Teacher Incentive Fund: Trivial or Transformative?

By Bryan C. Hassel & Dan Katzir

The historic agreement this month between the District of Columbia public schools, the American Federation of Teachers, and the Washington Teachers’ Union will provide the school district’s teachers with some of the highest levels of professional rewards, salaries, and support in the nation. ( "Foundations to Subsidize Merit Pay in D.C. Teachers’ Pact," April 21, 2010.) And there is reason to hope that the nation’s capital won’t stand alone: The Obama administration’s proposed funding boosts for the federal Teacher Incentive Fund present an opportunity for other states, districts, and schools to follow suit and create effective performance-based-compensation systems for teachers and principals.

For a long time, teachers and principals have toiled through the hardest parts of their jobs simply because they are motivated to improve young people’s lives. Yet most advocates agree that performance pay is a common-sense tool to reward success. Studies across industries and nations have revealed this fundamental truth: The opportunity to earn higher pay attracts talent, motivates professionals, and encourages high-performers to stay in their jobs.

At present, however, the vast majority of districts and states offer educators not a penny in performance-based compensation. The rare exceptions provide such small bonuses and short-lived incentives that they aren’t designed to truly make a difference in attracting, retaining,...