Performance-Based Teacher Compensation Systems
6.2%
Although most school districts continue to use traditional teacher compensation systems, a growing minority of districts have adopted performance-based compensation systems. In the 2015-2016 school year, 6.2% of teachers surveyed by the National Center for Education Statistics (NCES) reported that they would earn additional compensation based upon student performance. This is an increase from only 4.4% in 2011-2012.
This report assesses the components of performance-based compensation systems used by six profiled school districts. Our researchers also identify important considerations for developing and operating these non-traditional compensation systems.
Modified steps-and-lanes systems
A modified steps-and-lanes system alters a traditional salary schedule to incorporate some performance-based criteria.
With the assistance of the National Education Association, administrators at District A re-designed a traditional steps-and-lanes compensation model by replacing educational attainment salary lanes with lanes set by achieving specific professional development goals. This new model encourages teachers to spend more time on district-approved professional development.
Teachers in District A may advance one salary lane by completing 225 salary contact hours of professional development. Moving to the next salary lane provides teachers with a salary increase and greater future earning potential. This incentivizes teachers to complete professional development courses.
Compensation model components at District A
Base pay
- Administrators initially set new teacher salaries according to experience and educational attainment
- Teachers receive annual step increases in salary similar to those of a traditional steps-and-lanes schedule
- Teachers may advance a salary lane once every four years by completing 225 salary contact hours of professional development
Stipends
- The district pays experienced teachers $1,800 to develop and teach professional development courses in areas of high need and interest
- Administrators also provide teachers with stipends for holding teacher leadership positions (e.g., teacher mentors, group coordinators, serving on governance committees)
Multiple incentive systems
A multiple incentive system provides teachers with a wide variety of incentives and bonuses. These aim to influence teacher behaviors to help achieve specific district goals.
Teachers at District C receive a base salary determined by a traditional steps-and-lanes model. However, teachers can also receive bonuses and increases in base salary based on annual evaluations. The district targets bonuses and salary increases for teachers who work in schools with high-poverty levels and low academic performance.
The annual evaluations at District C are based on multiple components. For most teachers, the evaluation assesses student learning (50%), application of key teaching standards (30%), student surveys (10%), and professionalism (10%). Based on these components, teachers receive one of the five following ratings: ‘Ineffective’, ‘Minimally Effective’, ‘Developing’, ‘Effective’, and ‘Very Effective.’
Career ladder systems
A teacher career ladder system establishes career stages that correspond with different levels of compensation. Teachers move up and down a career ladder according to evaluation ratings.
District E compensates teachers according to a nine-stage teaching career ladder. Teachers progress up (and down) the career ladder based on annual performance evaluations. Administrators review all teachers each year. The reviews assess teachers based on the application of teaching standards (50%), student achievement on assessments (35%), and student survey results (15%). Administrators then assign evaluation ratings based upon a targeted distribution. As a result, every year, 3% of teachers will receive an unsatisfactory rating, and two percent will receive an exemplary rating.
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System development and operations
Because performance-based compensation systems are relatively uncommon, most teachers and district stakeholders will be unfamiliar with these compensation models. Without a clear understanding of the reasons for changing compensation systems, and how the new system could affect them, teachers may resist efforts to change the system. As a result, developing a performance-based compensation system can be challenging.
At District F and District B, administrators convened committees of stakeholders to develop a new compensation system. The committee at District F studied more than thirty other compensation systems and solicited feedback from district employees to develop a plan for the district. This process took eight months to complete.
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