Performance Pay: Tennessee

Retaining Effective Teachers Policy


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

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

Analysis of Tennessee's policies

Tennessee supports performance pay. The state requires local districts to develop differentiated pay plans which may include pay based on performance. If a district chooses to include a performance component, it must be "based on gains in student academic achievement" and "be criterion-based so that everyone meeting a previously agreed-upon standard earns that award." The amount of the award for effective teaching is decided at the local level, but the state requires that the amount be in the thousands, not hundreds of dollars —- incentives significant enough to matter to teachers. 


Recommendations for Tennessee

State response to our analysis

Tennessee 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: