1. Teacher-Designed Incentive Pay in Texas A Presentation to the IES Research Conference by Lori L. Taylor

2. NATIONAL CENTER ON PERFORMANCE INCENTIVES A Presentation of Ongoing Research by the

3. Why is Incentive Pay Interesting?  Merit pay / Pay for performance is a popular school reform initiative –Denver public schools –New York City public schools –Houston ISD  Theory suggests that well designed incentive pay programs could improve school effectiveness

4. What Do We Know About Incentive Design?  Multiple prizes can be more effective than a single prize –Freeman and Gelber (2006), Harbring and Irlenbusch (2003), Vandegrift et al. (2007)  Individual incentives more effective than group incentives –Freeman and Gelber(2006), Nalbantian and Schotter (1997)  Group incentives more effective in at least some situations –Chillemi (2008), Encinosa, Gaynor and Rebitzer (2007), Lavy (2004)  Group and individual incentives equally effective –Muralidharan and Sundararaman (2006)

5. Incentive Pay Plans in Texas  Governor’s Educator Excellence Grants Program (GEEG) –$10 million per year in federal funding for high performing schools serving low income students –3-year commitment  Texas Educator Excellence Grant Program (TEEG) –$100 million per year in state funding for high performing schools serving low income students  District Awards for Teaching Excellence (DATE) –$147.5 million per year in state funding for any Texas district or independent charter school willing to provide matching funds

6. GEEG and TEEG

7. Program Guidelines  Participation was voluntary  Incentive plans must be developed and approved by a school-based committee with significant teacher participation –At least 3 teachers must write letters of support for the plan  Incentive plans must be approved by both the district and the local school board

8. GEEG Funding  Non-competitive, three-year grants to 99 schools –Third year of grants distributed fall 2008  $60,000 to $220,000 per year, based on fall enrollments in 2004-05 –Average award 5.1% of instructional payroll in 2005-06 –Awards range from 2.6% to 16.5% of instructional payroll

9. TEEG Funding  Non-competitive, one-year grants to 1,000+ schools  Three Cycles of funding –Cycle 1 eligibility based on 2004-05 –Cycle 2 eligibility based on 2005-06 –Cycle 3 eligibility based on 2006-07  $40,000 to $295,000 per year, based on fall enrollments in eligibility year

10. Two Parts to Funding  Part 1 funds (75%) provide incentive awards for full-time teachers  Part 2 funds (25%) provide incentive awards to other school personnel, or fund professional development, mentoring programs, new teacher induction, etcetera

11. Guidelines for Part 1 Incentives  Part 1 incentive awards must be based on –Success in improving student performance by objective measures, and –Collaboration with faculty and staff that contributes to improving overall student performance at the campus  Part 1 incentives can also be based on –Teachers’ on-going initiative, commitment, and professional involvement in activities that have a direct impact on student achievement, or –Assignment to a hard-to-staff subject area  Part 1 incentives should be at least $3,000 and no more than $10,000 per teacher

12. Guidelines for Part 2 Incentives  Part 2 funding may be given to any school personnel –Who did not receive Part 1 awards –Who contributed to improving student performance –Who were not athletic coaches  Part 2 funding may also be used for –professional development activities –signing bonuses –teacher mentoring programs –new teacher induction programs –funding for feeder campuses –any other program that directly contributes to improving student performance

13. The Schools

14. Who Was Eligible?  GEEG Schools in the top third with respect to the share of economically disadvantaged students –At least 81.3% for elementary schools –At least 70.5% for all grade schools –At least 65.4% for middle schools –At least 55.8% for high schools  TEEG schools in the top half

15. Student Demographics, 2005-06

16. Two Performance Criteria  High performing –Rated Recognized or Exemplary, or –High TAKS passing rates if it is a registered alternative education campus  High improving –In the top quartile of Comparable Improvement for math and reading  TEA tried for balance of high performing and high improving by grade level

17. Findings

18. The Proposed Distribution of GEEG Teacher Awards Source: GEEG applications submitted to TEA for 93 schools.

19. The Distribution of GEEG Awards

20. The Distribution of TEEG Awards

21. The Determinants of Individual Awards  Most teachers in GEEG and TEEG schools received an award  Newly-arrived teachers received significantly smaller awards  Teacher experience and educational attainment generally unrelated to teacher awards  Teachers in tested grades and subjects received larger awards

22. Hedonic Model of Teacher Turnover IndividualCharacteristics  Race and gender  Years of experience  Educational attainment  Coaching status  Certification status  Salary  Teaching assignment Market Characteristics  NCES CWI  Unemployment rate  School fixed effects Program Characteristics

23. Teacher Turnover in Texas

24. Individual Awards and Teacher Turnover  Teachers are presumed to know by the end of the school year whether or not they will receive an award the following fall, and if so, how much  Teachers who anticipate no award are much more likely to turnover  The probability of turnover falls as the size of the award increases

25. The Impact of Individual GEEG Awards on Teacher Turnover

26. The Impact of GEEG on Student Performance  Two-stage analysis strategy  First stage estimates school effects by year from individual student data –GEEG and nonGEEG schools –Math and reading test score gains –Within-transformed data  Second stage estimates the impact of program characteristics on school effects –GEEG schools only –Campus fixed effects –Student demographics and school resources

27. Findings on GEEG Student Performance  Only insignificant differences in student outcomes across incentive structures  Small number of schools in the GEEG program and noise in the outcome measures could be masking significant effects

28. The Impact of TEEG on Student Performance  Two estimation strategies –Individual student fixed effects –Regression discontinuity analysis  No evidence of systematic effects

29. Math Gain Score for “Acceptable” CI Elementaries

30. Conclusions  Program schools were already high performing  Teachers designed weak incentives  No evidence of impact on student performance  Assuming that award recipients were more effective in the classroom than non-recipients, GEEG and TEEG increased retention of teachers schools particularly wished to retain