# U.S. Department of Education

# Policy and Program Studies Service

# Summary of Report

**Teacher Incentive Fund: First Implementation Report, 2006 and 2007 Grantees**

# Background

· **Purpose:**  This report is the first to examine the implementation of the 2006 and 2007 grants awarded under the Teacher Incentive Fund (TIF).    TIF was established by Congress in 2006 to change teachers’ and principals ’compensation by rewarding them for their performance, based primarily on increases in student achievement.  This report examines 16 2006 Cohort 1 and 18 2007 Cohort 2 grants.  Its main purpose is to describe how pay-for-performance was addressed in the initial cohorts on a variety of dimensions; the facilitators and barriers to implementation experienced by the grantees; perceived outcomes of the TIF project from the grantees’ perspective; and lessons learned from grantees’ experiences.

· **Central questions of report:**  This report answers three key questions:

# (1) What are the main characteristics or components of TIF performance pay plans in terms of strategies, targets and size of award ?

(2) What system supports (planning, communication, program and funding stability, adequate data systems, and alignment with other human resource policies) and broader contextual factors (stakeholder satisfaction) impede or enhance implementation of performance pay systems?

(3) Is a significant percentage of a district’s personnel budget used for performance pay?  In terms of the percentage of a district’s personnel budget that is used for performance pay, what evidence exists that performance pay systems are being established in the local grantee sites? What does this evidence indicate about prospects for sustainability beyond the life of the grant?

· **Design**:  Researchers analyzed extant data on the 34 Cohort 1 and Cohort 2 grantees’ individual projects by reviewing their proposals and annual performance reports. Additionally, researchers analyzed documentation about planned and existing local evaluations from the 20 grantees that submitted those evaluations to the Department.   Researchers conducted telephone interviews in spring 2010; as part of the interviews, researchers gathered the most recent payout data on teacher and principal awards.    Case studies of twelve TIF grantees (selected using a stratified random sample, where all grantees were assigned strata by grantee cohort, payment of awards based on teacher evaluations and prior experience with performance pay) provided additional qualitative data on grantee practices. 

**Results**

**Key findings organized by key questions:**

# (1) What are the main characteristics or components of TIF performance pay plans in terms of strategies, targets and size of award ?

· Grantees employed a combination of activities, supports and rewards to improve educator practice.

(1) **Two-thirds of grantees provided awards for student performance at the group or individual teacher level.**Six grantees rewarded teachers only at the school or group level, three grantees rewarded teachers only at the individual level, and another 21 rewarded teachers at both the group and individual levels. 

(2) **Sixteen of the 31 grantees that included teachers in their projects directly tied awards to measures of their teaching quality, typically assessed through classroom observations.**

(3) **The TIF authorizing legislation allows grantees to provide incentives for educators to work in hard-to-staff schools and subjects, but a minority of grantees chose to use funds in these ways.** Five grantees rewarded teachers for working in hard-to-staff schools, five grantees rewarded principals for working in such schools, and eight grantees rewarded teachers for teaching hard-to-staff subjects. 

(4) **Most grantees recognized the importance of providing teachers opportunities to learn how to improve their practices so they could earn an award.** Ten grantees offered teachers additional pay for participating in professional development, and 13 grantees provided teachers professional development in their schools through coaches, master and mentor teachers. 

(5) **In the majority of projects, almost all teachers and administrators received awards.**During the 2008-09 school year, grantees paid app**r**oximately $70 million in incentive awards to more than 20,000 educators (out of the total pool of****approximately 45,000 participants).****Eleven principal projects and seven teacher projects paid out less than two percent of an average salary, while 11 principal projects and 16 teacher projects paid six percent of salary on average.  Across grantees, the overall average award was large , but there was considerable variation in the size of the average participant award by grantee.  

(6) **Within grantees, the size of the award educators received varied based on their performance on various metrics.**For teachers, variation in student achievement was a major factor in determining the within-grantee difference in award size between low and high award winners in 15 grantees; in 16 other grantees, other activities or accomplishments (e.g., additional roles, hard to staff school or subjects, or multiple factors) drove the difference in teacher awards.   Although not considered as a differentiating factor, measures of teaching quality, typically assessed through classroom observations,  were tied to incentive awards in sixteen of the 31 grantees that included teachers in their projects.  Administrators at more than half of the grantees (18) received part of their performance pay based on the results of their job performance evaluations.

(2) What system supports (planning, communication, program and funding stability, adequate data systems, and alignment with other human resource policies) and broader contextual factors (stakeholder satisfaction) impede or enhance implementation of performance pay systems?

· Several factors affected project implementation across TIF grantees.   

(1) **Educators’ concerns about fairness of their performance pay systems were common, specifically with respect to understanding systems using value-added measures and to the accurate identification and payment of award recipients.**  For many grantees, communication about the program was a very difficult part of implementation. Nevertheless, educators reported that TIF promoted collaboration more often than it encouraged negative competition. 

(2) **Other factors guiding TIF implementation.**Projects that created structures through which teachers could both improve their practice, such as opportunities to become master or mentor teachers (intrinsic rewards) and effectively used signals created by financial awards (extrinsic rewards) to build educators’ investment in the improvement effort, appeared to have the greatest potential for better teaching and learning. 

(3) **Most grantees recognized the importance of providing teachers opportunities to learn how to improve their practices so they could earn an award.** Ten grantees offered teachers additional pay for participating in professional development, and 13 grantees provided teachers professional development in their schools through coaches, master and mentor teachers. 

(3) What are prospects for sustainability beyond the life of the grant?

· Performance pay projects had inherent financial challenges. 

Grantees exhibited a range of models of sustainability plans.  None adjusted base salary  for educators to accommodate performance pay (i.e., cuts in basic pay so that more money is left over for performance-based supplements); all offered increased financial compensation for award recipients. Since grantees received their initial TIF awards, budgets have declined. Budget cuts have made meeting the required match and ensuring sustainability even more challenging than when grantees made their initial proposals. 

· **Study time frame and reports:**  The study began in 2008 and will end in the fall of 2013.   

· **Contractor:**The study is being conducted by SRI International with the Urban Institute and Berkeley Policy Associates as subcontractors. 

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