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New study: Paying teachers bonuses can raise student achievement

A new study asserts that merit pay for teachers can improve student performance in math and reading and offers a cost-efficient option for districts to consider.

The seven-year, $13.9 million study by Mathematica Policy Research evaluated the federal Teacher Incentive Fund, which gave out $2 billion in grants for performance-based pay models designed to lure talented educators to high-needs schools. An in-depth review of the effectiveness of the grants was required by the American Recovery and Reinvestment Act.

The finding that merit pay boosted student outcomes -- albeit slightly -- departs from the conclusion of several past studies. The Mathematica study looked at both the implementation and impact of pay-for-performance across four years, 2011 to 2015.

The Mathematica study concludes:

Although the impacts of pay-for-performance were small, the costs of the bonuses were also low enough such that this policy was at least as cost-effective as some alternative policies that have been evaluated. Specifically, a cost-effectiveness analysis suggests that pay-for-performance was more cost-effective than class-size reduction (through four years of program implementation) and about as cost-effective as providing transfer incentives for high-performing teachers to move to low-performing schools (at the end of two years).

The researchers examined TIF grants in more than 130 districts. Districts that received TIF grants were large, more likely to be urban and in the South, and with a higher proportion of minorities and students eligible for free or reduced-price lunches. Ten districts participated in a random assignment study of the impact of pay-for-performance bonuses on educator effectiveness and student achievement.

Among the highlights of the 350-page report that I found interesting:

•Within the 10 evaluation districts, pay-for-performance led to slightly higher student achievement in reading and math by the second year of implementation.In both subjects, these differences were equivalent to about three to four weeks of learning

•All evaluation districts reported using observations and achievement growth to evaluate teachers, as required, and most used classroom achievement growth. More than half (60 to 70 percent) of the districts reported evaluating teachers based on classroom achievement growth. Within these districts, about 40 to 60 percent of teachers received classroom achievement growth ratings, typically because they taught grades and subjects tested by state assessments. All districts also used school achievement growth.

•Most teachers received similar performance ratings from one year to the next, with many teachers receiving higher ratings on classroom observations than on achievement growth.

•Most teachers and principals received a bonus, a finding inconsistent with making bonuses challenging to earn. The average bonus fell somewhat short of the guidance to make bonuses substantial. The structure of the bonuses was similar across all four years of TIF implementation. In each year, within schools that offered performance bonuses, most teachers (about 70 percent) received a bonus, and the average bonus was about $2,000. Bonuses were differentiated, with the highest-performing teachers earning bonuses significantly larger than the average bonus.

•The rationale behind pay-for-performance is that it can improve student achievement by enhancing educator effectiveness. In light of the positive impacts on student achievement, we examined whether pay-for-performance led to improved classroom practices in ways that were detected by trained observers and were related to higher student achievement. Pay-for-performance led teachers to earn slightly higher classroom observation ratings by the third year of implementation. Differences between the classroom observation ratings of teachers in treatment schools and those in control schools grew over the four years of implementation and became statistically significant by Year 3.

Here is part of the official summary:

Created by Congress in 2006, TIF was expanded and supported with ARRA funding in 2009. TIF's goals included reforming teacher and principal compensation to support rewards based on improved student performance; increasing the number of effective teachers teaching poor, minority, and disadvantaged students; and creating sustainable pay-for-performance systems. The 2015 reauthorization of the Elementary and Secondary Education Act renamed TIF the Teacher and School Leader Incentive Fund, continuing federal support for performance-based compensations systems in high-needs schools.

This study is evaluating these performance-based compensation systems to examine issues like the impact of pay-for-performance on student achievement and educator effectiveness, and helping to answer pressing policy questions about how the programs are designed, communicated, and implemented.

Key findings from this third report include:

Schools’ student achievement on standardized tests were higher by 1 to 2 percentile points in reading and math – the equivalent of about four weeks of additional learning – for schools that offered pay-for-performance bonuses, compared with ones that did not.

Most teachers (over 70%) received a bonus, suggesting that bonuses were not challenging to earn. Although the average bonus was about $1,800, the highest performing teachers received much larger bonuses, more than 3 times the average bonus.

Many teachers misunderstood whether they were eligible for performance bonuses or the amount they could earn. In the program’s third year, about 40 percent of teachers still did not understand they were eligible for a bonus. And teachers continued to underestimate the potential size of the bonuses, believing that the largest bonuses were only about two-fifths the size of the actual maximum bonuses awarded.


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About the Author

Maureen Downey has written editorials and opinion pieces about local, state and federal education policy since the 1990s.