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Paying Teachers for Performance
An Idea with Merit?

By Laurie Rowell / June 2009

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President Obama outlined his vision for education in May, calling for something that has long been a sticking point for educators: merit pay for teachers. It's a notion backed by a budget request for the Teacher Incentive Fund in the hundreds of millions of dollars.

Basing teachers' raises, salary grade, bonuses, or commissions on their performance—or that of their students—is a topic that sparks energetic debate. Those in favor, say it's reasonable to hold teachers to a high bar and to base compensation on some combination of professional milestones, assessments from students or peers, and possibly student performance on standardized tests. Many argue merit pay has a long history of working in the private sector and there is no reason not to use similar metrics to pay for what you want in education.

Those opposed say there is no clear-cut way to determine whether a teacher is performing well. In particular, they object to using student performance on standardized test scores as a metric, claiming they do not correlate on a one-to-one basis with a teacher's performance in the classroom.

Yet in his prepared remarks last month, the President did specifically address standardized test scores as a key indicator of the need for improvement in U.S. education. "The solution to low test scores is not lower standards—it's tougher, clearer standards," he said, suggesting the scores are a problem that requires direct attention.

But would offering teachers a bonus in the pay packet make for better student scores on these tests?

In 2000, Great Britain began implementation of a performance-related bonus model for teachers. When results were examined in 2004, in a study done at University of Bristol's Center for Market and Public Organisation, they showed that in fact among eligible teachers, the financial incentive did seem to result in an increase in test scores for all subjects except math on the GSCE, the test students take at age 16 to qualify for higher education.

In the US, professors David Figlio and Lawrence Kenny tackled the same issue in 2007 and came to similar conclusions. Figlio and Kenny found that among the 534 public and private schools to return their surveys, students in schools where teachers were awarded merit pay for better test scores earned a percentage point or two higher than students from schools that did not offer the financial incentive. The authors point out in the abstract that the study doesn't make clear whether teachers who are paid to improve the scores work harder to do it or whether better schools just offer the bonuses.

"We could only study the effects of merit pay in cross-section, so there might still be some third factor that explains both a school's performance and its likelihood of having merit pay," observes Professor Figlio, Orrington Lunt Professor of Education and social Policy at Northwestern University. "I prefer to think of our paper as indicating that it would be fruitful to have more experimentation with merit pay, rather than indicating that merit pay definitely works."

Standardized tests offer a handy quantitative, digital metric. "They tend to be highly related to other outcomes, like the likelihood of going to or graduating from college or adult wages," Figlio observes, "so they are a shorthand for a number of educational outcomes that we as society often care about."

But does their very simplicity constitute a system that begs to be gamed?

One often-urged argument in favor of merit pay for teachers is that the educational system should mirror what works well in the private sector, where pay for performance is successful. But Richard Rothstein, a research associate at the Washington-based Economic Policy Institute, takes issue with this view. "I have examples from both the public and the private sectors where there have been attempts to institute accountability systems based on quantitative measures alone, and they have resulted not only in gaming, but in distorting the goals of the institution and corruption of various kinds," he explains.

Rothstein, along with Scott J. Adams and John Heywood, is author of "Teachers Performance Pay and Accountability," an Economic Policy Institute report that details a fascinating array of pay-for-performance approaches that have not worked at all in private and government sectors, and discusses what similar approaches could mean to education.

"One example is health care," says Rothstein. "There have been attempts to rate physicians and hospitals based on the survival rate of cardiac surgery patients. What happens is that systematically the hospitals and the physicians turn away the sickest patients, operating only on those who are the most likely to survive, completely defeating the purpose of the accountability system."

In education the greatest hazard to a test-score-based merit pay system for teachers falls to those who struggle most.

"Children in special education do not perform well on standardized tests," says Pat Steinburg, President of Washington State Special Education Coalition (WSSEC), an alliance of advocacy, education, and resource organizations. She is concerned that special education teachers will be discouraged "because most merit pay schemes related to standardized assessments leave them out of the possibility of receiving merit pay."

Merit pay for excellence on test scores is not the only way that struggling students can be cut out of the educational loop. "Students who do not achieve sufficiently academically will be denied access to certain classrooms," Steinburg says. The result can be discrimination that limits access to choice subjects and special-interest courses. "This is not only an issue in a single classroom; it becomes a systems issue where students may not be accepted for transfer from one school to another because their test scores are not sufficiently high."

Christie Perkins, the WSSEC Public Policy Chair, adds that students who have Aspergers Syndrome, ADHD, dyslexia, or other disorders might be gifted engineers or scientists in the future, but do not do at all well on standardized tests. "Standardized tests were never able to show the talents of many of the gifted students I know and they are no way to measure the skills of an educator," she says.

But if a well-designed system will give us an accurate measure of accountability, experts differ in just how such a system ought to be designed. "Test scores alone will distort the accountability system," says Rothstein. "You have to visit schools and inspect them and make evaluations as to the quality of instruction," he explains. "Looking at student work, talking to students, rating the quality of the school climate, the discipline in the school—these are the ways to hold schools accountable."

Unfortunately, qualitative measures have their limits, too, as they run the risk of being subjective. Principals, peers, students, and outside observers are not free of bias. And say what you will about standardized tests, they are at least objective. And as Professor Figlio points out, "Educators pay a lot of attention to ratings, and so do households."

The question of merit pay for the teaching profession has been addressed by several countries over the past 20 years. Currently, a pay-for-performance model in Australia hit heavy pushback from teachers unions when it appeared it would be based on student test scores alone. But this year the unions there are supporting merit pay for "professional accomplishment and leadership," according to a Sydney Morning Herald article.

In Sweden, a comprehensive approach to performance-related pay was instituted in 1995. But last year a study that included teacher interviews, done by Ulf Lundström and presented to the European Educational Research Association, found that teachers were uncomfortable with a system that seemed arbitrary and did not appear to correlate with the work they were doing.

But if raising test scores for students is to be the primary motivation for offering merit pay bonuses, we might be offering financial incentives in the wrong quarter. The Learning Makes a Difference Foundation ran a pilot program last year at the Fulton County, Ga., school system that cut out the pedagogical middleman. The program paid students to attend tutoring sessions in math and science. "Half of the learn-and-earn students improved in both math and science while only 20 to 30 percent of the comparison group improved in those subjects," says the organization's press release. The write-up acknowledges that not everyone feels comfortable with the approach, but adds, "All of the students were excited about getting paid."

Performance-based pay for teachers has a long history of having been tried, then rejected. Supporters say it is because we haven't yet worked out the right metric to measure excellence.

Lundström, in his study of merit pay in Sweden suggests that the problem may be more fundamental. "Performance-related pay fits well into a context in which efficiency, quality assurance, and accountability are high on the agenda. It is an agenda in which learning, knowledge and values that are hard to measure, but often most important, are downgraded."

The topic of merit pay for teachers plays well on the political stage right now while the populace is concerned about the quality of public education and focused on the need to ensure measureable value for what the taxpayer spends. While the government, as an external oversight party, may not be the ideal rational designer for educational reform, they are already taking a hand at it. According to the National Education Association, 36 states already provide some kind of merit pay for teachers and the institution of a national Teacher Incentive Fund means there will be more on the way. If there is a proper approach to merit pay, we had better find out what it is.

About the Author
Laurie Rowell is a freelance writer in technology and education with a background teaching both in person and online.


  • Thu, 22 Oct 2009
    Post by Peggy Veary

    Merit pay would only fly if all students had identical families, identical abilities, identical neurological systems, identical neighborhoods, identical intellects, identical health strengths and problems - well, you get the idea! We are human beings, we are not clones! I am a special education teacher with 25 years in the classroom, which is remarkable when the average special educator turn-over rate is 3-5 years. Why do TPTB not understand such a simple argument? I am flabbergasted!

  • Fri, 12 Oct 2007
    Post by Patricia Schlicht

    Great supportive article. I am writing as a Wiki Neighbour, working for an international development agency in Canada, in the area of eLearning, among other things. Dr. Wayne Mackintosh is the ( of WikiEducator and commissioned the creation of the Wiki Newbie Tutorial. You are most welcome to use these, to learn how to work on the Wiki, maybe create your own site. Please refer to (Main Page at Warm regards, Patricia

  • Fri, 09 Mar 2007
    Post by Lisa Neal

    A friend sent me an article this morning from Associated Press: Wikipedia to writers: Prove your expertise - at I gues it isn''t any more surprising that Wikipedia authors would fabricate identities than anyone contributing to another type of site.