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Teacher Compensation Remains a Challenge

November 2006

Tony Milanowski	Allan Odden

Between 50 and 75 percent of a district’s education budget is spent on teacher compensation. It makes sense for states and districts to ask how teacher pay can be leveraged to increase the excellence of instructional practice and deliver on our commitments to improved student achievement.

Well, how much is a teacher worth? It depends on what you mean by “a teacher.”

Do you mean an eighth-grade science teacher with a master’s degree and 5 years’ experience teaching in a low-income neighborhood where many students have special needs? Do you mean a 12th-grade language arts teacher with 20 years experience in an isolated rural district, and with lots of continuing education credits, who has taught summer school for the past five years? Should these teachers be compensated according to their longevity and highest degree attained, or by market value of their subject specialty? Or should they be compensated based on how well their students perform on standardized assessments?

Figuring out the best way to compensate K-12 teachers has occupied the best minds in education research for a long time. The system of paying teachers simply according to how long they’ve been on the job does not account for how effective they are, that is to say, how well their students achieve.

Each teacher is unique, and his or her strengths should be measured carefully, and rewarded appropriately, depending on the context, according to UW Madison education professor Allan Odden and colleagues.

Odden says compensation systems can be designed to reward teachers based on classroom performance. Such systems can improve instructional practice and produce higher levels of student learning. When compensation is brought into the teacher-quality agenda, Odden says, it makes the system take several things more seriously: teacher recruitment, selection, professional development, and evaluation. In most places, he adds, such forms of compensation also lead to higher levels of pay, thus producing better teachers, better-paid teachers, and higher-performing students.

But in many places the teacher compensation system is broken: teachers are not compensated fairly either by comparison to other teachers or by comparison to other degreed professionals.

The pay gap between teachers and other college educated workers has increased in the last 10 years. WCER researcher Tony Milanowski says the best research he has seen suggests teachers are paid about 12% less than other college occupations. Teachers with specialties in short supply, such as mathematics and science, for example, are paid no more than teachers in other disciplines. Some of the best and brightest undergraduates majoring in science and mathematics disciplines choose not to go into teaching because of relatively low pay. Some say they’d be much more likely to consider teaching as a career if it paid as much as jobs in the private sector. In a study for The Consortium for Policy Research in Education, Milanowski found that a salary level 45% above the local average would have attracted 48% of the sophomore survey respondents and 37% of the junior respondents to a career in K-12 teaching. (See story here.)

Pay scales based solely on a teacher’s seniority do not reward superior performance. And the relationship between teacher quality and years of teaching experience is weak or non-existent after teachers’ first five years, says UW Madison researcher Anthony Milanowski.

And although teachers must take continuing education courses, often in the summer, most single-salary pay schedules reward teachers for the number, and not the quality, of these credits.

There’s also an equity issue. In a June 2006 report the Education Trust found that school districts like Milwaukee and Chicago, with high percentages of low-income and minority students, are more likely to have teachers who are unqualified, inexperienced, and less talented academically. The study shows a direct connection between poor teacher quality and low student achievement. (Read a PDF of the report here.)

Proposed Solutions

New compensation strategies have been developed over the past several years in an attempt to connect teacher compensation to progress in student achievement.

“Pay for performance” plans aim to improve student learning and to reward teachers for their contribution to that learning. But “pay for performance” means a new focus on changing the conditions that make a difference for students and teachers.

Performance awards are based on either the performance of the individual teacher’s students or the performance of students under a group of teachers or school. But opponents of individual-based performance awards argue that current testing systems do not accurately assess student progress and create an inaccurate measure of teacher performance.

Some new pay systems attempt to provide incentives for engaging in professional development specifically related to school or district goals. Some systems aim to attract and retain effective teachers in low-income schools or other hard-to-staff schools or in high-need subject areas such as math and science.

Denver, Colorado’s ProComp program rewards teachers for achievement in four areas: helping to increase student achievement, developing professional knowledge and skills, receiving satisfactory evaluations, and filling special needs in schools or specific positions. Odden says ProComp’s success shows that voters are willing to back higher teacher pay if it promises to raise student achievement.

Skill-based or knowledge-based systems reward teachers for developing core competencies related to the teacher’s subject specialty, or that match the district’s overall teaching priorities. Research indicates that, at least in concept, teachers view these programs more favorably than early attempts at merit pay or career-ladder systems, and some districts with skill-based pay experience higher rates of retention of highly qualified teachers.

Challenges Remain

New compensation systems can cost more than traditional systems. Funding them can be difficult both in the short term and long term. In a study of the Cincinnati school system WCER’s Milanowski found that teachers did not think the district could afford the performance pay program, and thus did not believe it would continue. In Minneapolis teachers felt the state would discontinue funding their program, leading many eligible teachers not to participate. In California, the state set aside big money one year, but when the economy slowed, it dropped the program.

Funding has come from local tax increases and state appropriations. “The problem is that when economic downturns hit, politicians look at these programs as a place to cut,” Milanowski says. “But this happens in the private sector too: if profits go down, often less is available for performance pay. The difference is in the private sector better employee performance can often help to generate the money needed to pay for performance.”

Successful programs can become expensive as a high percentage of teachers qualify for higher salaries through skill development or higher performance. Milanowski says that although only a few programs have been around long enough to tell, that did happen in North Carolina.

In addition, those with vested interests in the status quo often oppose such changes. Successful compensation changes can’t be imposed from above or achieved by simply copying models from elsewhere. They need to be crafted based on local needs, organizational capabilities, and realistic financial projections. Depending on the level of support for the single salary schedule, districts and policymakers may find it politically difficult to implement any significant compensation reform. Milanowski estimates that about one-half to two-thirds of the programs he’s observed failed to get off the ground.

An eighth-grade science teacher with a master’s degree and 5 years’ experience teaching in a low-income neighborhood where many students have special needs brings much to the classroom and should be compensated well. A 12th-grade language arts teacher with 20 years experience in an isolated rural district, and with lots of continuing education credits, and who has taught summer school for the past five years should also be compensated well. But continuing to rely on a compensation formula that recognizes only longevity and continuing education credits does justice neither to the teachers, nor to their students.