Pay for Performance: What’s Ahead for Teachers?

Call it what you will —“merit pay,” “teacher and student incentives” and “performance compensation” are its most popular names — the strategy of financially rewarding teachers and students for improved test scores and school performance may be an idea whose time has come.

As an expert on the economics of education, professor David Figlio is keenly interested in the development of incentive programs for teachers and students and their effects on schools nationwide.
As an expert on the economics of education, professor David Figlio is keenly interested in the development of incentive programs for teachers and students and their effects on schools nationwide.

President Obama’s stimulus package unveiled earlier this year includes hundreds of millions of dollars to be used for teacher incentive programs that focus on performance pay. In certain states across the country, such as Minnesota, New York and Maryland, some teachers already receive bonuses or raises for classroom performance rather than their years on the job and coursework completed, which are more traditional drivers of teacher compensation. Underlying the push for merit pay is a desire to raise the quality of U.S. education by encouraging those teachers who can deliver the best education to children and rooting out the incompetent ones, some of whom now enjoy lifelong tenure.

But as the government expands the scope of incentive programs, many questions arise: How will merit-based pay programs work? What set of criteria or benchmarks will be used to evaluate teachers? Who will decide whether or not teachers are meeting these criteria?

As an expert on the economics of education, SESP faculty member David Figlio is keenly interested in the development of these incentive programs and their effects on schools nationwide.

Performance pay
“There are lots and lots of ideas about incentives out there for educators right now. There will be a lot of experimenting in the next few years, and we don’t have a lot of evidence yet about what will be effective and what won’t,” notes Figlio, who is the Orrington Lunt Professor of Education and Social Policy, a research associate at the National Bureau of Economic Research and a fellow at the Institute for Policy Research.

Incentive programs now on the table seek to improve school performance through a number of ways that target both teachers and students. Teacher incentives range from one-time teacher bonuses to permanent salary increases and promotions. The rewards teachers get paid for exceptional performance typically range from a few hundred dollars to $10,000. In New York City, for example, teachers who meet targets on progress reports can earn up to $3,000. The city’s high-poverty schools have also created lead teacher positions in which teachers can earn $10,000 extra by mentoring other teachers, modeling lessons, and taking on tough assignments. Figlio sees this trend as a positive development in teacher compensation, especially when merit pay is based on improvements in test scores rather than test score levels alone.

“Teachers usually get paid in a lock-step way, so that excellent teachers get paid no more than unmotivated clock-punchers,” Figlio observes.

But, he adds, hammering out the details of merit pay will require a lot of study, patience and consideration. “Teaching is a collaborative venture. How can you tease out what one teacher did separately from another? Do we give rewards to teams of teachers at the grade level, or the school level, or to individuals? That’s a really interesting and challenging issue that isn’t always part of the discussion about teacher incentives.”

Investigating incentives
For their part, students are also receiving rewards such as parties, pep rallies and, yes, money, for excellent or improved performance on standardized exams. While Figlio likes the idea of letting kids know they’re responsible for their performance, he also cautions against practices that artificially and temporarily raise students’ performance on tests, say, by feeding them high-sugar, low-fat snacks beforehand.

Figlio’s recent research has found that regardless of which incentives are used, schools will respond strongly to them. In a 2007 study that surveyed 534 public and private schools, Figlio and Lawrence Kenny of the University of Florida discovered that students in schools that financially rewarded teachers for improved test scores performed better than students from schools without them. “This indicates that if teachers are provided the opportunity to get more cash for performing well, they will,” he remarked.

Not surprisingly, the tools used to judge teacher and student performance are standardized tests, the ultimate measure of accountability. Figlio sees advantages and disadvantages to relying on these tests. “On the bright side, we can say we have high standards for students and these standards are measurable and rigorous. Holding schools and teachers accountable for getting students up to these standards seems like a laudable goal. We could do a lot worse than having students meet high standards in literacy and numeracy.”

However, Figlio also sees limitations to the tests. He points out that they overemphasize certain subjects, such as math and reading, while ignoring others, such as art, science and foreign languages, to name just a few. He says that they also overemphasize certain abilities within reading and math, which he finds troubling.

“Standardized tests tend to focus on one-step problem-solving as opposed to multidimensional problem-solving. … It’s hard to write good, new questions, and it’s expensive to grade challenging questions,” he says. Evaluating writing on tests, especially less tangible skills such as effective communication, also poses problems.

These aspects of today’s standardized testing lead Figlio to believe that tying them to incentives should be done gingerly. “We need to be very, very careful in terms of how we step up these measurements, in both what gets measured and how the results will translate in terms of incentives for teachers and schools, because that will make the difference.”

Tenure reform
The complement to merit pay is tenure reform, an idea that also enjoys great support from the Obama administration. Reformers advocate either lengthening the time teachers must teach on a probationary period or eliminating it altogether. They argue that the current tenure system inevitably leads to valuing teachers’ length of service as the dominant criterion.

Figlio believes in extending the probationary period to at least five years in order to better evaluate a teacher’s quality. “It would give people more of a chance to demonstrate their true abilities and figure out if teaching is what they really want do,” he says, adding that principals almost always call teachers “excellent” in evaluations, whether or not they really are.

“Right now only a small fraction of teachers get turned down for tenure. We have to be willing to wield the hatchet, though we need to be extra careful that we're really identifying the very bad teachers,” he warns.

With so many new approaches to be tried out and studied, Figlio advises against making any proclamations at this point. “It’s a new era, but it’s unclear what it will look like. I’m happy that the Obama administration is calling for lots of experimentation. Let’s put our money where our mouth is. Let’s try a bunch of different teacher incentive experiments and study them. Let’s not make any big state or national policies until we see the results.”

Private School Vouchers in the Spotlight

Private School Vouchers in the Spotlight
Merit pay isn’t the only strategy designed to improve students’ performance through a challenge to the traditional public school model. Another, even more hotly contested tactic comes in the form of school vouchers, which allow some students the choice to attend private and religious rather than public schools.

In addition to researching teacher and student incentives, SESP professor David Figlio also investigates the economic aspects of private school vouchers. In particular, he looks at the degree to which private schools provide competition for public schools, who is participating in voucher programs and if the programs actually benefit the students who use them.

Supporters of vouchers claim that they give low-income students a chance at a high-quality education they could never otherwise afford. Critics charge that vouchers will lure away the best and brightest students, and will ultimately drain the public school system.

Neither argument, however, held up particularly well in Figlio’s most recent research. He found that students using vouchers to attend private schools in Florida were performing at levels almost equal to their counterparts in public schools. The study tracked more than 23,000 students who received as much as $4,200 a year in the nation’s largest voucher program, Florida’s Corporate Tax Credit Scholarship Program. (Per-pupil spending in Florida public schools is about $7,000 a year.)

To qualify, students must be eligible for free or reduced lunch. Figlio found that participating students were more likely to be minorities who were poorer than those who chose not to participate.

According to Figlio, “A lot of people believe that vouchers will skim off the cream ... but we find no evidence of that. We saw the opposite: the program is attracting struggling kids.”

Figlio will continue his research over the next year, as he sorts through new test score data from private schools. He believes that his initial findings will remain fairly consistent. “This result suggests that vouchers might be another option, but if we’re expecting kids to just turn around in a huge way, that’s just wishful thinking,” he says.

By Lisa Stein