Performance Pay: Indiana

Retaining Effective Teachers Policy


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

Best Practice
Suggested Citation:
National Council on Teacher Quality. (2011). Performance Pay: Indiana results. State Teacher Policy Database. [Data set].
Retrieved from:

Analysis of Indiana's policies

Starting in July 2012, Indiana requires local salary scales to be based upon a combination of factors. Years of teacher experience and content area degrees beyond the requirements for employment may not account for more than 33 percent of the calculation. The remaining calculation is determined by results of the teacher evaluation based on a number of factors, including teacher performance and student achievement, which should include but not be limited to test results. 


Recommendations for Indiana

State response to our analysis

Indiana 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: