The single salary schedule has ruled the delivery of teacher pay for decades, despite long-standing criticism that it fails to link some portion of teachers'pay to their performance. In recent years, there has been some experimentation with performance pay for teachers. Early attempts focused on the development of merit pay, in which pay raises were linked to subjective evaluations of teacher performance. Subsequent evaluations of merit pay plans questioned their effectiveness, especially given their limited survival, though it was acknowledged that the problem was not necessarily merit pay per se, but the way the plans were designed, implemented, and administered (Hatry, Greiner, & Ashford, 1994). Notwithstanding these unsuccessful experiences, national surveys have found that teacher attitudes toward some forms of performance pay are not unfavorable (Ballou, 2001; Ballou & Podgursky, 1993).
In the 1990s, other forms of performance pay began to emerge at the state and district levels. Notable were school-based performance awards and knowledge- and skill-based pay plans. Elements from these plans have now been incorporated into combined pay plans. And while none of these plans has been widely adopted, they have drawn intensive national scrutiny and study. This Policy Brief focuses on the nature and effectiveness of these plans. We first provide generic descriptions of three types of plans, followed by a synthesis of research results on their effectiveness. A set of guidelines for effective practice is then provided to help states and districts embarking on these forms of performance pay. We conclude with a look ahead at recent developments in performance pay plans and other deviations from the traditional teacher salary schedule.