A New Teacher-Pay System Could Better Support Reform

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Education, like the private sector, is facing growing pressure to improve bottom-line results. Yet, while many companies are changing their pay structures to reinforce workplace reforms, most teachers are still being paid based on a 75-year-old salary structure that may be due for retirement.

Early in the 20th century, opposition to overt discrimination and demand for greater teacher skills led to the current single-salary schedule, which pays the same salary to teachers with the same qualifications regardless of grade level taught, gender, or race. Appearing first in Denver and Des Moines in 1921, and in nearly all urban districts by 1950, the schedule pays differentials based on years of experience, educational units, and educational degrees.

The single-salary schedule was appropriate for schools of the first half of this century. Administrators were responsible for goals, objectives, and school success, and teachers were responsible mainly for delivering a standardized curriculum emphasizing "the basics."

Teachers' initial skills were assessed in the process of licensure. Once in the system, they were paid more for each year of experience--a practice typical of bureaucracies and the way most workers were paid in the broader economy. But this salary structure is not adequate for the schools of today.

Today's education reforms expect teachers to acquire the professional expertise needed to teach a "world class" curriculum well to the diverse students in schools. Today's teachers also are being asked to take on broader leadership roles in school management, organization, and instruction. And more than ever, today's teachers are being asked to focus on results--student achievement--in addition to education processes.

In other words, major changes in the organizational needs of schools have emerged. A revised teacher-compensation structure could help to address these new and more complex system needs.

Since June 1994, the finance center of the Consortium for Policy Research in Education has been conducting the Teacher Compensation Project. It aims to create new salary structures that provide incentives for teachers to enhance their professional expertise, and that contribute to improved school performance and student achievement.

With generous support from the Pew Charitable Trusts, the project has been examining efforts to change employee pay in the private sector and in education. CPRE also has held a series of working meetings with leaders and local members of the American Federation of Teachers and the National Education Association and officials of the National Board for Professional Teaching Standards. Members of 10 other national education and policy organizations participated in additional conversations.

One of the major goals of the Teacher Compensation Project is to avoid the traps of the simplistic "merit pay" and "career ladder" approaches of the past. These efforts failed mainly because they were not linked to the organizational needs and working processes of effective schools, and thus were poorly designed.

For example, merit-pay plans usually require individual teachers to compete against each other for a fixed pool of funds. Such competition among teachers works against the collaborative culture found in most highly effective schools.

Career-ladder programs were created to enable career advancement in teaching. Instead, most of these provide nonteaching jobs for a fixed number of excellent teachers, thus encouraging the best professionals in the schools to leave the classroom. This is just the opposite of how a high-performance school should deploy its best workers. Other pitfalls of these programs were the facts that teachers often were not integral partners in planning the programs and that too often funding was eliminated after the first years of implementation.

Participants at our project meetings agreed that these are problems to be avoided. We asked them to list their worst fears about new moves to reform teacher pay. Increased teacher competition, decreased teacher morale, and short-lived or insufficient funding all cropped up on the list.

Yet, research evidence from the private sector suggests that new types of compensation systems, such as skill-based pay, group-based performance awards linked to organizational results, and contingency pay, are promising new approaches to compensation. These new plans have been associated with wide worker acceptance, better employee morale, improved organizational performance, and higher individual salaries.

In the private sector, this type of compensation reform has usually been part of a restructuring process and a movement toward higher performance and more decentralized management. The organizations that have tried this have either added money, cut money, or kept money the same. So there is nothing inherent in these ideas that requires additional money. Let's take a brief look at these approaches.

  • Skill- or competency-based pay. The current single-salary schedule incorporates a form of skill-based pay by compensating teachers for number of educational credits and years worked. However, many of the credits used for salary increases are only loosely if at all connected to teaching responsibilities or to emerging notions of challenging subject-matter instruction. And more years of experience do not necessarily create the skills needed to teach an increasingly diverse student body or to participate in school-based management decisions.

A better approach might be to pay teachers for developing expertise in areas that have been identified by the profession and the school itself as skills that are needed for high student performance. A skills-/competency-based-pay salary component could be added to the current salary schedule, could replace either the education or experience component of the current salary schedule, or could replace both components.

For example, salary increases could be tied to professional licensure and certification such as that being developed by the Interstate New Teacher Assessment and Support Consortium, the Educational Testing Service, and the National Board for Professional Teaching Standards.

But skill-based pay must not be confused with individual performance-based pay. Skill-based pay systems do not pit teachers against one another for a fixed pool of funds. Rather, teachers are rewarded for mastering and demonstrating knowledge and competencies valued by the school.

  • Group-based performance awards. Group-based performance awards, or collective incentive-pay plans, explicitly encourage school staff members to work together toward common goals such as improving student performance. Collective incentives provide an important symbolic focus on outcomes while avoiding the divisive aspects of individual performance incentives. Group-based performance incentives could provide bonuses to all school employees or to teams of teachers, and additional funds for the school when, for example, student achievement in core content areas exceeded some predetermined criterion for improvement.

    Gain-sharing is another type of group-based performance incentive. Gain-sharing programs encourage employees to find more efficient means of achieving organizational goals. For example, school faculties that found lower-cost means of providing the same quality services could receive a portion of the cost savings, with the rest of the funds going toward instructional materials.

    Group-based performance awards would need to be carefully designed. They would need to be based on improvements in performance. They also would need to be adjusted for student mobility, be explicit about the achievement targets for students in special-education programs, capture student performance across the full range in order not to ignore the bottom half, and recognize important differences, to ensure a level playing field for participation in the award.

  • Contingency pay. At General Motors' Saturn plant in Tennessee, employees have 10 percent of their base pay held back in ways that may apply to education. Five percent of pay is contingent upon all workers' spending at least 5 percent of the work year (92 hours) in ongoing training that is provided by the plant. Another 5 percent is contingent on the plant's meeting certain quality and production targets for its cars.
  • The idea of committing teachers, schools, and school systems to an ongoing training process as well as to meeting high-quality standards could have appeal in education. Thus, a percentage of teachers' base pay could be contingent upon each teacher's engaging in a specified amount of professional development each year. This would commit both schools and teachers to carefully designed, effective, ongoing professional-development activities that support student-learning goals.

    One way to apply the quality concept to education would be to require the faculty to work together to produce a performance report, such as the School Quality Review in New York State. The report would provide a vehicle for faculty members to develop what is known as "reflective practice" and for them to take part in an ongoing process of improving both teaching skills and the educational program.

    While compensation plans incorporating skill- or competency-based pay, pay-at-risk, and/or group-based performance awards have been used in the private sector for several years, they are generally new to education. Several states and districts are attempting, however, to better align their compensation systems with current educational goals and the organization of schools.

    Early results suggest that these efforts have the potential to support teacher professional development and encourage teachers to focus on improving student achievement. But further research is needed.

    There are many technical issues surrounding implementation of compensation reforms. But one of the most important requirements is that teachers be involved in every stage of the process--from idea to implementation. Teachers' unions, school boards, and political leaders need to be involved as equal partners, in order to design any new structure so that it can be supported by all parties.

    No one compensation plan should be viewed as an ideal or universally applicable model. And teacher-compensation systems alone are not the solution to vague and often conflicting educational goals and the myriad problems faced by schools. But compensation is a potentially powerful tool that could be used to support education reform, reward excellence, and undergird a climate of educational excellence.

    Vol. 15, Issue 23, Pages 35, 48

    Published in Print: February 28, 1996, as A New Teacher-Pay System Could Better Support Reform
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