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Arbitrator Rejects Consulting Firm's Minneapolis Teacher-Pay Plan

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A Minneapolis arbitrator's decision to award standard pay raises to teachers has dealt a setback to a plan by the district's corporate superintendent to link their pay to student performance.

During contract talks this month, teachers' union leaders rejected Superintendent Peter Hutchinson's pay-for-performance plan until it can be studied more closely.

The arbitrator overseeing the talks agreed with the union and awarded teachers raises of 1.25 percent and 2.5 percent over the next two years.

Mr. Hutchinson and other school officials have said they fear that the settlement will threaten the district's budget and its student programs.

The recent developments appeared to undercut Mr. Hutchinson, whose St. Paul-based consulting firm, Public Strategies Group Inc., was hired by the school board last year to provide leadership services to the 44,000-student district.

Key to Mr. Hutchinson's leadership is his plan to transform the structure of the district, building in incentives that encourage the best practices for students and educators. (See Education Week, Feb. 9, 1994.)

The proposal to reward teachers with an across-the-board 1 percent bonus for helping the district meet achievement goals was just one of the superintendent's ideas for building accountability into the system.

Mr. Hutchinson and his company have a pay-for-performance contract with the district under which he receives a six-month base salary of $30,000. The firm receives additional payments only if it meets such goals as improving student achievement or increasing community involvement.

School board members have even discussed tying their salaries to improvements in the schools, a school official said last week.

'Thoughtful Analysis'

Mr. Hutchinson, who also unsuccessfully proposed adjusting teachers' "step'' pay raises so that they would be more evenly distributed, has not given up on performance pay, said Katrina R. Reed, the associate superintendent for human resources.

"This means we just have to step back and look at how we can continue this discussion,'' Ms. Reed added. "I think the teachers are still interested.''

Union leaders, who were seeking pay increases of 2.7 percent for both years of the contract, have said it was not performance pay that turned them off but how it would have been adopted under the proposal.

The superintendent "wanted to mandate this instantly,'' said Louise Sundin, the president of the Minneapolis Federation of Teachers. "We wanted to go into a thoughtful analysis, much as our colleagues have in other districts.''

The district is now focused on finding the money to pay for the teachers' and other employee contracts without cutting into student programs, Ms. Reed said.

School officials have estimated that the teachers' pay package--including the annual raises, step increases, and benefits--will cost about $20 million over two years.

Officials already anticipate exhausting a $2.2 million budget reserve to pay for part of the first year of the agreement.

The district has been vigilant in its financial planning since early last year, when allegations of financial mismanagement led to the ouster of Superintendent Robert Ferrara and one other top official.

Mr. Hutchinson, whose firm helped clean up the district's finance-and-operations division last year, has warned that the recent salary agreement--which the board is set to vote on next month--could hinder the district's budget-balancing efforts.

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