The state should support performance pay, but in a manner that recognizes its appropriate uses and limitations.
Virginia supports performance pay. The purpose of the Strategic Compensation Grant Initiative is to award incentive payments to teachers. Local school divisions may submit proposals to apply for a competitive grant. Proposals may include plans to reward teachers for significant student academic progress, assuming additional responsibilities, and pay incentives for a hard-to-staff position or a critical-shortage area.
Virginia Code 22.1-318.1; 318.2
Although Virginia is commended for recognizing performance pay, it should guarantee a connection to student achievement and prevent local districts from basing financial incentives solely on elements not indicative of performance in the classroom.
Virginia asserted that it has two incentive programs based on performance, and teachers must meet performance requirements to be eligible for these payments. The 2013 Virginia General Assembly established the Strategic Compensation Grant Initiative for the purpose of awarding incentive payments to teachers. Also, the Virginia General Assembly appropriated funds to provide recruitment and retention incentives to teachers in STEM areas.
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/.