New Strategies Devised To Reward Schools for Student Gains

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Two groups of university-based researchers, working independently, have developed models for giving schools financial incentives to improve students' test scores, and one of the schemes will be pilot-tested in Tennessee beginning this year.

The two plans differ significantly in some respects. The Tennessee plan, known as the School Improvement Incentives Project, would award bonuses to individual schools for either maintaining a high level of achievement or improving achievement in the basic skills. The professional staff of each participating school would decide how to spend the bonus money, which would run from $100 to $1,000 per teacher.

The second scheme, developed by 10 Dallas-area professors under the auspices of the National Center for Policy Analysis, is aimed at countering what its authors believe is an overemphasis on student atten-dance, at the expense of academic goals. Their plan calls for altering state-aid formulas so that 20 percent of state money is allocated to districts according to student achievement.

In both cases, however, the planners maintain that schools and school districts cannot be penalized for failing to improve student performance; they can only gain funds as a result of improvement.

Increasing Concern

Both plans appear to reflect increasing concern over the effectiveness of schools, local initiative in instructional improvement, and the kinds of incentives that--intentionally or inadvertantly--are built into state school-aid policies.

Allan Odden, director of policy and analysis for the Education Commission of the States, said the concept of financial incentives for improved achievement "ought to be taken seriously," but questioned both the underlying assumptions and the conclusions of the Dallas researchers.

"If one took their general conclusion that there ought to be rewards in the system for doing excellent things, that's a good suggestion," he said. "But to link state aid to achievement gains gets you into all kinds of thorny issues.

"How are you going to do that on a fair basis? The rich could gain more than the poor. You certainly have to think of those issues. There's been some criticism that we've been rewarding failure with compensatory-education programs where the money is allotted according to low achievement. This could be an even bigger problem."

Currently, Mr. Odden said, no state systematically gives financial incentives to schools or districts that show gains in student achievement. It is technically possible, he said, to structure such incentives in a fair way, by predicting the "normal" rate of achievement for a group of students, adjusting for pupil and community characteristics, then rewarding schools that exceed the predicted rate.

"You could think of ways where it might make sense to do that," he added. "It's psychometrically possible to do it, not perfectly, but pretty well. But to say that 20 percent of the formula's going to achievement is just going too far, I think."

The Tennessee Plan

Mr. Odden was more favorably disposed toward the Tennessee plan because it will use criterion-referenced tests (which measure an absolute level of achievement rather than compare a group of children to a national sample) and incentive bonuses as a supplement to, not a substitute for, basic state aid.

Called the School Improvement Incentives Project, the plan was developed by Vanderbilt University's Institute for Public Policy Studies under the sponsorship of the Tennessee State Board of Education. A grant from the Lyndhurst Foundation helped underwrite the development of the plan and provided preliminary technical-assistance grants to 100 schools that have volunteered to participate.

Because the state legislature did not appropriate funds for the study of incentives, the 1983-84 school year will be used for planning. Each participating school will receive $500 to plan its school-improvement strategies; in 1984-85, assuming that the legislature provides funds for incentives, half the participating schools will be eligible for bonuses if they show improvement or maintain high test scores. The rest of the participating schools will be treated as a control group and will be expected to put their improvement strategies into effect, but will not be eligible for the financial rewards.

Student achievement in the basic skills will be gauged by performance on criterion-referenced tests, based on state learning objectives, and on norm-referenced tests that show how a school's students compare with a national sample. Awards will go to schools that score at or above national norms and to schools that show gains on either test.

The minimum award to schools succeeding on at least one of these measures will be $100 per teacher; the maximum will be $1,000 per teacher. The school's professional staff will decide how to use the money; if local policy permits, it may be distributed to the teachers.

"We chose to address the effects of monetary incentives on schools as an organization rather than on teachers within a school because the group approach circumvents problems generally associated with mer-it pay," said Gay McRainey, project manager. "It hypothetically encourages cooperation and communication among teachers in order to achieve a group goal, rather than fostering competition or divisiveness within a faculty, as merit pay is purported to do."

In addition to discovering the effect of financial incentives, the developers of the Tennessee project hope to learn more about effective instructional practices and how schools go about institutionalizing them.

The Dallas Study

The document published by the National Center for Policy Analysis, a nonprofit public-policy research organization supported by businesses and other private doners, is at once more ambitious and more theoretical than the Tennessee plan. Prepared by a group of professors of economics, education, management, finance, and political science, the report is based on the premise that the attendance-driven state-aid formulas used in many states give school districts inappropriate incentives.

"The amount of money schools get for simply keeping youngsters in school is enormous," said Cherie Clodfelter, chairman of the department of education at the University of Dallas and one of the report's authors. "It's a response to financial incentives--the schools are paid to attract students, but they receive no financial reward for academic achievement."

The research group concluded that the policy of linking state funds to attendance has led to social promotion, watering-down of course content, and other practices deemed academically counterproductive.

Based on these premises and on experiments in the 1970's with "performance contracting"--under which private contractors were paid a fee to raise the achievement levels of students--the Dallas researchers concluded that schools will improve students' academic achievement only if the incentive structure is "radically redesigned." Their proposal, called reward (for "Reading, Writing, and Arithmetic Development), would:

Allocate at least 20 percent of state funds to districts on the basis of achievement, as measured by annual standardized basic-skills tests. Rapid improvement would be rewarded more heavily than long-term improvement.

The remaining 80 percent of state aid would be allocated according to attendance, student characteristics, and other factors now customarily used.

"Experience-rate" schools before putting the new formula into effect. This would ensure, the report's authors contend, that districts with brighter students would not have an inherent advantage. Districts with large numbers of slower learners, the authors say, "would have the most to gain ... because they have the greatest potential to raise their level of performance."

The formula assumes that it is easier to raise the achievement level of a low-achieving student than of a higher achiever. If that assumption proves false, the authors say, the plan could be altered to provide greater rewards to districts that show greater gains for low-achieving students.

Emphasize results rather than procedures, thus encouraging creativity and reducing paperwork.

Permit but not require districts to set up merit-pay systems or other changes in teacher compensation and career patterns.

At least one member of the Texas State Board of Education has expressed support for the plan and said he hopes a special commission studying school finance and other topics will consider its recommendations.

Mr. Odden, however, said he believed that declining educational standards over the last several years are not necessarily the result of attendance incentives. "That's like saying, 'federal aid's up and achievement's down, so there must be a connection'," he said.

He also noted that only about one-third of the states base aid to school districts on average daily attendance; the trend in recent years has been toward the use of average daily membership figures, which do not give districts so strong an incentive simply to get children in school at any cost.

Copies of the Dallas report, entitled "The Failures of Our Public Schools: The Causes and a Solution" are available from the National Center for Policy Analysis, 413 Carillon Plaza, 13601 Preston Road, Dallas, Tex. 75240.

Further information on the Tennessee School Improvement Incentives Project is available from Gay McRainey, project manager, Vanderbilt Institute for Public Policy Studies, 1208 18th Ave. South, Nashville, Tenn.

Vol. 03, Issue 01

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