Merit Pay - History of Merit Pay

History of Merit Pay

Merit pay's roots lie in behavioral psychology and incentive theory. These theories are based in the belief that people react to incentives and that you can increase performance with the right catalyst. Several public policies implemented since the 1920s have used wages as that catalyst in attempts to improve performance among teachers.

Notably, William Sanders, a statistician from the University of Tennessee, used incentive theory to develop the first quantitative design model to measure just how much impact teachers made on their students' performance. Sanders' design used test scores over a three-year period to plot a student's trajectory. This trajectory was then compared with test scores each year to see if the student was falling behind or exceeding their expected score. The difference between the trajectory and the actual score was assumed to be attributable to the teachers' efforts. Sanders originally intended this measurement tool to be used to support teachers who worked at difficult schools or needed additional training or resources. However it soon became the standard of merit pay for teachers. Also In what is called "expectancy theory" (Vroom 1964), the focus is on choices that individuals make, and it is assumed that all workers expect a positive correlation between performance and reward.

One example of a system that uses merit-pay is the Teacher Advancement Program (TAP) created by the Milken Family Foundation in 1999. TAP is currently in place in more than 180 schools all across the United States. In this program, salary raises are based on teacher performance, which is measured by a combination of observations and student test scores. TAP teachers can advance their career in three ways: (1) remain in the classroom and become a mentor to others, (2) leave the classroom and become a master teacher, or (3) advance to administration through traditional means. This program is focused on helping teachers improve performance by learning from others. Teachers are put into small groups that—for a few hours each week—collaborate about what's working in the classroom. The opportunity allows teachers to build skills that will improve classroom learning.

Since adopting TAP in 2001, Bell Street Middle School has doubled the percent of students with advanced scoring in math and reading. The school has also reduced the number of students scoring "below basic level of math" by 46 percent. Another benefit of the TAP program for the middle school has been a reduction in teacher turnover from 32 percent to 10 percent.

One criticism of TAP is that it is expensive for schools, costing from $250 to $400 per student per year. Many TAP schools use grants to fund the program cost. Independent research has not yet supported the notion that the TAP system helps schools retain staff or significantly increases student achievement. It is noted that while Solmon Lewis and others with connections to the Milken Family Foundation have produced evidence that TAP is a successful merit pay program, there is a conflict of interest with their research because their goal is to implement the system in schools. More independent research is needed to determine the effectiveness of TAP in schools.

In 2006, United States Congress created a $600 million federal grant program called the Teacher Incentive Plan (TIF). In 2009, the program was expanded and supported with American Recovery & Reinvestment Act (ARRA) funding. According to the US Department of Education, the TIF "supports efforts to develop and implement performance-based teacher and principal compensation systems in high-need schools." The program's goals include (1) improving student achievement by increasing teacher and principal effectiveness; (2) reforming teacher and principal compensation systems so that teachers and principals are rewarded for increases in student achievement; (3) increasing the number of effective teachers teaching poor, minority, and disadvantaged students in hard-to-staff subjects; and (4) creating sustainable performance-based compensation systems (PBCSs). A national evaluation of the TIF program has yet to be performed, but preliminary research has provided mixed results. According to an article by the Center for American Progress an evaluation of programs supported by TIF, such as Denver's ProComp program and the Nashville study, has shown initial evidence that performance-based pay has had a positive effect on student achievement. However, other evaluations, such as a study performed by the Vanderbilt University National Center on Performance Incentives in the metropolitan Nashville School System, have not confirmed the hypothesis that rewarding teachers for improved scores will cause scores to rise.

Denver's Professional Compensation System for Teachers was approved by teachers and financially backed by Denver voters in 2004 and 2005, and later received additional funding from a TIF grant in 2006. In this program, teachers are given nine ways to increase their earnings such as working in a high-needs schools, exceeding expectations on state exams, meeting professional objectives set at the beginning of the year, receiving a worthy evaluation from a principal, and gaining "distinguished school" status by meeting mixed criteria such as parent satisfaction In 2010, an evaluation report detailing effects of ProComp was issued. This report highlighted several key findings in both district-wide student achievement trends, as well as in student achievement outcomes relating to teacher hiring effects. On a district-wide level, the 2010 evaluation showed a substantial increase in mathematics and reading achievement from the immediate time period before ProComp's implementation compared to time period subsequent to the implementation. Additionally, teachers hired after the implementation of ProComp showed higher first-year achievement compared to those hired before the program's implementation.

The Nashville Study. The National Center on Performance Incentives conducted a three-year study in the metropolitan Nashville School System from 2006 through 2009, in which middle school mathematics teachers participated in an experiment to evaluate the effect of financial rewards for teachers whose students showed large gains on standardized tests. As stated in the study's final findings report, "The experiment was intended to test the notion that rewarding teachers for improved scores would cause scores to rise." The results of the study did not confirm this hypothesis. Students of teachers assigned to the treatment group eligible for bonuses did not outperform students whose teachers were assigned to the control group that was not eligible for bonuses.