Merit Pay Programs: Policy Research 

Despite this history of failure, there is reason to believe merit pay is a promising compensation reform.  In 2003-2004, about eight percent of school districts were experimenting with merit pay nationwide (Strizek et al., 2006, as cited in Johnson & Papay, 2009).  With current pressure from Race to the Top to explore merit pay as a method to improve teacher quality, this number is likely to increase dramatically as states compete for funding (de Nies, 2009).  Race to the Top joins the Teacher Incentive Fund (TIF) as federal government programs currently encouraging merit pay across the nation.  TIF was started in 2006 under the Bush administration to help start merit pay programs in high-need schools (U.S. Department of Education, 2008). 

Merit Pay Framework

Merit pay programs supported by both Race to the Top and TIF vary widely.  In this section, we consider three merit pay programs currently used in Florida, Texas, and North Carolina.  To allow for comparison, each district is presented using a framework published by Susan Moore Johnson and John P. Papay (2009). When deciding to implement merit pay, the framework explains, districts answer three guiding questions.  First, districts decide how to measure performance.  Performance is usually measured using student achievement data, professional evaluations, or a mix of the two.  Second, districts decide how to identify top performing teachers.  In other words, what level of performance warrants a financial award?  Districts may answer this question by either (1) ranking teachers and then establishing a threshold of performance, or (2) establishing a standard that must be met in order to earn the award.  There are cases to be made for both techniques, but most merit pay systems currently rely on relative ranking rather than a standards-based sorting mechanism.  Third, and finally, districts decide if they will reward individuals or groups, typically schools.  Both methods are widely used across merit pay systems (Johnson and Papay, 2009).  To visually organize this framework, Johnson and Papay (2009) offer this chart: 

Current Examples of Merit Pay Programs

 With this framework in mind, we will consider three merit pay systems: Hillsborough Country, Florida; Houston, Texas; and Charlotte-Mecklenburg, North Carolina.  This is not an exhaustive list of successful merit pay programs.  These districts however, serve as examples of the variety in programs seen across the nation and are considered “prominent initiatives” by Johnson and Papay (2009). 

Hillsborough County, Florida

Background: Hillsborough County is located in west-central Florida and includes the city of Tampa.  Hillsborough County Public Schools (HCPS) serves approximately 192,000 students in 239 schools, making it the eighth largest district in the U.S. (Hillsborough, 2008).  Interest in merit pay began in 2000 in HCPS, just a year before the Florida legislature passed E-Comp, a controversial, statewide merit pay system (Johnson & Papay, 2009).  In 2006, STAR (Special Teachers Are Rewarded), E-Comp’s replacement, began requiring districts to use a merit pay plan.  STAR, however, was quickly replaced by a more flexible merit pay system called Merit Award Program (MAP) in 2007.  MAP made having a merit pay structure optional but provided additional state funding to participating districts (Florida, 2007).   

Plans:

• MAP (Merit Award Program): MAP is a statewide initiative that provides districts with funding for a merit pay system.   All teachers in the system are eligible for the award, and no application is required.  Teachers are given awards based on a relative ranking, which is created with two criteria:
• POWER (Performance Outcomes with Effective Rewards):  POWER is a Teacher Incentive Fund initiative that began in 2007 in 21 high needs schools in the district (Hillsborough, 2009).  POWER serves as a supplement to MAP, and it evaluates teachers based on the same criteria.  Teachers in high needs schools are eligible for an additional five percent POWER bonus, on top of their MAP bonus (Center, 2009).
• TPP (Teacher Performance Pay):  Developed in 2001 with the support of teachers, union representatives, and administrators, TPP is the local merit pay program in Hillsborough County.  Teachers are eligible for a five percent bonus based on a professional evaluation done by school principals.  In order to earn the bonus, teachers must earn 95 percent of the possible points in the evaluation (Hillsborough, 2008, May 13).

Summary:

Houston, Texas

Background:  The Houston Independent School District (HISD) is the largest school district in Texas and the seventh largest in the nation.  HISD serves 200,225 students in 296 schools (Houston, 2008b).  Houston’s merit pay program is a piece of a larger district initiative called ASPIRE (Acceleration Student Progress Increasing Results and Expectations) (Houston, 2009).  The merit pay aspect of ASPIRE has five goals focused on teacher quality and improved student achievement (Houston, 2007).  For performance in the 2007-2008 school year, HISD awarded over $30 million in merit pay bonuses to 87 percent of its employees (Houston, 2009, January 28).  HISD receives additional funding for the ASPIRE initiative through the TIF (Center, 2009). 

Plans:

• ASPIRE, Strand I (value-added, campus-wide involvement):  Rewards in this strand are given at the campus, or school, level.  All staff members are eligible for the award, and no application is necessary (Houston, 2007). 
  • There are three steps to determine which schools receive awards:
    1. A “Campus Composite Gain Score” is calculated based on the value-added data for each school.
    2. Schools are separated into elementary, middle, and high schools.
    3. Schools in the top two quartiles of their group are awarded a bonus.
  • Teachers can earn bonuses up to $1,500 (Houston, 2008a).
• ASPIRE, Strand II (value-added, core teacher performance):  Strand II awards are available to about 70 percent of the teachers in HISD. 
  • Strand II is divided into four parts (A-D) depending on the subject and grade level a teacher is assigned to teach.
  • Awards are based on a relative ranking of a teacher’s value-added score.  Who a teacher is compared to depends on the grade level and subject he or she teaches.
  • Awards range from $3,500 to $7,000 (Houston, 2008a).
• ASPIRE, Strand III (campus involvement and achievement): 
  • Part A:  This part of Strand III rewards campuses based on a comparison of their student achievement gains with 40 other demographically similar campuses across the state.  Schools in the top two quartiles can earn bonuses up to $1,000.
  • Part B: Teachers at schools who earn an “Exemplary” or “Recognized” district rating earn $200 to $400 bonuses.
  • Part C: English and language arts teachers in 4^th and 7^th grade and high school are eligible for a bonus based on students’ writing scores.  Part C can be determined using a relative ranking or standards-based criteria (Houston, 2008a).  

Summary: 

Charlotte – Mecklenburg, North Carolina

Background:  Charlotte-Mecklenburg Schools (CMS) is the twentieth largest district in the country and currently serves about 132,000 students in the Charlotte metro area (Johnson & Papay, 2009).  CMS first started experimenting with merit pay programs in the mid 1990’s with merit pay for principals.  The district has recently been piloting programs for individual teachers with the assistance of a TIF grant  (Johnson & Papay, 2009).

Plans:

• Local Accountability Bonus:  This program awards schools based on students’ growth and change.  The award is standards-based, and all schools can meet the requirements.  Award amounts, however, depend on the number of schools who meet the standard and vary from year to year.  Most staff members are eligible, but most notably, teachers with an unsatisfactory rating are excluded (Charlotte-Mecklenburg, 2008).
• LEAP (Leadership for Educators’ Advanced Performance):  This TIF initiative awards merit pay based on mixed measures to individual teachers.  Teachers are eligible for a bonus worth up to ten percent of their base salary, and must complete two requirements:

• North Carolina State ABCs of Public Education: This statewide accountability system awards merit pay to schools based on change in student achievement (a different calculation than the one used in Local Accountability Bonus).  Teachers are eligible for a $1,500 bonus if students meet Expected Growth standards (Public, 2009). 

Summary:    

Conclusion 

These three districts provide examples of prominent merit pay programs, and exemplify that there is no “one size fits all” approach to merit pay.  Even within districts, multiple programs exist and reward different sets of teachers for different accomplishments.  The complexity of merit pay should not, however, deter districts from creating a merit pay program.

Throughout this section, we’ve used Johnson and Papay’s (2009) merit pay framework to consider three programs.  Johnson and Papay (2009) offer three guiding questions (how to identify top performers, how to measure performance, and at what level to provide awards) to help districts make specific decisions about merit pay design.  The Consortium for Policy Research in Education (CPRE) offers districts guidance, however, on the step before design—cultivating support.  CPRE’s suggestions include securing stable funding, building strong evaluation systems, and gauging potential reactions of key stakeholders (Heneman, Milanowski, & Kimball, 2007).  Susan Moore Johnson explains previous merit pay programs often failed because teachers did not view them as credible, and it was unclear what teachers could do to earn the awards (personal communication, October 30, 2009).  CPRE urges districts to remember this history and ensure not only that teachers value the award, but also that teachers “recognize and understand the connection between performance and their pay” (Heneman, Milanowski, & Kimball, 2007, p. 6).  Teachers in both Hillsborough County and Houston see establishing this connection as a struggle even in their more established programs (M. Snow, personal communication, 2009, November 9).  As merit pay programs begin and evolve, they rely heavily on buy-in from many different players.  This requires program designers to consider merit pay from all stakeholders’ points of view.