagepub.com/cgi/content/abstract/21/1/47