Texas’ $750 million Teacher Incentive Allotment is the largest state merit pay program in the country—but a new study suggests the bonuses it pays out may not be enough to draw top teachers to the participating rural and high-poverty schools the allotment was designed to help and keep them there.
More than 65,000 teachers in 809 school districts received bonuses under the allotment in the 2025-26 school year, with more than $1.8 billion awarded since the program was launched in 2019.
“Teachers are the single most important in-school factor that affects student outcomes,” said Texas Education Commissioner Mike Morath in a briefing on the incentive pay June 11, when the state announced 809 of the state’s more than 1,200 school districts now participate in the allotment. “By rewarding our most effective teachers with pathways to stay where they’re needed most, students ultimately reap the reward.”
Morath cited a Texas Tech University study finding that after four years, overall teacher turnover was 2 percentage points lower in districts that participated in the allotment than in districts that did not.
But teacher recruitment and retention under the program may not benefit the highest-need schools, according to a new working paper released by the Annenberg Institute at Brown University in advance of peer review.
For the study, Patrick Massey of Michigan State University used teacher and student administrative data for all Texas public K-12 schools from the 2011–12 through 2024–25 school years and state data on the allotment grants and teacher awards from 2019-24 to track nearly 40,000 teachers’ job mobility in the years after they were identified for a bonus.
The allotment bonuses are based on teachers’ merit designation and their schools’ level of economic disadvantage, including poverty and rural location. “Master” teachers, considered the top 5% based on student test-score growth and class observations, can earn bonuses from $12,000 to as much as $32,000 if they teach in the highest-poverty rural schools—equal to about half of the average Texas teacher’s base salary. “Exemplary” teachers perform in the top 20% and earn $6,000 to $18,000. “Recognized” teachers, who either earn National Board certification or perform in the top third of teachers, can earn $3,000 to $9,000 per year.
Texas distributes the grant funding to districts based on a February snapshot of designated teachers’ districts, but the districts don’t generally distribute the bonuses until late summer, and can withhold a teacher’s bonus if they leave before the disbursement. After that, the designation and bonus travels with the teacher for five years.
In the first year after being designated, Massey found, most teachers stayed put to receive their first bonus. But mobility started to rise after that.
The average designated teacher who switched schools needed more than $6,000 in additional yearly pay—generally at the program’s “master” and “exceptional” tiers—to move to a school with one standard deviation higher poverty.
But teachers in the lowest, “recognized” tier were most likely to switch schools in the first place.
Teacher mobility played out differently for high-poverty and rural districts, both often harder to staff. Teachers who started their designation in low-income schools were more likely to leave for wealthier schools, and those who switched from higher-income schools were more likely to move to other high-income schools.
And after the first year of receiving an allotment bonus, Massey found Texas teachers in rural schools were no more likely to stay than they were before receiving the designation, and those in high-poverty schools were still more likely to move to higher-income schools.
“We need to be careful about how we’re designing [differentiated-pay] policy because ... it’s basically a public signal that says, ‘I’m a good teacher,’” Massey said, “and teachers are leveraging that public signal to move into high-income campuses.”
Bonus pay is often favored as a policy lever to bring top teachers to disadvantaged schools, but it requires more expensive and sustained bonuses to make a teacher switch schools than to keep them on their original campus, said Dan Goldhaber, a teacher workforce researcher and the director of the Center for Analysis of Longitudinal Data in Education Research at the University of Washington.
A teacher, he noted, “is not going to make a move unless the bonus offsets the costs of moving—both dollar costs and also psychic costs of acculturation at a new place ... maybe where the school already struggles with retention,” Goldhaber said.
To use merit pay for recruiting, Goldhaber and Massey agreed programs must both target highly effective teachers and use large-enough bonuses to overcome the perceived difficulties of teaching at higher-poverty schools, while also preventing existing high-quality teachers from leaving high-need schools.
Other existing research supports those conclusions: A federally funded study from a decade ago found that bonuses amounting to $20,000 helped effective teachers transfer and stay in low-income schools, but fewer than 1 in 5 teachers opted to change schools even for bonuses of that magnitude. More recently, scholars have noted that teachers who transfer to lower-income schools under such programs often don’t remain as effective—probably because of the work it takes to adjust to a new school and establish new relationships with students.
Growing merit pay experimentation
Differentiated-pay plans have gained more traction in states. Arkansas, Louisiana, and Utah as well as Texas are experimenting with programs that evaluate teachers based not just on on their students’ test scores, but classroom practice, instructional leadership, and willingness to teach high-need subjects, students, and schools.
The Trump administration pledged to back state and district efforts to replace teacher-tenure systems with performance pay, but federal support for such programs has been uneven.
This spring, the Education Department announced it would award $60 million in fiscal 2026 for Teacher and School Leader Incentive grants to districts developing performance-based bonuses for teachers and principals. But in fiscal 2025, teachers missed pay bonuses under the same program when the Education Department cut existing grants to in an effort to eliminate diversity, equity, and inclusion-related programs. (Congress later maintained funding for the program.)
