Issue Date: December 17, 2006

Merit Pay for Teachers

PRINTEMAILSAVETEXT

In most jobs in the private sector, a person's salary is usually in some way based on his or her performance. In fact, more than half of all U.S. corporations award their employees performance-based monetary incentives. A businessperson, for example, will typically earn more money depending on how productive he or she is in the workplace; real estate agents earn larger commissions for selling more expensive homes; and professional athletes sign richer contracts depending on how valuable they are to their respective teams.

Jon Raedle/Getty Images

Public school teachers in Miami-Dade County, Florida, demonstrate outside a school board meeting in October 2006, asking for higher pay. Many teachers reject the idea that merit pay will improve the quality of teaching, arguing that a better way to do that would be to raise teachers' salaries across the board.

Public-sector jobs, however, usually operate on different types of payment scales. In determining the salaries of jobs in the public sector--which includes government officials, police officers, teachers and utility workers, among others--performance is of less importance than certain other factors, such as tenure, or the amount of time one spends at a given job.

In the U.S., the earnings of public school teachers have been tied to an escalating salary schedule since around the end of World War I (1914-18). Professional teachers' organizations such as the National Education Association (NEA) lobbied for, and achieved, a payment model that guaranteed salary increases corresponding to the number of years a teacher has worked. In most public school districts, a teacher's salary increases each year for a set amount of time--usually anywhere between 10 and 15 years. After that point, teachers earn salary bonuses in accordance with the level of their degree; public school teachers who have earned a doctorate usually earn a much higher salary than those who have simply obtained a bachelor of arts degree.

In recent years, however, some observers of the U.S. public school system have suggested that private sector-style performance-based pay should be applied to public school teachers. Indeed, in some U.S. public school districts, such payment plans have already been applied. In Houston, Texas, for example, teachers are paid bonuses depending on their effectiveness, which is measured by student test scores. Many of the school districts that have introduced merit-based bonuses for teachers use different ways of measuring teachers' performance, but student test scores has so far been the most popular.

In October 2006, the concept of merit pay for teachers received another boost. A federal program known as the Teacher Incentive Fund began awarding grant money to schools willing to introduce a merit-pay program for their teachers. Some observers say that the Teacher Incentive Fund will help encourage schools across the U.S. to adopt their own performance-based payment systems. However, critics of merit pay for teachers argue that such plans are ill-suited for the teaching profession. Should teachers be rewarded based on their performance in the classroom? [See 2006 Debating the Teacher Incentive Fund (sidebar)]

Supporters of merit pay for teachers argue that awarding bonus money to a school's best teachers will elevate the quality of teaching throughout the entire school. Teachers will engage in healthy competition to earn the bonuses, and students will benefit greatly, proponents assert. Supporters maintain that under the pay system currently in place in most U.S. public schools, teachers have little or no incentive to work hard, since they know their salaries will rise each year anyway. Merit pay rewards teachers who put the most effort into their jobs, advocates argue.

Critics of the idea, however, say merit pay would create a significant amount of negative competition between teachers, who ideally should be working together to better teach their students. Also, the methods used to evaluate teachers--particularly students' test scores--are inherently problematic, because a teacher's worth is often intangible and unquantifiable, critics contend. Finally, opponents maintain that teachers are professional educators who do not need the promise of bonus pay to motivate them to teach to the best of their ability.

Developing the Idea of Merit Pay for Teachers

The concept of paying teachers in accordance with their classroom performance has its roots in the early 18th century in Britain. Starting around 1710, teachers' salaries in Britain started being linked to student performance in subjects such as reading, writing and math. As a result, however, "curriculums were narrowed to include only the testable basics," write Vivian Troen and Katherine Boles, lecturers at Brandeis University in Waltham, Mass., and Harvard University, respectively. British elementary schools dropped difficult-to-test subjects such as music and art, and teachers began to fill their class time with little more than memorization exercises. Eventually, the plan was abandoned after numerous teachers were caught fabricating students' test scores in order to advance their salaries.

In the 1860s, Britain once again installed merit-based pay in its elementary schools. Under a payment plan known as "payment by results," individual schools received government grants based on their students' academic performance; those grants in turn paid the teachers' salaries. Students were individually evaluated by government-appointed inspectors. However, educational historians say that many of the same problems occurred in Britain's second attempt at merit-based pay: Teachers forced students to memorize the facts needed to pass the inspectors' evaluations, but the students evinced little understanding of the material. "Payment by results" was phased out by the turn of the 20th century.

Throughout their history, U.S. public schools have occasionally adopted some form of Britain's old merit-pay system for teachers. That approach became popular in U.S. schools in the 1950s; by the turn of the next decade 10% of public school districts had adopted a system of paying teachers based on performance. Many schools focused on students' test results, but others incorporated performance evaluations based on district administrators' observations and even recommendations made by other teachers.

By the 1970s, however, most school districts that had switched to merit pay reverted to the traditional payment method. A national survey conducted in 1978 indicated that just 4% of U.S. school districts paid their teachers in accordance with job performance. By the middle of the 1980s, that figure had dwindled to just 1% of all school districts.

Merit Pay Sees a Resurgence in Interest

In 1997, following several years of debate and discussion, Cincinnati Public Schools in Ohio received approval from its teachers' union to experiment with a merit-pay system. Teachers and administrators collaborated on the design of the program, in which teachers would receive bonuses based primarily on written evaluations by their colleagues; student performance was not directly a factor.

Mathew Cavanaugh/Getty Images

Gov. Mitt Romney (R. Mass.) has proposed a merit-pay plan for Massachusetts public school that would award a bonus to the top one-third of the state's teachers.

A three-year, 10-school pilot program was launched in 1999. At the end of that trial period, the union again voted on the merit-pay system. In that second vote, merit pay was resoundingly rejected: 1,892 votes against the plan compared with just 73 votes in favor.

Cincinnati's flirtation with the concept of merit pay is said to have renewed interest in the idea throughout the U.S. For example, as Cincinnati's pilot program was nearing its conclusion, New York City began to experiment with the idea. In 2000, mayor Rudolph Giuliani (R) made public his plan to try out merit pay during summer school, which is typically reserved for students with academic difficulties. Giuliani suggested awarding bonuses of up to $2,500 to teachers who managed to substantially improve their students' performance. Teachers' unions, however, expressed outrage at the plan, and it failed to obtain union approval. (Giuliani's successor as mayor, Michael Bloomberg (R), does not support merit-based pay for individual teachers.)

Unlike New York and Cincinnati, Denver, Colo., has had considerable success in incorporating merit pay into its schools. The city's school district, Denver Public Schools, is widely credited with having the best-conceived and best-implemented merit-pay plan in the U.S.

In 1999, Denver Public Schools--after gaining approval from its teachers' union--launched its four-year merit-pay pilot program. Teachers and administrators collaborated to create an incentive-based system of payment. Teachers earn bonus money for accomplishing various objectives, which are tied to student performance, evaluations by school administrators, and agreement to work with children most in need of extra academic help. New teachers are automatically enrolled in the program, while teachers who had been employed by Denver Public Schools before 1999 are offered the choice to participate. Under the plan, Denver teachers stand to increase their salaries by as much as 40% a year, depending on how many objectives they meet.

When the pilot program ended in 2003, most teachers and administrators claimed that it was a success. The following year, merit pay became a permanent part of Denver's educational landscape following a union vote. Then in November 2005, Denver taxpayers voted to contribute an extra $25 million to Denver Public Schools to fund the merit-pay plan. The following November, the district received an extra $22 million in federal money to support merit pay.

The success of merit pay in Denver has spurred other state and city politicians to propose merit pay for their public school districts. State and local officials have come up with merit-pay proposals in Massachusetts, for example. In the late 1990s, the city of Boston attempted to initiate a merit pay system, but the teachers' union resisted. In 2005, however, Gov. Mitt Romney (R) proposed an education initiative in which the top one-third of teachers throughout the state would be awarded a substantial yearly bonus--as much as $15,000 in some cases, although the average would be $2,700. As of November 2006, Romney's plan is still being debated.

California has also grappled with the concept of merit pay for teachers. Teachers from that state's largest city, Los Angeles, defeated a merit-pay plan in 2000. But Gov. Arnold Schwarzenegger (R) reintroduced the idea in early 2005, suggesting that the best-performing teachers should be rewarded with extra money. Schwarzenegger said that teachers' unions and district administrators should work together to develop criteria for determining the best teachers in a given school. However, as in Los Angeles five years earlier, teachers' unions throughout the state rallied against Schwarzenegger's proposal, and it was never introduced in the state's legislature.

Merit pay has proven to be a more successful proposition elsewhere. In July 2005, Minnesota enacted a plan that links 60% of a teacher's yearly raise to his or her performance in the classroom. Performance is measured according to several factors, including student test scores, evaluations of teaching methods and additional duties taken on by teachers. Minnesota's government has committed $86 million to be meted out to school districts over the next two years. Participation in the program is not mandatory; indeed, as of June 2006, only 20 out of the state's 339 school districts had agreed to participate. Reportedly, however, nearly one-third of those 339 districts have expressed an interest in joining the program at some point.

In January 2006, Houston Public Schools became the largest single district to approve a merit-pay plan. The $14.5 million plan rewards only teachers who manage to raise their students' test scores on state-administered and nationally administered standardized tests. Although the 6,300-member Houston Federation of Teachers, a teachers' union, officially opposes the plan, other teachers in Houston have accepted it. Teachers stand to earn up to $10,000 for raising students' scores, although the average bonus would be about $3,000.

One month after Houston approved its merit-pay plan, Florida adopted one of its own. Fulfilling the promise of a 2002 state law requiring performance-based pay for teachers, Florida's merit-pay plan will award a bonus to the highest-ranked 25% of the teachers in the state's public school system. Teachers are ranked mostly according to their students' test scores. Their bonuses will represent 5% of their salary; the average teacher in Florida earns roughly $41,500, meaning the average bonus will be approximately $2,000. As per the aforementioned state law, all public school districts are required to participate in Florida's new merit-pay plan.

The Teacher Incentive Fund: Merit Pay at the Federal Level

Merit pay for teachers has been a much-discussed topic among school districts throughout the country during 2006. Local and state officials in states such as Arizona, Arkansas, Idaho, Iowa, Maryland, New Mexico, North Carolina and Wisconsin have all recently debated the advantages and disadvantages of merit pay. In Maryland, for example, Gov. Robert Ehrlich Jr. (R) in August 2006 announced that he intended to launch a merit-pay plan, known as the Quality Compensation Initiative, by the year 2007. (However, Ehrlich was defeated in November 2006 elections. He was defeated by Democrat Martin O'Malley, who has stated, "I have yet to see a merit-pay system that looked workable.")

Jay L. Clendenin/Getty Images

President Bush (R) and Secretary of Education Margaret Spellings visit Friendship-Woodbridge Elementary School in Washington, D.C., in October 2006. Bush and Spellings promoted a federal merit-pay fund called the Teacher Incentive Fund during their visit.

Merit pay has also found its way into the federal budget. President Bush (R) first proposed the idea of a federal merit-pay plan--which he calls the Teacher Incentive Fund--in September 2004. Bush initially called for a $500 million allotment in the federal budget for performance-based bonuses for public-school teachers. The fund, however, was not implemented until the 2007 fiscal year, which began in October 2006. In contrast to Bush's $500 million request, the 2007 budget allotted just $99 million to the Teacher Incentive Fund.

Shortly after the start of the 2007 fiscal year, the Education Department announced that 16 grants, totaling $42 million, had been awarded to school systems throughout the country, chosen according to need. Chicago Public Schools, which has a high rate of poverty among its students, received the largest portion of the 2007 money--a total of $27.5 million. School districts that are awarded those grants are permitted to devise their own method of distributing the money to their employees, so long as that method is somehow based on classroom performance.

Many school districts receiving federal grants through the Teacher Incentive Fund have praised the program. The head of Chicago Public Schools, Arne Duncan, says that his district's grant represented a "historic day for Chicago schools." However, opponents of merit pay have denounced the Teacher Incentive Fund, as well as other merit-pay plans on the local and state level. Such opponents argue that merit pay does not work, and will ultimately harm the teaching profession.

Opponents Say Merit Pay Would Worsen U.S. Schools

Critics of merit-pay plans for teachers argue that the idea of paying educators based on student test scores is antithetical to the very nature of the teaching profession. The practice essentially encourages public school teachers to "teach to the test," making "rote regurgitation the centerpiece of schools," writes Newsweek columnist Anna Quindlen. The value of a good teacher extends far beyond his or her students' test scores, critics say, and cannot be accurately or easily measured by mere numbers.

Indeed, merit pay could cause teachers to view their students as a means of earning more money, rather than as young people whose intellectual and social growth they are supposed to be nurturing, opponents suggest. Because teachers' financial well-being would be tied to student test scores under merit-pay plans, teachers would inevitably focus more on students most likely to score higher on tests, critics say. Additionally, linking salaries to test scores might tempt some unscrupulous teachers to fudge test results in order to enhance their own paycheck, opponents contend.

Many merit-pay plans stipulate that only the top 10% or 25% of a school's faculty would receive bonuses. That, critics maintain, would foster unhealthy competition in many public schools, with teachers trying to get the highest-performing students in their classes. Teachers would also be less amenable to discussing and sharing their teaching methods, critics argue. It is essential that teachers work together, opponents say, since their shared goal should be educating their students. Introducing competition in the form of merit pay would effectively end such cooperation, opponents maintain.

Jeremy Eagle

The process of evaluating teachers to determine who should and should not receive extra pay would also be extremely time-consuming and costly, critics contend. David Bechhofer, a director of the Boston, Mass.-based consulting firm Bain & Co., says that for an administrator to accurately evaluate an employee of a private company, up to 20 hours of work might be necessary. "When I try to imagine a school principal doing 30 reviews, I have trouble," he adds.

Critics also note that there is little or no evidence to suggest that merit pay produces its intended results when applied to the field of teaching. Troen and Boles, the lecturers at Brandeis and Harvard, write:

We've looked at dozens of [merit-pay] plans in North America, South America, Asia, Europe and the Middle East. Guess what? None of them, past and present, has ever had a successful track record. None has ever produced its intended results. Any gains have been minimal, short-lived and expensive to track.

Opponents of merit pay say that teachers should be allowed to teach without the added pressure of a performance-based paycheck. Furthermore, critics maintain, public school teachers are professional educators; they do not necessarily need a monetary bonus to motivate them to teach at a higher level. "It would be nice to have extra money," says Loren Bromley, a teacher at Cleveland High School in Portland, Ore. But, he adds, "if you're a professional, you should be setting high goals and achieving them anyway."

Wade Nelson, a professor of educational leadership at Winona State University in Minnesota, concurs. "The best professionals find their motivation within, and often respond to outside controls with measured compliance, defensiveness, or passive resistance," he states. In other words, Nelson argues, introducing the concept of merit pay to public schools might actually lower teachers' overall performance.

Finally, many critics assert that the currently discussed performance-based bonuses for teachers are simply too low to encourage any substantial increase in their performance. "The added work of attempting to elevate hard-to-educate students to ever-higher new academic standards is unlikely to be elicited by the promise of a $2,000 bonus," write James Guthrie and Matthew Springer of Vanderbilt University in Nashville, Tenn. "Why bother moving out of one's instructional comfort zone when the reward stakes are so low and the effort so vast?"

Teachers are unlikely to respond to an "all stick and no carrot" reward system, writes New York Times columnist Matt Miller. A better solution, according to critics of merit pay, is to raise teachers' salaries across the board. That would do far more to increase the overall quality of public school education in the U.S. than any merit-pay plan, they assert.

Merit Pay Will Foster Healthy Competition, Supporters Say

Supporters of merit pay argue that, by offering teachers the opportunity to earn extra money for a commendable performance, schools will more easily retain their top teaching talent. The best teachers at a school will invariably end up earning many thousands of dollars a year in bonus pay, and will therefore be likely to remain at the same school for many years, supporters say. Additionally, they assert, merit pay will help attract new teachers to the profession. Gaynor McCown, a former senior policy analyst for President Bill Clinton (D, 1993-2001), writes:

Rewarding excellence--and holding those who are not pulling their weight accountable--is also an attractive incentive for the best and brightest to enter the teaching profession. Young people who believe in their own abilities and who see a structure that encourages excellence will be more inclined to enter a field that acknowledges what they bring to the table.

Indeed, advocates maintain, a payment system that rewards hard work and dedication will improve teacher quality throughout a given school. Under the prevailing public-school payment structure, a teacher who achieves "great results [will] get the same pay as the teacher who may be slacking," says David Connelly, a lawyer for the Springfield School Committee in Massachusetts. In other words, supporters say, teachers, under the current system, have no incentive to really work hard. Performance-based bonuses would encourage more teachers to perform to the best of their ability--as well as reward those who already do so, proponents assert.

Supporters also refute critics' assertions that merit pay would encourage unhealthy competition among teachers. Any competition would be wholly beneficial to students, just as competition between businesses is typically beneficial to consumers, supporters contend. One of the major problems with U.S. public schools is teachers who become too set in their ways and fail to adapt to change, supporters argue. Merit pay would eliminate that problem, since teachers of all ages would be equally motivated to work hard and secure their performance-based bonus, advocates argue.

Responding to arguments that evaluating teachers by test scores alone is a poor way to award merit pay, supporters note that teachers use test scores to evaluate students; why should teachers not be evaluated the same way? And although many other factors can be used to determine which teachers are awarded bonuses--such as evaluations from fellow teachers and administrators and high attendance rates--test scores are the most quantifiable way to do so, and therefore the most objective, proponents say. "I know people say that we test too much, but how can you solve a problem until you measure?" Bush asked. "Measuring is the gateway to success."

Simply raising teachers' salaries across the board will not necessarily improve teacher quality in U.S. public schools, supporters maintain. "That might attract more people to teaching, but not necessarily smarter or harder-working people," writes City Journal's Nicole Gelinas. Merit pay would, on the other hand, attract intelligent, industrious people to teaching because they know they can quickly increase their pay, proponents argue.

Supporters also say that many critics of merit pay misunderstand what the term actually means as it is applied to public schools. Merit-pay plans are rarely based solely on raw test scores, supporters say; many other factors come into play, such as evaluations written by fellow teachers and administrators.

Additionally, supporters note, bonuses for improving test scores actually encourage teachers to take on the challenges of working with lower-performing students. In many merit-pay systems, teachers are evaluated in accordance with their ability to raise test scores from year to year. Consequently, more teachers will be attracted to lower-performing schools and classes, supporters assert, since they would have a greater chance of significantly raising test scores of students in such settings. Merit-pay plans actually encourage teachers to work harder with lower-performing students, advocates maintain.

Is Merit Pay Just Another 'Education Fad'?

The U.S. public school system has frequently been criticized as not doing enough to educate the country's youth. To that end, numerous reforms have been proposed in the last several decades in an attempt to overhaul the country's public schools. Some of those proposed reforms include team teaching, in which two or more teachers work in a classroom simultaneously, and block scheduling, in which classes meet for 90 minutes a day for one semester rather than 45 minutes a day over the course of an entire school year. With few exceptions, however, such reforms have not caught on with teachers, parents or administrators. "The list of once fashionable but now faded education innovations could go on and on," Guthrie and Springer write. Many of those once-heralded innovations have since been derided as educational "fads." [See 2005 Block Scheduling in Schools]

Some educators say that merit-pay plans will meet the same fate as the many failed education initiatives of the past. They maintain that there is no evidence to suggest that merit pay is an effective way of compensating teachers. According to merit pay's critics, basing payment on performance simply does not suit the teaching profession, and no amount of federal grant money will change that.

Supporters, however, say that merit pay is the best way to compensate teachers. They point to the recent surge in the number of school districts that have adopted a performance-based pay plan for their teachers. Indeed, in the 2007-08 school year, the state of Texas will embark on a $160 million incentive-based payment plan for teachers, in what is being touted as the largest merit-pay plan to date in the U.S.

Additionally, supporters say that merit pay cannot be rushed into schools. For merit-pay plans to work, they must be carefully and collaboratively designed by teachers and administrators, proponents argue. Many of those supporters point to Denver Public Schools as a good example of a merit-pay program that was thoughtfully conceived and properly executed. "In other places, it was more of a political hurry to get it done," says Rob Weil, the director of educational issues for the American Federation of Teachers. Even supporters of merit-pay plans say that poorly designed plans will do U.S. students more harm than good.

Discussion Questions & Activities

1) Many opponents of merit pay argue that it is impossible to quantify a teacher's worth. What do you think they mean by that?

2) Do you think teachers should receive greater pay for increasing their students' test scores? Why or why not?

3) Do you think merit pay would cause teachers to compete with one another for bonus money? Would that competition have a positive or negative effect on how they teach?

4) Imagine you are a teacher whose school has recently implemented a merit-pay plan based on students' scores on a statewide standardized test. Do you think you would change your approach to teaching due to the merit-pay plan? In what ways?

5) Most merit-pay plans are based on students' test scores. In what other ways could teachers be evaluated according to a merit-pay plan? Write a proposal for a merit-pay plan, listing all of the factors to be taken into account in teacher evaluations.

Bibliography

Anderson, Jennifer. "Denver Rewrites the Book on Teacher Compensation." Portland Tribune, February 24, 2006, www.portlandtribune.com.

Boles, Katherine and Vivian Troen. "How 'Merit Pay' Squelches Teaching." Boston Globe, September 28, 2005, www.boston.com.

Gelinas, Nicole. "Time for Merit Pay for Teachers." New York Sun, June 20, 2005, 9.

Guthrie, James and Matthew Springer. "Teacher Pay for Performance: Another Fad or a Sound and Lasting Policy?" Education Week, April 5, 2006, www.edweek.org.

Labbe, Theola. "Bush Pitches Incentive Pay for Teachers." Washington Post, October 6, 2006, B4.

McCown, Gaynor and Wade Nelson. "Teacher Merit Pay: Prudent or Pointless?" Scholastic Administrator, April/May 2004, www.scholastic.com/administrator.

Miller, Matt. "Honor Thy Teacher." New York Times, May 28, 2005, A11.

Moe, Terry. "Management 101 for Our Public Schools." Wall Street Journal, October 31, 2006, A18.

Quindlen, Anna. "The Wages of Teaching." Newsweek, November 28, 2005, 100.

Rothstein, Richard. "Arguing Against Merit Pay as Incentive for Teachers." New York Times, April 26, 2000, B11.

Sacchetti, Maria. "Teachers Study Merit Proposal." Boston Globe, August 8, 2005, www.boston.com.

Additional Sources

Additional information about merit pay for teachers can be found in the following sources:

Odden, Allan and Carolyn Kelley. Paying Teachers for What They Know and Do: New and Smarter Compensation Strategies to Improve Schools. Thousand Oaks, Calif.: Corwin Press, 2002.

Stronge, James, Christopher Gareis and Catherine Little. Teacher Pay and Teacher Quality: Attracting, Developing and Retaining the Best Teachers. Thousand Oaks, Calif.: Corwin Press, 2006.

Contact Information

Information on how to contact organizations that are either mentioned in the discussion of merit pay for teachers or can provide additional information on the subject is listed below:

Key Words and Points

For further information about the ongoing debate over merit pay for teachers, search for the following words and terms in electronic databases and other publications: