Rewarding Expertise

For most of the century just past, and into the current one, school districts have paid their teachers according to a “single salary schedule,” a pay scheme that bases an individual teacher’s salary on two factors: years of experience (steps) and number of education credits and degrees (lanes). Introduced in Denver and Des Moines in 1921, the single salary schedule was meant to resolve the inequities of an era when women, minorities, and elementary school teachers were paid less than their counterparts. It ensured that all teachers with similar qualifications would earn the same salary. Moreover, the education component gave teachers, most of whom then had just two years of education from a “normal”school, the incentive to earn a full bachelor’s degree and, over time, a master’s or doctoral degree.

Illustration by John Weber.

The traditional single salary schedule, however, is not well suited to the demands of today’s reform environment. Today’s goal is not to achieve mere marginal increases in performance. The goal is literally to double or triple education results—to increase from 30 percent the number of students who perform proficiently on tests of academic achievement to 60 and then 90 percent. This is a daunting challenge. Indeed, there are few if any examples in the education field of systems doubling or tripling results.

Where we do find such improvements is in private business. And, in raising their performance to new levels, many of these companies have moved away from pay based on seniority to new compensation systems that more directly support their organizational strategies. Such compensation systems tend to incorporate two elements: 1) pay for acquiring new knowledge and skills; and 2) performance-based team, group, and organizational bonuses or stock options. Knowledge- and skills-based pay gives workers direct economic incentives to acquire the competencies they need to work successfully in a restructured environment. The group performance bonuses link pay to organizational results.

Likewise in education, a more strategic compensation structure would tie teacher pay to education reform goals and strategies. Years of experience and education units and degrees are at best indirect measures of the types of knowledge and skills teachers need to raise students to current performance standards. Furthermore, the traditional salary schedule has no element directly linked to raising student achievement, the main goal of education reform. The challenge, then, is to design compensation systems that provide direct incentives for teachers to improve the quality of their instruction and to raise student achievement. The following proposals suggest how teacher compensation can be aligned with current education policy while retaining the spirit of the single salary schedule—namely, that individuals with the same qualifications should earn the same salary.

Pay for Knowledge and Skills

Research in both education and the private sector has shown that designing an effective compensation system, one that encourages employees to work toward an organization’s goals, requires the involvement and support of employees and their leaders. If employees believe, for instance, that a new pay system either rewards or punishes them for outcomes over which they have no control, then it will engender only bitterness and lost productivity. My colleagues and I have helped to design new pay structures that have the benefit of being both effective and workable, having garnered the support of both school districts and the two national teachers unions.

These structures include two basic elements: pay based on knowledge and skills and group bonuses linked to school performance.

The knowledge- and skills-based element should constitute the largest share of an individual teacher’s salary. This pay structure seeks to enhance the professional expertise of teachers by rewarding them for meeting certain professional standards—with the expectation that meeting such standards will boost student achievement.

To create such a system, states and school districts must identify the knowledge and skills that a teacher needs in order to teach successfully. Then they need to create explicit standards for teacher performance that incorporate the elements they have identified. Such standards should be aligned with state and district standards for what students should know and be able to do.

Developing a system to measure the expertise and classroom practice of individual teachers against the performance standards is the next step. The assessment process should include peer as well as administrative review. Such a system requires teachers to perform to professional standards—or benchmarks—of practice, a hallmark of any real profession. To ensure the system’s integrity, the performance review process must be rigorous and reliable. Those involved in the review process, especially principals or their designees, need to be intensively trained in how to spot quality instruction when they see it—not a strength of many current school principals.

Neither states nor districts have to develop these standards and assessments from scratch. Nationally, four sets of teacher standards and assessments have been developed; states and districts can modify them for their own use. These standards have drawn on research on effective teaching and the actual practice of successful teachers.

Two sets of standards address the expertise of beginning teachers: the PRAXIS series from the Educational Testing Service and the INTASC standards and assessments from the Council of Chief State School Officers. A third set, the Framework for Teaching described in the 1996 yearbook of the Association for Supervision and Curriculum Development, covers teachers throughout their careers. The fourth set comes from the National Board for Professional Teaching Standards, which board certifies experienced, accomplished teachers in 30 different subject areas. Board certification for teachers is similar to board certification for doctors; it reflects advanced, specialized expertise.

Each set of standards requires teachers to know their subject matter, to understand how students learn that subject, and to be able to use effective curriculum programs and instructional strategies. They must also demonstrate effective classroom practice and conduct of broader professional activities, including parent outreach and communication.

About a quarter of the states have begun to use versions of the first two sets of standards in new, performance-based teacher licensing systems. Dozens of districts across the country use the third set to structure teacher evaluation, professional development, and, in some cases, salary schedules for new teachers. Numerous states and districts, collectively employing about half of all teachers, provide salary increases for experienced teachers who earn certification from the National Board.

More research needs to be conducted, both to improve the standards and to show that teachers who meet the standards also raise student achievement. But for now, the standards represent state-of-the-art research on what constitutes good teaching. And they exceed the substantive validity of most pay programs based on knowledge and skills in the private sector—where they are implemented with less evidence of their effects than they are in the education field.These new salary schedules provide incentives for teachers to learn what it takes to be successful in the classroom—for today’s tougher curriculum, higher student-performance standards, and more complex students.

Those involved in the review process need intensive training in how to spot good teaching—not a strength of many current school principals.

Pay for Performance

The second pay-for-performance element, school-based performance awards, gives salary bonuses to all teachers in a school when student achievement school-wide.

To create such programs, states and districts must identify the most important elements of student performance (usually academic achievement), measure them (usually with state tests), calculate change in performance on a school-by-school basis, and provide rewards to schools that meet or beat performance improvement targets—all of which must be backed by system supports that enable all schools to boost results.

Research on these programs in Kentucky, in Maryland, and in the Charlotte-Mecklenburg (North Carolina) and Dallas school districts has found that school-based award programs can help to boost student performance. Such programs seem to encourage teachers to focus their work efforts on the areas of student performance that are being measured—primarily the core academic areas of mathematics, science, social studies, and reading. In these programs, teachers valued monetary bonuses, but they also thought that the bonuses were too small (the average bonus per teacher was about $1,000 a year). Research in the private sector has found that in order to affect a worker’s motivation, annual bonuses need to be at least 5 to 8 percent of salary—about $2,000 for a typical teacher.

The question of how these two new pay elements differ from merit pay inevitably arises. First, under a pay structure based on knowledge and skills, all teachers can earn salary increases by acquiring new knowledge and skills. Second, a teacher’s eligibility for a salary increase is determined by demonstrated performance to clear standards—not a whimsical administrative decision. The standards make clear to both teachers and supervisors what is being evaluated, and scoring guides structure how data are accumulated to determine a teacher’s performance level. Both factors enhance the validity of the evaluation and its perceived fairness. Finally, an individual teacher’s eligibility for a bonus depends on school-wide performance gains, not just gains in individual classrooms. This matches the trend in the private sector, where workers are organized into teams and group awards are rapidly replacing individual merit pay programs.

Pay for Professionals

In restructuring teacher pay, we should not ignore both market realities and the specialized knowledge that only some teachers need. For instance, the existing teaching standards emphasize pedagogy more than content knowledge. But solid knowledge of content is crucial to good teaching at the secondary level, and for some teachers even at the elementary level. Therefore, teachers should receive extra pay for earning a master’s degree, but only in their license area (say, mathematics education) if not just in their content area (mathematics).

Furthermore, to alleviate intense teacher shortages in areas such as mathematics, science, technology, and special education, school districts should supplement the salaries of qualified teachers who possess expertise in these subjects. Without these supplements, teacher shortages will continue to develop, and teachers without content expertise will continue to be drafted to teach such courses, a practice that harms both students and teachers. Although pay differentials are still a contentious issue, such supplements are emerging in many collectively negotiated teacher contracts across the country.

Teachers at the pinnacle of the profession should also receive significantly higher salaries. Individuals who are service-oriented have many well-paying options in today’s service economy. Until expert teachers are paid like experts, education will continue to lose bright and able candidates to other professions. These higher salaries should be based on demonstrated teacher expertise at the highest professional levels, expertise that is linked to greater student learning. Expert teachers should assume significant school leadership positions as well, training and supervising more junior teachers.

Pensions for teachers should also be comparable with those available to private-sector professionals. Defined-benefit pensions, the norm for teachers, provide modest though assured retirement benefits. For the same price, pensions could be shifted to defined contributions, like private-sector 401(k) plans. Such a switch would probably double the financial payoff for teachers even if the pensions were invested in index funds. State budget surpluses could be used to cover transition costs and to ensure that teachers who have already retired receive their full benefits. This issue is just emerging on policy agendas. Any opposition is due largely to lack of information and concern about transition costs, similar to the skepticism surrounding proposals to invest a portion of Social Security funds in the market to improve long-term pension levels.

Teachers Sign On

To date, most states and districts have chosen an “add-on” approach to reforming teacher pay, retaining the traditional single salary schedule while providing stipends for some expertise, such as National Board certification, or extra pay for teachers in a shortage area. These are important but not dramatic changes in the way teachers are paid. However, the Cincinnati Public Schools (CPS) and the Vaughn Next Century Learning Center, a charter school in Los Angeles, have both embarked on bold experiments in reforming teacher pay.

The Cincinnati plan. The Cincinnati Federation of Teachers and the school district’s administration jointly designed a new teacher salary system that includes both a pay structure based on knowledge and skills and a bonus linked to school performance. The new pay scheme was the happy consequence of having a district devoted to improving the quality of its workforce and raising the level of student achievement and a reform-minded union with similar goals.

The knowledge-and-skills structure represents the most dramatic change. Effective during the 2002–03 school year, teachers will have five performance categories. To move to a higher category, and a higher salary, they will need to demonstrate a higher level of professional practice. In general, the standards require teachers to know the content to be taught, to understand how students learn that content, and to have developed effective curriculum and instructional strategies for teaching the content and successful classroom management strategies. Proficiency means that a teacher consistently meets these standards in everyday practice; it also means that a teacher knows whether each individual student is learning and what to do if any are not.

If a teacher fails to improve his practice enough to move to a higher category, then his salary will be capped at the highest salary that his current category allows. Teachers will have a fixed number of years to move out of the first two (the lowest) categories, or they lose their jobs. Thus, to remain in teaching, beginning teachers must enhance their professional practice to at least the third category, “proficient.” The proposed improvement schedule makes increasing one’s professional expertise serious business. But it also guides the process with explicit standards and expectations for teacher performance, and it supports teachers with professional development linked to the standards.

In a Consortium for Policy Research in Education (CPRE) study of the new evaluation system’s 1999–2000 pilot, 75 percent of teachers said the new teaching standards were valid descriptions of good teaching. But school principals varied widely in their implementation of the performance-based teacher evaluation system across the ten-school pilot, which raised questions about the system’s fairness. That’s why the Cincinnati district is taking the next two years to “perfect” the evaluation system, with intensive training for principals and peer assessors, before using the results to trigger pay levels.

Under the plan, Cincinnati teachers will also receive pay increases for acquiring National Board certification and master’s degrees, but only in the area of a teacher’s license. Teachers in shortage areas, such as science, or teachers who take on leadership roles, such as being a peer evaluator in the new teacher evaluation system, will receive pay supplements as well.

The school-based performance award program will provide $1,400 salary bonuses to the teachers and principal in a school that makes sufficient improvement each year. The district selected this amount to ensure that each teacher and administrator would receive a $1,000 check ($1,400 minus taxes) after learning that teachers in Charlotte-Mecklenburg were unhappy when a $1,000 bonus became only $600–$700 after taxes. A school’s performance will be measured by Ohio’s proficiency tests, and the improvement benchmarks will be linked to the performance goals of the district’s strategic plan. Schools that consistently fail to improve performance will be redesigned.

Vaughn Next Century Learning Center. Vaughn, a charter school in Los Angeles, enrolls about 1,200 students, nearly all of whom have limited English proficiency and are eligible for free or reduced-price lunches. In September 1998, the school began implementing an impressive new pay plan. The new salary schedule includes several pay elements based on knowledge and skills, contingency pay, and an award based on school performance. The school adopted a new salary schedule mainly because its dynamic principal was an innovator and thought a new salary structure would fulfill two purposes. First, the performance element would signal that improved student achievement was the school’s most important goal. Second, the knowledge-and-skills elements would provide a direct incentive for teachers to learn the skills and expertise needed to improve student performance.

To begin, the school pays for several specific skills and knowledge that it needs to make its instructional program work. In the 1999–2000 school year, it structured these pay elements into three tiers. In Tier 1, teachers could earn an additional $3,500: $1,300 for literacy expertise, $1,300 for ESL or language-development skills, $400 for technology skills, $300 for special-education inclusion experience, and $100 each for their classroom-management and lesson-planning skills. Three evaluators (self, peer, and administrator) assessed each area; an average score of 2.5 or higher on a four-point scale was required to earn the salary increase for each knowledge and skill area.

To reach Tier 2, a teacher needed a full California teacher license plus a score of 3.0 or higher in each Tier 1 area. Tier 2 then provided for a potential extra $5,600 in pay: $2,500 for experience in supporting English-language learners, $1,000 for math expertise, $800 each for science and social studies, and $500 for the arts. Teachers needed a score of at least 3.0 in each of these areas to earn the salary increment.

Finally, Tier 3 provided an additional $4,000 if the teacher’s average rating for all areas in Tiers 1 and 2 was greater than 3.5. Altogether, a teacher potentially could earn an extra $13,100.

The Cincinnati Plan
Under Cincinnati’s new knowledge- and skills-based pay plan, teachers will advance through five levels of professional achievement, earning salary increases based on performance.
  • Salary: $30,000
  • Teachers who fail to advance to Novice within two years are terminated
  • Salary: $32,000–$35,750
  • Must be rated 2 or better in all performance and skill categories (on a scale of 1–4)
  • Teachers who fail to advance to Career within five years are terminated
  • Salary: $38,750–$49,250
  • Must be rated 3 or better in all categories
  • Salary: $52,500–$55,000
  • Must be rated 4 in two categories
  • Salary: $60,000–$62,000
  • Must be rated 4 in all categories
The Vaughn Plan
Teachers at the Vaughn Next Century Learning Center, a charter school in Los Angeles, can earn an extra $13,100 by acquiring various skills and knowledge deemed critical to the school’s success.
TIER 1: Teachers who score at least a 2.5 in each category earn bonuses of:
  • $1,300 for literacy expertise
  • $1,300 for ESL or language development 2.5 in each skills
  • $400 for technology skills
  • $300 for special-education skills
  • $200 for classroom-management and lesson-planning skills
TIER 2: teachers who meet Tier 1’s requirements and hold a teacher license are eligible for:
  • $2,500 for supporting English-language learners
  • $1,000 for math expertise
  • $800 for science or social studies expertise
  • $500 for arts instruction
TIER 3: Teachers who average at least 3.5 in all categories earn:
  • $4,000 for being a distinguished teacher

A CPRE survey found that most teachers were motivated by the knowledge-and-skills pay amounts and that 75 percent of them wanted the program to continue.

Each teacher received an additional $1,500 if the school increased its performance on California’s student achievement tests. Small bonuses were also provided for taking on school leadership/managerial responsibilities and for helping to produce school-wide cost reductions. For instance, a bonus of up to $250 was available to each teacher for reducing expenditures for substitute teachers. In the future, the school hopes to institute such “gain-sharing” plans to reduce costs in other areas, such as building insurance and workers compensation. The CPRE survey found that 81 percent of Vaughn’s teachers thought it was fair to give bonuses to teachers when student learning rose; 84 percent said they were motivated by the bonus; and 79 percent said the bonus program should be continued.

These pay elements were in addition to a teacher’s base pay, some years of experience increases, and some credential-based pay. Starting salary in 1999–2000 was $31,500. For the next five years, an extra $1,000 is added each year to base pay if the teacher’s annual performance review is 2.0 or higher. A full California teaching credential earns an extra $1,000; a master’s degree, $2,000; National Board certification, $4,000.

Until expert teachers are paid like experts, education will continue to lose bright and able candidates to other professions.

The overall salary package provided more potential money than teachers would have earned through the Los Angeles school district’s salary schedule. All teachers earned the performance bonus for meeting their first year’s student performance improvement targets. Perhaps most important, nearly all teachers have opted into the new system. After all, teacher buy-in is an important aspect of any pay-for-performance plan, especially if such plans are recruiting tools for the next generation of teachers.

Pay plans based on knowledge and skills, together with awards based on school performance, can garner educator, union, and policymaker support for teacher salary structures that are appropriate to the 21st century. Such pay innovations should also boost student achievement and, because they are based on performance, strengthen the argument for dramatically raising teacher salaries—at least for those with the highest levels of professional expertise.

–Allan Odden is a professor of educational administration and codirector of the Consortium for Policy Research in Education at the University of Wisconsin–Madison.

Last Updated


Notify Me When Education Next

Posts a Big Story

Business + Editorial Office

Program on Education Policy and Governance
Harvard Kennedy School
79 JFK Street, Cambridge, MA 02138
Phone (617) 496-5488
Fax (617) 496-4428

For subscription service to the printed journal
Phone (617) 496-5488

Copyright © 2024 President & Fellows of Harvard College