Retaining Effective Teachers Policy
The state should support performance pay, but in a manner that recognizes its appropriate uses and limitations.
Starting in 2016, teachers will receive performance pay that links teacher performance to compensation. "Indicators of teacher performance may include improving professional skills and knowledge, classroom performance or instructional behavior and instructional outcomes. Teacher performance pay may include predetermined bonus amounts and payout criteria."
Nebraska Revised Statutes 79-309.01
While it is commendable that Nebraska is considering a move toward performance-based compensation, it should guarantee a connection to student achievement and prevent local districts from basing financial incentives on other elements that may not be indicative of performance in the classroom. Further, the state should consider moving up the timeline for beginning this initiative, which has already been on the books for several years.
Nebraska recognized the factual accuracy of this analysis.
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.
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. The methodology that allows for the measurement of teachers' contributions to student achievement is still developing, and evaluation systems based on teacher performance are new in many states. Performance pay programs must recognize these limitations. There are also inherent issues of fairness that should be considered when different types of data must be used to assess the performance of different kinds of teachers.
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. 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.
Performance Pay: Supporting Research
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 E. Hanushek, "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: http://www.performanceincentives.org/.