Incentive Pay Shows Promise for Boosting Test Scores

May 25, 2009

For release noon May 26 and thereafter (675 words)
State School Superintendent Tony Bennett has the right idea with his plan to give incentive grants to schools that raise graduation rates. The program, which Bennett is funding with cost savings achieved by his office, will award up to $20,000 to educators at high schools with the biggest increase in 2009-10 graduation rates.
If he could get it past the all-powerful teachers’ union, Bennett might want to try a merit-pay program for teachers who help raise test scores, at least on a pilot basis. And with Barack Obama embracing the idea, political opposition may be easier to overcome.
As it is now, Indiana school districts negotiate “single-salary” pay scales, which base pay on years in the classroom and degrees. This is despite the fact almost every other profession uses a merit assessment process in determining pay raises. Proposals to reward teachers for improving student performance are routinely dismissed as impractical and unfair with the loudest critics alleging that teacher quality is impossible to quantify. A better solution, those critics say, is to provide higher salaries across-the-board for teachers who are chronically underpaid compared to professions of comparable worth.            
But there’s no research to support the notion that simply paying teachers more leads to better teaching. On the contrary, according to Geeta Kingdon and Francis Teal at the University of Oxford. In their 2002 study of schools in India, the economists found “that in public schools, which pay centrally determined high minimum wages across the board with little variation across teachers except for seniority, there is no relation between teacher wages and student achievement.” They did, however, find a connection in India’s private school system between absence of job security, performance pay plans and student achievement.
A stronger link has been documented in one of the most recent U.S. studies on the topic, this one assessing a merit-pay pilot project in Little Rock, Ark., public schools.
In the October 2008 issue of Educational Leadership, Joshua Barnett and Gary Ritter noted that the single-salary system contains perverse incentives for good teaching. “Because the current system includes no monetary rewards directly tied to effectiveness, many effective teachers seek more ‘compensation’ through better working conditions, often choosing to leave schools with a high population of disadvantaged students and challenging teaching conditions for schools serving more advantaged students. Good teachers might also increase their compensation by leaving the classroom for an administrative position or, worse, leaving the field of education entirely.”
The Little Rock program, known as the Achievement Challenge Pilot Project, began at a single school in the 2004-05 school year funded by a private foundation and expanded to four more schools the following year using both public and private funds. All participating schools had poor, high-minority populations.
Teacher merit under the plan was based solely on student achievement gains on the Stanford Achievement Test or the Iowa Test of Basic Skills. Teachers would pre-test in the fall or preceding spring and then test again at the end of the school year. In between, they would target instruction to student weaknesses.
After two years, the schools achieved average gains of seven percentile points in math and reading scores. At the same time, scores of students in comparable public schools without merit pay fell. Keys to success, the researchers said, were a straightforward formula for determining merit and incentives for collaboration, in this case a reward component based on school-wide achievement. Also, “Education officials cannot expect teachers to shift their behavior toward excellence for the proverbial peanut bonus.” The Arkansas bonuses ranged from $1,800 to $8,600.
The Arkansas study found enough immediate impact to justify merit pay. Long term, the researchers suggested, it will serve as a form of natural selection with more competent teachers staying in the profession and less competent ones leaving.
Indiana should try a similar pilot project and evaluate its effects. Once teachers enjoy the fruits of merit pay, opposition will diminish. With ISTEP scores stagnant and in some places falling, don’t we owe it to students to do anything that works?

Andrea Neal is a teacher at St. Richard’s School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at


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