e-Texas e-Texassmaller smarter faster governmentDecember, 2000
Carole Keeton Rylander
Texas Comptroller of Public Accounts

Recommendations of the Texas Comptroller

Chapter 6: Education

Attract High-Quality Teachers to the Classroom with Pay for Performance


Texas schools find it increasingly difficult to attract competent, dedicated teachers to their classrooms. Teacher pay scales in most Texas school districts still follow the state’s minimum teacher salary schedule, with no differentiation based on expertise, performance, or market demands. Some other states are testing alternative salary schedules and teacher career tracks to attract more and better-qualified candidates. Texas should establish similar pilots and assess which are the most effective in attracting good teachers.


Many Texas school districts face teacher shortages, particularly in high-demand fields such as math, science, bilingual education, and special education. In 1998-99, Texas had 63,000 vacant teacher positions, but only 21,900 persons were issued teaching certificates during the previous year.[1] Urban districts in particular find it hard to find and keep high-quality teachers.[2] High teacher turnover in many school districts creates instability and impedes planning.

Teacher quality, moreover, is one of the most important factors in student success.[3] Some observers have questioned the quality of the teaching offered in certain Texas schools, particularly those serving low-income communities with large percentages of children at risk of failure or dropping out.[4] These schools, of course, have the most urgent need for highly skilled and motivated teachers.

Merit and Performance Pay

Private and public organizations are moving away from pay scales based primarily on years of experience. Teacher salary scales in Texas and other states, however, usually still follow this formula.[5] Yet such pay schemes based almost exclusively on seniority are inappropriate for organizations facing a constant need to adapt and improve to keep pace with a rapidly changing environment—a characterization that certainly fits modern schools. Many companies are moving to pay systems that offer higher salaries for greater individual skills and excellent group performance. School finance experts Allan Odden and Lawrence Picus, among others, argue that similar pay systems for educators can produce better results than experience-based pay scales.

Odden and Picus have designed a teacher pay-for-performance system designed to meet the demands of school reforms, such as Texas’, that rely on statewide standards and school-based decision-making. Ideally, compensation systems in such an environment should be constructed to offer incentives in two broad categories. First, teachers should be rewarded for improving their own skills and gaining new knowledge and abilities. Second, such a system should include school-based performance incentives such as financial rewards to all educators at schools that demonstrate high levels of achievement or improved performance. Individual skills and knowledge that might increase a teacher’s pay could include the acquisition of advanced degrees, satisfactory performance evaluations, and “Master Teacher” status—a designation that allows the teacher to train and mentor other teachers. School-based rewards typically would go to schools demonstrating improvement or excellence in student achievement, dropout rates, absenteeism, graduation rates, and other measurable outcomes.[6]

Some states have implemented programs to attract teachers in high-demand fields, including pay-for-performance measures as well as other initiatives designed to make the jobs more attractive. Georgia has eliminated tenure for new hires, raised salaries for teachers in areas of critical need, and provided significant bonuses for high performance. Georgia’s pay-for-performance plan will provide bonuses of $1,000 to all certified personnel in a school that receives an ‘A’ under the state’s accountability system, and $500 to those in a school that receives a ‘B.’ Each school receiving an ‘A’ or ‘B’ receives a lump-sum payment of $10,000 or $5,000, respectively. The accountability system takes into account both absolute achievement and year-to-year improvements.[7]

Denver’s public schools have launched a four-year pilot pay-for-performance program that is partially funded by private donations, including a $1 million donation from the Rose Community Foundation. Under the pilot, 346 teachers from 12 district schools are given $500 bonuses for agreeing to participate in the program and can earn up to $1,000 in additional performance bonuses.[8]

The Dallas Independent School District (DISD) has had a performance award system in place since the 1991-92 school year. Bonuses of $1,000 are awarded to teachers and $500 to support staff in schools ranked at the top of the district’s School Effectiveness Index. This index is a value-added model, meaning that it measures academic improvement rather than absolute achievement. This feature gives teachers at schools that serve historically low-performing students the same opportunity to receive the bonuses as those at traditionally high-performing campuses. The district also has developed a Classroom Effectiveness Index to measure the effectiveness of individual teachers. This index, however, is used only for evaluation purposes and is not tied to compensation.[9]

Alternative Pay Scales

The Milken Family Foundation, a Santa Monica-based organization that researches and rewards effective teaching practices, has devised a salary system that offers teachers pay for performance, multiple career tracks, and the chance to earn relatively high salaries without moving into administration. If properly implemented, moreover, this scheme can be adopted within most existing budgets.[10] Called the Teacher Advancement Program (TAP), the proposal is based on five principles:

  1. Multiple career paths that allow teachers to advance without leaving the classroom;
  2. Market-driven compensation, in which teachers are paid based in part on the demand for their services, skills, and knowledge;
  3. Performance-based accountability, in which teacher pay is tied in part to student performance;
  4. Professional development; and
  5. “Expanding the supply of high-quality teachers.”[11]

Five Arizona schools implemented TAP pilots in Fall 2000, and South Carolina has announced plans to begin piloting such programs in Fall 2001.[12]

Various school districts and charter schools across the nation also have begun experimenting with pay scales that reward teachers who acquire certain skills and knowledge. Often, these salary increases are added to existing minimum salary scales that provide steady increases based on years of experience.

The Vaughn Next Century Learning Center, a charter school in Los Angeles, has developed a pay system incorporating a number of individual and school-based performance measures. Teachers’ base salaries are supplemented with additional pay for years of experience; various credentials; skills and knowledge specifically related to instructional programs; “contingency” elements, such as student attendance rates and parental involvement; “outcome-related” elements, such as improved schoolwide performance and awards for grade-level achievement goals; leadership or managerial skills; and reductions in operating costs.[13]

Teacher Pay in Texas

As already noted, Texas law establishes minimum teacher salaries that depend primarily on teachers’ years of experience.[14] The 1999 Legislature instituted an across-the-board $3,000 increase in minimum salaries and added a $5,000 stipend to be paid to teachers certified as master reading teachers who teach at high-need campuses.[15]

School districts are free to pay their teachers salaries above the minimum salary scale and state law does not prevent them from offering differential pay for teachers across different fields of expertise. Many districts now offer stipends to attract new teachers in high-demand areas such as math and science. Nonetheless, most school districts continue to base teacher pay on years of experience and do not offer higher pay for teachers with the skills most in demand.

Furthermore, Texas teachers generally are not paid based on classroom performance. The Texas Successful Schools Award System (TSSAS) does provide a limited system of rewards for schools that perform well under the state’s accountability system.[16] For the 2000-01 biennium, the Legislature appropriated $5 million for this program.[17] For the 1998-99 school year, 790 schools received awards averaging $2,531.[18] Schoolwide awards of this limited amount, however, provide little incentive for individual teachers.


Texas should establish pilot programs to test alternative teacher pay schedules.

The Texas Education Agency should award matching grants to help schools establish innovative teacher pay packages. The Legislature should appropriate $5 million annually, and the Commissioner of Education should actively seek donations to further increase the pool of funds available for grants. The commissioner should establish guidelines for awarding grants that encourage multiple pilot programs and give preference to schools with large numbers of economically disadvantaged students. All funded programs should include some form of merit or performance pay. The grants should match, dollar for dollar, money that schools are willing to contribute toward a pay-for-performance plan. Schools should be allowed to solicit private contributions to help pay for their portion of the program. Both traditional public schools and charter schools should be eligible for the grants. If the commissioner determines that a district or school is unable to allocate money for a pilot program, the commissioner may waive the local match requirement.

The commissioner should limit the grants to ensure that they are large enough to encourage schools to apply for them and to provide real performance incentives for teachers.

The Texas Education Agency (TEA) should administer the program. This duty would include reviewing grant applications, awarding grants, and monitoring recipients to ensure they implement the programs outlined in their grant applications. TEA also should conduct ongoing reviews of the pilot programs to determine which pay schemes are most effective in improving student performance, attracting quality teachers, and encouraging teachers to remain in the profession. TEA should report these findings to each session of the Texas Legislature.

Fiscal Impact

State funding for the grants should be capped at $5 million per year, or $10 million for each biennium, with the Commissioner of Education raising additional funds from private contributions. The grants would match money allocated by schools to alternative pay schedules. TEA should be able to administer the program and conduct reviews using existing resources.

Savings/(Cost) to the
General Revenue Fund


[1] State Board for Educator Certification, “Overview of Texas Teacher Supply, Demand, and Utilization,” Austin, Texas, February 4, 2000. (Press release.)

[2] The Council of Great City Schools, The Urban Teacher Challenge (Belmont, Massachusetts, 2000), p. 6.

[3] Center for the Study of Teaching and Policy, Teacher Quality and Student Achievement: A Review of State Policy Evidence, by Linda Darling-Hammond (Seattle, Washington, 1999), p. 36.

[4] “Teacher credentials, TAAS scores linked; UT study of Texas schools suggests certified teachers are key part of students’ test success,” Austin American Statesman (April 11, 1999), p. A1; and “A Question of School Equity; Certified-teacher shortage worse in Austin's low-income areas,” Austin American Statesman (May 9, 1999), p. A1.

[5] Southern Regional Education Board, Teacher Salaries and State Priorities for Education Quality – A Vital Link (Atlanta, Georgia, 2000), pp. 5-6.

[6] Allan Odden and Lawrence Picus, School Finance, A Policy Perspective (McGraw Hill: Boston, 1999), Ch. 11.

[7] Georgia Governor’s Office, “Summary of HB 1187” (Atlanta, Georgia, 2000) (http://ganet.org/governor/education/summary_tf.html). (Internet document.)

[8] “Merit-Pay Plan for Teachers Wraps Up Year,” Rocky Mountain News (June 21, 2000), p. 5A.

[9] Consortium for Policy Research in Education, A Case Study of the Dallas Public School School-Based Performance Award Program, by Bob Mendro, Ruben Olivarez, Maureen Peters, Tony Milanowski, Eileen Kellor and Allan Odden (Madison, Wisconsin, 1999) (http://www.wcer.wisc.edu/cpre/pdfs/Dallas%20SBPA%20case.pdf). (Internet document.)

[10] Milken Family Foundation, A Matter of Quality: A Strategy for Assuring the High Caliber of America’s Teachers, by Lowell Milken (Santa Monica, California, 2000), p. 21-6.

[11] Milken Family Foundation, “Teacher Advancement Program” (Santa Monica, California, 2000) (http://www.mff.org/tap/tap.taf). (Internet document.)

[12] Milken Family Foundation, “Five Arizona Schools to Implement TAP This Fall,” (Santa Monica, California, July 7, 2000) (http://www.mff.org/newsroom/news.taf?page=122). (Internet document.); and Heather Hare, “Program affects teacher’s role, pay,” Charleston Post and Courier (June 29, 2000) (http://www.mff.org/newsroom/news.taf?page=130). (Internet document.)

[13] Allan Odden and Lawrence Picus, School Finance, A Policy Perspective, pp. 423-425.

[14] V.T.C.A., Education Code, §21.402.

[15] V.T.C.A., Education Code, §21.410.

[16] V.T.C.A., Education Code, §39.092.

[17] Texas H.B. 1, 76th Leg., Reg. Sess. (1999).

[18] Texas Education Agency, “Texas Successful Schools Award System, Facts and Figures 1998-99” (Austin, Texas, 1999) (http://www.tea.state.tx.us/TSSAS/9899facts.html). (Internet document.)

e-Texas is an initiative of Carole Keeton Rylander, Texas Comptroller of Public Accounts
Post Office Box 13528, Capitol Station
Austin, Texas

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