School & District Management

Performance Pay for All?

By Debra Viadero — June 05, 2009 2 min read

If you thought merit pay was controversial, here’s an idea that will really rock your socks: How about a school finance system that is entirely performance-based?

That’s what authors Eric A. Hanushek and Alfred A. Lindseth propose in their new book, Schoolhouses, Courthouses, and Statehouses: Solving the Funding-Achievement Puzzle in America’s Public Schools.

Hanushek, a senior fellow at Stanford University’s Hoover Institution, is best known for having sparked a national debate over whether money matters in education. (He suggested more money didn’t boost student achievement all that much.) A senior partner in the law firm of Sutherland, Asbill & Brennan, Lindseth speaks from experience. He represented states such as New York, Florida, and North Dakota in important school finance cases.

In their new book, Hanushek and Lindseth trace the history of school finance as far back as the 1950s and make the case that all of the legislative and court-imposed remedies tried so far haven’t led to any real improvements in schooling. What they propose instead is creating an entire school-funding system linked to increases in student achievement.

Here are some facets of their plan:


  • Offering bonuses or merit pay to principals and administrators for boosting student test scores;
  • Providing group rewards for teachers in schools that improve student achievement and financial incentives for good teachers to work in hard-to-staff schools;
  • Basing decisions on hiring and firing teachers on their effectiveness in the classroom;
  • Continuous evaluation of new programs for the purpose of continuing to fund those that work and zeroing out funds for those proven to be ineffective;
  • A modified weighted-student-funding system that would provide districts with more money for students who cost more to educate, but also make adjustments for differences in local contexts; and,
  • Using block grants or vouchers to pay for special education students.

The authors’ contention is that, while some school systems are doing one or more of these things, you’d be hard-pressed to find a single state or district that’s doing it all.

You can hear the authors outline their ideas for yourself on Tuesday at a forum sponsored by the American Enterprise Institute in Washington. Randi Weingarten, the president of the American Federation of Teachers, will offer a response. Look for information about the book on the Princeton University Press Web site.

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A version of this news article first appeared in the Inside School Research blog.