Special Report

Earning Their Apples

With teacher unions on the decline, merit pay will be the norm in the next decade.

By 7.26.11

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The move earlier this month by D.C. Public Schools to fire 200 of their worst-performing teachers certainly got attention from school reformers and teachers union bosses alike. After all, the move to get rid of five percent of the district's teachers -- many of whom were rated "minimally effective" in their instruction for a second straight year under the district's performance-based evaluation system -- proved once and for all that last year's successful effort by the American Federation of Teachers to oust Adrian Fenty as Washington, D.C. mayor and toss out the tough-talking Michelle Rhee as the district's chancellor came to naught.

Few, however, noticed that the district's 663 top-performing teachers would get something more than apples: Each of them will get bonuses of as much as $25,000 for their successful work. For just one of those teachers with a bachelor's degree and 10 years in the classroom, the top bonus is equal to 38 percent of their annual salary of $65,173.

By next year, these D.C. teachers won't be alone. After a decade of small-scale voluntary efforts, states such as Florida, Ohio, and Indiana are giving teachers the chance to earn extra cash, gain well-deserved recognition for their work, and prove that they can hack it in the classroom. Other states are considering their own efforts. Whether or not merit pay becomes a reality throughout the nation will depend as much on how school reformers and districts put together these plans as on whether they can beat back the National Education Association, the American Federation of Teachers, and their allies defending traditional public education.  

Driving the move towards merit pay are the same conditions that have led states such as Wisconsin and New Jersey to either abolish collective bargaining for teachers or force them to contribute more to their retirement. With states facing $137 billion in budget shortfalls in the coming two fiscal years -- and $1.4 trillion in long-term teachers' pension deficits and retired teacher healthcare benefits -- budget-cutting governors are taking aim at the array of generous defined-benefit pensions, nearly-free healthcare plans, near-lifetime employment privileges and degree-and seniority-based pay scales that have long made teaching the most-lucrative profession (and most-insulated from hiring and firing) in the public sector. They have found themselves teaming up with the nation's school reform movement, which has proven that traditional teacher compensation is both overly costly and ineffective at rewarding high-quality teachers and spurring student achievement.

But budget-cutters and school reformers both realize that abolishing collective bargaining and forcing larger contributions isn't exactly enough to address either the fiscal problems or the low quality of America's traditional public schools. So they are turning to an idea long-embraced in the private sector: Basing at least some portion of teacher pay -- either in the form of bonuses or pay increases -- on their success or failure in improving student performance (in terms of growth on standardized tests). Districts in cities such as Denver, New York City, Nashville, and Houston have spent much of the past decade engaged in their own small-scale efforts, while one state, North Carolina, has since 1996 given bonuses to teachers who improve student achievement. And now, other states are seizing on the idea. 

Last month, Ohio launched a merit pay plan for teachers working in districts receiving federal Race to the Top dollars. Indiana went even further, requiring all teachers to earn raises based on their performance starting next year. Meanwhile, Florida is requiring all newly-hired teachers entering the classroom after 2014 to earn their raises based on performance. For example, a Sunshine State teacher can get a raise of as much as $9,875 if he or she has been ranked "highly effective" in improving student achievement.

Merit pay, of course, doesn't sit well with the NEA, the AFT, or their fellow allies in defending traditional public education such as Diane Ravitch, the education historian who has become a foe of anything reeking of school reform. For the unions, in particular, merit pay strikes at the heart of their influence: the decades-old bargain with rank-and-file members to continually assure them of ever-increasing salaries. The fact that teachers would no longer be considered as interchangeable as fast-food workers -- and that the bonuses are based in part on student achievement on the standardized tests the unions abhor -- makes performance pay even more of an abomination to them.

They have also seized upon a series of recent studies that cast doubt on merit pay's efficacy. Last week, the Rand Corp. released a "report declaring that New York City's now-shuttered merit pay experiment did not improve student achievement in any grade." The report was music to the ears of union bosses and readers of writer Daniel Pink's half-baked theories on motivation everywhere. Declares Leo Casey, an AFT official who runs the Edwize blog: "Teachers do not answer to the economic calculus of stockbrokers and hedge-fund managers."

Such declarations fail to consider the fact that while teachers may not get big upfront paychecks at the beginning of their careers (and must wait a decade or longer before reaping the full benefits of traditional teacher compensation), they still definitely value money and other forms of external motivation. The fact that teachers unions and the Baby Boomer teachers are battling fiercely with school reformers over their efforts to end tenure and cut back defined-benefit pensions (two of the big long-term income streams in traditional teacher compensation) belies such myth-making.

At "Teacher Appreciation Week" events held every May, teachers reap gifts big and small -- from milkweeds pulled from off the street to lavish packages from Bath and Body Works -- given by students and parents as rewards for their work. As Jesse Walker, the managing editor of Reason observed in a tweet last month, these tchotchkes are certainly "a backdoor form of merit pay."

Given that merit pay is fairly new in education, there is no irrefutable evidence that merit pay doesn't work. A study of North Carolina's merit pay plan released last month by the American Enterprise Institute shows that student test performance for teachers participating in the Tar Heel State's merit pay program increased by 1.3 percent over the average expected growth in achievement over time. The privately-funded TAP program, started 12 years ago by Lowell Milken, the brother of the legendary (or infamous) junk bond inventor, has proven even more successful. Some 20,000 teachers receive bonuses and job promotions based on how well they and their colleagues improve student achievement and improve their skills. In Louisiana, for example, teachers in nearly half of the 28 schools operated by the Algiers school district that participated in TAP increased student achievement by more than a full academic year.

But the failure of some merit pay plans clearly proves that future performance-pay efforts must adapt the same structures as those in the private sector. And this means ditching traditional teacher pay altogether.

For one, the bonuses and raises must be large enough -- equal to as much as 20 percent or similar to levels in the private sector -- to motivate teachers to work harder. This is especially true for Baby Boomer instructors, who have already reaped all the fringe benefits -- to work harder. After all, salaries and bonuses, like prices, signal the value of work. Veteran teachers participating in New York City's merit pay initiative were only paid $1,500 to $3,000 for meeting or exceeding performance targets -- or just between one-to-three percent of their base salary of $100,049 a year. Even the North Carolina initiative's maximum bonus of $1,500 equals out only to 3 percent of the average income of $47,934 for a Tar Heel State teacher.

The fact that many merit pay plans are voluntary -- and often require teachers to give up the near-lifetime employment rights that are a key part of their compensation packages -- also rendered these plans dead in the water. Just 28 percent of Denver's veteran teachers had joined its merit pay when it launched in 2006. The New York City experiment only covered teachers in just 205 of the district's 1,700 schools, essentially letting teachers in the rest of the city off the hook. Even the Florida plan, which has garnered jeers from NEA and AFT leaders, still allows Baby Boomer teachers to stick to the wasteful compensation plans they hold dear.

There is plenty of promise in performance pay. But school reformers must not treat it as an add-on to traditional teacher compensation. This means ending tenure and other seniority-based benefits; it also means ending degree- and seniority-based pay scales with salary bands based on performance (especially in improving math and literacy).

Reformers will get plenty of help from younger, more reform-minded teachers (who now make up the majority of all teachers) and are already battling with Baby Boomers over the direction of the NEA and the AFT. Given that generational divide, along with the "continuing decline of teachers' union influence," performance pay is likely to be the norm in the next decade.

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About the Author

RiShawn Biddle the editor of Dropout Nation , is co-author of A Byte at the Apple: Rethinking Education Data for the Post-NCLB EraHe can be followed at Twitter.com/dropoutnation.