1. 1 (c) 2008 The McGraw ‑ Hill Companies Redesigning Teacher Salary Structures School Finance: A Policy Perspective, 4e Chapter 12

2. 2 (c) 2008 The McGraw ‑ Hill Companies Redesigning Teacher Salary Structures 1.Changing the Way Teachers Are Paid 2.Elements of Teacher Salary Structures 3.Beginning and Average Pay Levels 4.Wage Premiums 5.Base Pay Progression Elements 6.A New Salary Structure Emphasizing Teachers’ Instructional Practice 7.Effective Processes for Designing and Implementing Teacher Pay Changes

3. 3 (c) 2008 The McGraw ‑ Hill Companies

4. 4

5. 5 Why Change the Teacher Salary Schedule? Changing the pay structure can help reinforce strategic goals of the organization Public support for paying teachers for merit or performance is high Proposals to change the way teachers are paid create headlines and are good politics for state and local policymakers

6. 6 (c) 2008 The McGraw ‑ Hill Companies Linking Teacher Pay Changes to Core Educational Goals To accomplish the goals of NCLB and state standards-based reform, the nation must: 1.Put a high-quality teacher in every classroom in the nation 2.Ensure that each teacher covers the state and district’s curriculum standards 3.Enhance the instructional practices used so that students learn content by thinking, problem solving and communicating it

7. 7 (c) 2008 The McGraw ‑ Hill Companies Linking Teacher Pay Changes to Core Educational Goals A pay structure linked to these goals needs: 1.An overall teacher salary level that would allow the state and each of its districts to compete for talent in the labor market 2.A higher salary level for urban and rural districts to compete for talent 3.Clear, ambitious but attainable student achievement goals that can be incorporated as an element of teacher compensation (NECAP? MCAS?) 4.An instructional vision to serve as a focus for professional development to improve teacher practice

8. 8 (c) 2008 The McGraw ‑ Hill Companies The Elements of Teacher Salary Structures Five critical elements of total compensation for teachers: 1.Base Pay 2.Variable Pay 3.Benefits (Health Ins, Pension Structure and Contributions, Sick Days, Pers Days, Prof Days) 4.Career Opportunity 5.Working Conditions

9. 9 (c) 2008 The McGraw ‑ Hill Companies The Elements of Teacher Salary Structures: Base Pay The monthly or biweekly paycheck (26 or 20) Includes three important components: 1.Beginning or starting pay 2.Base pay progression over time, mainly annual pay increases and automatic “steps” 3.Top pay – the highest salary a teacher can earn 4.Longevity stipends

10. 10 (c) 2008 The McGraw ‑ Hill Companies The Elements of Teacher Salary Structures: Variable Pay Almost always provided as a bonus Conditional on meeting performance targets Varies from year to year depending on whether performance targets are met Base pay plus variable pay equals total cash compensation

11. 11 (c) 2008 The McGraw ‑ Hill Companies Determining Adequate Beginning and Average Teacher Pay Levels Identify the salary benchmarks that would allow the state and local districts to compete for talent in the education labor market –Many states use the salaries in surrounding states as benchmarks –Some states use regional benchmarks –Others use the national average teacher salary

12. 12 (c) 2008 The McGraw ‑ Hill Companies Determining Adequate Beginning and Average Teacher Pay Levels It is also necessary to identify the salary benchmarks that would allow the state and local districts to compete for talent in the broader labor market –To do so, states must look at teacher salaries with respect to these other occupations and set benchmarks for average and beginning salaries

13. 13 (c) 2008 The McGraw ‑ Hill Companies Determining Adequate Beginning and Average Teacher Pay Levels States and districts must determine where in the market they want to compete –Many states in the past have set beginning salaries at the average salary of college graduates with liberal arts degrees ~$31,000 –A more appropriate target today might be the average salary for all college graduates ~$40,000

14. 14 (c) 2008 The McGraw ‑ Hill Companies Determining Adequate Beginning and Average Teacher Pay Levels Although some argue that adjustments to teacher salaries are necessary because teachers work 9 or 10 months of the year (and some say 5 or 6 hours per day), a study by Allegretto, Corcoran, and Mishel (2004) argues against it

15. 15 (c) 2008 The McGraw ‑ Hill Companies Teachers, Performance Pay, and Accountability What Education Should Learn From Other Sectors By Scott J. Adams, John S. Heywood & Richard Rothstein Preface by Daniel Koretz Series editors Sean P. Corcoran and Joydeep Roy May 2009 | An EPI book

16. 16 (c) 2008 The McGraw ‑ Hill Companies

17. 17 (c) 2008 The McGraw ‑ Hill Companies Scott Adams and John Heywood economists conduct one of the first systematic analyses of pay-for-performance practices in the private sector. contrary to the claims by advocates of teacher merit pay, “relatively few private-sector workers have pay that varies in a direct, formulaic way with their productivity, and that the share of such workers is probably declining.” chart compares the available data from 1976 and 1998 taken from a highly respected survey of U.S. workers, the Panel Study of Income Dynamics (PSID). Far from being widespread, the share of workers receiving bonuses, commissions, or piece rates ranges from about 1% to a maximum of about 12%.

18. 18 (c) 2008 The McGraw ‑ Hill Companies National Compensation Survey (NCS), National Longitudinal Survey of Youth (NLSY), Panel Study of Income Dynamics (PSID), and National Study of the Changing Workforce (NSCW). Caveat: “While none of these data sources are ideally suited for this task, the conclusions that emerge from their combined analysis are remarkably consistent:” 1. Pay tied directly to explicit measures of employee or group output is surprisingly rare in the private sector. For example, in the 2005 NCS, only 6% of private sector workers were awarded regular output-based payments. The incidence is even lower among professionals. 2. “Non production” bonuses, which are less explicitly tied to worker productivity, are common, and their use has grown over time. However, these bonuses represent only a very small share of overall compensation (the median share in the NCS and NLSY ranges from 2% to 3% of overall pay). 3. The incidence and growth of bonus pay is disproportionately concentrated in the finance, insurance, and real estate industries (true in the NCS, NLSY, and NSCW). Additionally, male and non-unionized workers are much more likely to receive performance-based pay.

19. 19 (c) 2008 The McGraw ‑ Hill Companies Wage Premiums When are wage premiums necessary? –In high-poverty/low-performing schools to ensure that students at these schools have high-quality teachers –For subject-area shortages such as math, science, technology and special education, a wage premium can help alleviate the problem –In urban districts that have trouble competing with surrounding districts –In rural districts that have trouble attracting teachers to their isolated locations

20. 20 (c) 2008 The McGraw ‑ Hill Companies Wage Premiums How large should wage premiums be? –Research suggests between 15 and 40 percent premiums for high-poverty/low-performing schools –For subject area shortages, the premiums paid around the country are generally small, ~$1,000-$2,000, and without much impact Study by Milanowski (2003) found that $5,000 was likely to have a more significant impact

21. 21 (c) 2008 The McGraw ‑ Hill Companies Wage Premiums Wage premiums should be coupled with an effectiveness criterion to ensure that the teachers they attract are effective –Such effectiveness criteria could include a major, minor, or a certain number of credits in the subject as well as a measure of instructional effectiveness

22. 22 (c) 2008 The McGraw ‑ Hill Companies Teacher Signing Bonuses Mass DOE

23. 23 (c) 2008 The McGraw ‑ Hill Companies Researcher: Teacher Signing Bonuses Miss Mark in Mass. PUBLISHED: FEBRUARY 21, 2001 By Debra Viadero WITH ONE-FIFTH OF THE RECIPIENTS LEAVING THE CLASSROOM AFTER ONE YEAR AND MANY OF THE REST HEADING FOR SUBURBAN SCHOOLS, MASSACHUSETTS' EFFORT TO LURE NEW TEACHERS WITH $20,000 SIGNING BONUSES IS FALLING SHORT OF THE MARK, SAYS A REPORT RELEASED LAST WEEK. "THE STATE'S NEW DOOR INTO TEACHING IS LOOKING MORE AND MORE LIKE A REVOLVING DOOR—A GOLD-PLATED REVOLVING DOOR," SAID AUTHOR R. CLARKE FOWLER, AN ASSOCIATE PROFESSOR OF EDUCATION AT SALEM STATE COLLEGE IN SALEM, MASS. "THIS APPROACH PROMISES NOT TO RESOLVE THE STATE'S COMING TEACHER SHORTAGE BUT TO AGGRAVATE AND EXTEND IT."

24. 24 (c) 2008 The McGraw ‑ Hill Companies Base Pay Progression Elements Redesigned structures often include these factors to provide base pay increases: 1.A major, minor, or master’s in the subject taught 2.Engagement in professional development 3.Years of experience 4.Implementation of a project designed to improve student performance 5.Knowledge and skills, or a high score on a performance assessment of teachers

25. 25 (c) 2008 The McGraw ‑ Hill Companies Knowledge- and Skills-Based Pay

26. 26 (c) 2008 The McGraw ‑ Hill Companies Bonuses Based on Improvements in Student Learning 1.What performance elements are included? 2.How will these elements be measured? 3.How are annual improvement targets set? 4.How can a level playing field be created? 5.Should bonuses be one-time, or added to base pay? 6.How large will the bonuses be? 7.Will the awards be on an individual or whole- school basis? 8.How should the program costs be estimated?

27. 27 (c) 2008 The McGraw ‑ Hill Companies Effective Processes for Designing and Implementing Pay Changes There are four major process steps: 1.Design 2.Implementation 3.Evaluation and change 4.Funding

28. 28 (c) 2008 The McGraw ‑ Hill Companies Effective Processes for Designing and Implementing Pay Changes All of these changes cost money –Many states finance them through either natural growth in general-fund revenues or tax increases Arizona passed a half-penny sales tax increase Denver passed a multi-million dollar increase by referendum