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[Federal Register: May 21, 2010 (Volume 75, Number 98)]
[Rules and Regulations]               
[Page 28713-28739]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21my10-15]                         

[[Page 28713]]

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Part III

Department of Education

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34 CFR Subtitle B, Chapter II

Teacher Incentive Fund; Notice Inviting Applications for New Awards for 
Fiscal Year (FY) 2010; Rule and Notice

[[Page 28714]]

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DEPARTMENT OF EDUCATION

34 CFR Subtitle B, Chapter II

[Docket ID ED-2010-OESE-0001]
RIN 1810-AB08

 
Teacher Incentive Fund

Catalog of Federal Domestic Assistance (CFDA) Numbers: 84.385 and 
84.374.
AGENCY: Office of Elementary and Secondary Education, Department of 
Education.

ACTION: Notice of final priorities, requirements, definitions, and 
selection criteria.

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SUMMARY: The Secretary of Education (Secretary) establishes priorities, 
requirements, definitions, and selection criteria under the Teacher 
Incentive Fund (TIF) program. These priorities, requirements, 
definitions, and selection criteria will be used in two separate and 
distinct TIF grant competitions: The Main TIF competition, which will 
provide TIF funding to eligible entities to support their 
implementation of a performance-based compensation system (PBCS) in 
accordance with the priorities, the Main TIF competition requirements, 
the definitions, and the selection criteria established in this 
document; and the TIF Evaluation competition, which will provide, in 
accordance with the priorities, the Main TIF competition requirements, 
the definitions, and the selection criteria, as well as the Evaluation 
requirements established in this document, TIF funding to help pay the 
costs of implementing the eligible entity's PBCS in exchange for an 
agreement to participate in the national evaluation. The Secretary may 
use these TIF priorities, requirements, definitions, and selection 
criteria in fiscal year (FY) 2010 and subsequent years. We intend the 
priorities, requirements, definitions, and selection criteria announced 
in this document to help improve student achievement (as defined in 
this document) in high-need schools (as defined in this document) and 
provide incentives for effective teachers, principals, and other 
personnel (in those sites in which the grantee wishes to expand the 
PBCS to additional staff in its schools) in these schools to take on 
additional responsibilities and leadership roles.

DATES: These priorities, requirements, definitions, and selection 
criteria are effective July 6, 2010.

FOR FURTHER INFORMATION CONTACT: April Lee, Telephone: (202) 205-5224; 
or by e-mail: TIF@ed.gov; or by mail: (Attention: Teacher Incentive 
Fund), U.S. Department of Education, 400 Maryland Avenue, SW., Room 
3E120, Washington, DC 20202.

SUPPLEMENTARY INFORMATION: 
    Purpose of Program: The purpose of the TIF program is to support 
projects that develop and implement PBCSs for teachers, principals, and 
other personnel in order to increase educator effectiveness and student 
achievement (as defined in this notice), measured in significant part 
by student growth (as defined in this notice), in high-need schools (as 
defined in this notice).
    Program Authority: The Departments of Labor, Health and Human 
Services, and Education, and Related Agencies Appropriations Act, 2008, 
Division G, Title III, Public Law 110-161; Departments of Labor, Health 
and Human Services, and Education, and Related Agencies Appropriations 
Act, 2010, Division D, Title III, Public Law 111-117; and the American 
Recovery and Reinvestment Act of 2009, Division A, Title VIII, Public 
Law 111-5.
    Background: Signed into law by President Obama on February 17, 
2009, the American Recovery and Reinvestment Act of 2009 (ARRA) 
constitutes an unprecedented effort to revive the Nation's economy, 
create and save millions of jobs, and address long-neglected challenges 
so the Nation can thrive in the 21st century.
    In addition to measures that modernize the Nation's infrastructure, 
enhance energy independence, preserve and improve affordable health 
care, provide tax relief, and protect those in greatest need, the ARRA 
provides an unprecedented sum--approximately $100 billion dollars--to 
fundamentally transform our public education system.
    Section 14005(d) of the ARRA requires that this funding be used to 
promote effective school reform in four assurance areas: (1) Adopting 
internationally benchmarked standards and assessments that prepare 
students for success in college and the workplace; (2) Building data 
systems that measure student success and inform teachers and principals 
in how they can improve their practices; (3) Increasing teacher 
effectiveness and achieving equity in teacher distribution; and (4) 
Turning around our lowest-achieving schools.
    The ARRA's second and third assurances are based on evidence that 
teachers are the single most critical in-school factor in improving 
student achievement. In addition, the ARRA recognizes the contribution 
a principal makes toward running an effective school. However, too many 
students, particularly those attending high-need schools, are provided 
instruction by unqualified or ineffective teachers. Accordingly, the 
ARRA requires the Department to promote efforts that ensure an 
equitable distribution of effective teachers between high- and low-
poverty schools so that economically disadvantaged students have the 
same access to effective teachers as other students.
    TIF is one such effort that advances the ARRA's third assurance of 
recruiting, developing, and retaining effective teachers. To meet this 
assurance, Congress appropriated an additional $200 million dollars of 
funding for the TIF program.
    The Department plans, to the extent feasible and appropriate, to 
align TIF with the requirements of other ARRA programs, including the 
State Fiscal Stabilization Fund, Race to the Top, and Title I School 
Improvement Grants. The Department's intention in doing so is to 
maximize the efficient use of resources and encourage applicants to 
develop plans for evaluating educator effectiveness and for providing 
educators the useful feedback and professional development needed to 
improve classroom practice and student achievement that complement, and 
are consistent with, plans developed across other ARRA programs.
    Along with appropriating TIF funds to be used to support projects 
that implement PBCSs, the ARRA also requires the Department to use some 
of the appropriated funds to conduct a ``rigorous national evaluation * 
* * utilizing randomized controlled methodology to the extent feasible, 
that assesses the impact of performance-based teacher and principal 
compensation systems supported by the funds provided in this Act on 
teacher and principal recruitment and retention in high-need schools 
and subjects.'' The ARRA thus requires the Department to award funds in 
a way that will ensure adequate participation of both a treatment group 
and control group in the national evaluation. The TIF Evaluation 
competition is designed to permit the Department to meet this 
responsibility and, at the same time, to seek answers to research 
questions about the effect of PBCSs on student achievement in high-need 
schools that are of great importance to those who would implement such 
systems.
    The Department published a notice of proposed priorities, 
requirements, definitions, and selection criteria (NPP) for this 
program in the Federal Register on February 26, 2010 (75 FR 8854). That 
notice contained background information and our reasons for proposing 
the particular priorities,

[[Page 28715]]

requirements, definitions, and selection criteria.
    Public Comment: We received comments on the NPP from 40 commenters, 
including State educational agencies (SEAs), local educational agencies 
(LEAs), nonprofit organizations, teachers' unions, universities, 
professional associations, parents, and other public citizens. We used 
these comments to revise, improve, and clarify the priorities, 
requirements, definitions, and selection criteria.

Major Changes in the Final Priorities, Requirements, Definitions, and 
Selection Criteria

    In addition to minor technical and editorial changes, there are 
several substantive differences between the priorities, requirements, 
definitions, and selection criteria proposed in the NPP and the final 
priorities, requirements, definitions, and selection criteria that we 
establish in this notice. Those substantive changes are summarized in 
this section and discussed in greater detail in the Analysis of 
Comments and Changes that follows. We do not discuss minor technical or 
editorial changes, nor do we address comments that suggested changes 
that we are not authorized to make under the law.

Priorities

    We are making the following changes to the priorities for this 
program:
     In clause (b) of absolute priority 1 (Differentiated 
Levels of Compensation for Effective Teachers and Principals), we have 
clarified the need for observation-based assessments of both teachers 
and principals as part of the evaluation system used to support a TIF-
funded PBCS. This change is in response to a recommendation from a 
commenter to amend proposed priority 1 to be consistent with core 
element (c), which requires classroom observations of teachers and 
principals at least twice during the school year.
     In competitive preference priority 4 (Use of Value-Added 
Measures of Student Achievement), we have changed the language to read: 
``Clearly explain the chosen value-added model to teachers to enable 
them to use the data generated through the model to improve classroom 
practices.'' This change was made in response to a commenter's request 
to provide clarification as to whether applicants could meet this 
priority by using value-added models only, or whether they also must 
provide feedback to teachers aimed at improving instruction.
     We have added a new competitive preference priority 6 to 
address the issue regarding whether current TIF grantees would be 
restricted from applying for TIF funds. Under this new competitive 
preference priority, the following applicants can receive additional 
points: Nonprofit organizations that are current TIF grantees that 
propose to work with a new eligible scope of SEAs and LEAs, and those 
applicants that do not already have a TIF grant in place. This 
competitive preference priority is titled Competitive Preference 
Priority 6--New Applicants to the Teacher Incentive Fund. Please see 
the Final Priorities section of this notice for the full language of 
this new competitive preference priority.

Requirements

    We are making the following changes to the requirements for this 
program:
     The NPP stated that ``[a]lthough [the applicable statutes] 
provide that Federal TIF funds may support PBCSs only for teachers and 
principals, grantees may extend their PBCSs to additional school 
personnel by using non-TIF funds to pay for additional compensation for 
non-instructional personnel.'' 75 FR 8856. Under the Department's FY 
2010 Appropriations Act, Congress authorized FY 2010 TIF funds to be 
used for PBCSs for teachers, principals, and other school personnel. 
Therefore, while requiring TIF-supported PBCSs to extend to both 
teachers and principals, we have revised the requirements to permit 
applicants to propose the use of TIF funds to support PBCSs that also 
benefit such other school personnel as the applicants may identify. 
(This change does not otherwise affect the program's priorities, 
requirements, or selection criteria as proposed in the NPP.)
     For both the Main TIF competition and the TIF Evaluation 
competition, the proposed Additional Eligibility Requirement that would 
have precluded applications that proposed to implement their PBCSs in 
schools currently served by a TIF grant award has been revised to 
permit applicants who are already TIF grantees to propose expansion of 
their existing PBCSs to cover new categories of staff in schools 
currently served by TIF funding. Thus, for example, current TIF 
grantees whose projects focus only on principals could seek TIF funding 
to expand their PBCSs to teachers and other personnel (in those sites 
in which the grantee wishes to expand the PBCS to additional staff in 
its schools) as well.
     In paragraph (d) of the Core Elements, we have added a 
footnote to remind applicants that data systems that link teacher and 
principal incentives based on student growth (as defined in this 
notice) must comply with any applicable requirements under both the 
Family Educational Rights and Privacy Act (FERPA) and State and local 
privacy laws. This change was made in response to two commenters who 
urged the Department to ensure that the data management systems 
required by paragraph (d) of the Core Elements protect privacy of 
students and educators.
     Under the TIF Evaluation Competition Requirements, a new 
design that incorporates a 1 percent across-the-board bonus has been 
selected for the control schools. The requirement to provide a match 
that would have been required if Comparison Design 2 was selected has 
been eliminated.
     We have added a Local Evaluation requirement. The new 
requirement clarifies (1) that, in order to be eligible to receive 
points under the Quality of Local Evaluation selection criterion, 
applicants must include a description of their local evaluation in 
their application although it will not be considered when ranking 
applicants under the TIF Evaluation competition, and (2) that 
applicants selected under the TIF Evaluation competition will not be 
required to conduct the local evaluation they propose in response to 
the selection criterion. This was in response to three commenters who 
expressed concern that some applicants might mistakenly believe that 
applying for the TIF Evaluation competition obviates the need to 
address the Quality of Local Evaluation criterion.
     We have clarified that the Department will waive the 
Advance Notice requirement under the TIF Evaluation competition for any 
applicant that is eligible to implement its PBCS in school year 2010-11 
(i.e., for applicants that meet the five core requirements) so long as 
the program is implemented according to the evaluator's assigned group 
status. (Note: The evaluator will be ready to assign group status 
immediately upon grant award.) We made this change in response to a 
commenter who expressed concern that, depending on when FY 2010 TIF 
grants are awarded, applicants might not be able to provide the two 
months notice to teachers and principals involved in the evaluation, as 
required under the proposed Advance Notice requirement.
     Under the Evaluation Competition requirements, the 
eligibility requirement was broadened to include consortia and 
intermediary units that have centralized coordination of data and that 
could meet the minimum requirement of 8 schools in grades 3 through 8.

[[Page 28716]]

Definitions

    We have made no changes to the proposed definitions.

Selection Criteria

    We have made the following change to the selection criteria for 
this program:
     We have added new sub-criterion to the Project Design 
selection criterion that concerns the extent to which an applicant 
provides a clear definition of how teachers, principals and other 
personnel (in those sites in which the grantee wishes to expand the 
PBCS to additional staff in its schools) are determined to be 
``effective'' for the purposes of the proposed PBCS. We have added this 
sub-criterion because our proposed criterion would have had applicants 
address how effectiveness would be determined but had neglected to have 
reviewers examine the actual definition of teacher and principal 
effectiveness applicants would use.

Analysis of Comments and Changes

    An analysis of the comments received on, and any changes to, the 
priorities, requirements, definitions, and selection criteria since 
publication of the NPP for this program follows.

    Note about general comments: We received many comments 
expressing general support or making general recommendations for 
this program. In most cases, these comments were effectively 
duplicated by other comments expressing support or making specific 
recommendations for the program's proposed priorities, requirements, 
definitions, or selection criteria, which we discuss in the sections 
that follow. We accordingly do not discuss those general comments 
here. In other cases, we interpreted a general comment as applying 
to a specific priority, requirement, definition, or selection 
criterion. We address the comment in the discussion that relates to 
the relevant priority, requirement, definition, or selection 
criterion.

    Note about comments on program issues not covered in the NPP: We 
received a number of comments relating to program issues that were 
not proposed for public comment in the NPP for this program. These 
issues include: specific funding ranges or award amounts for the 
grant categories, the number of grant awards, uses of funds, length 
of grant periods, and technical assistance for applicants. We do not 
address comments on these issues here. We note, however, that 
information on these issues will be made available through other 
Department documents, including the notice inviting applications for 
this program.

General Comments

    Comment: Several commenters expressed strong support for the TIF 
program, as outlined in the NPP, both for the overall effort to improve 
recruitment, development, and retention of effective teachers and for 
specific components of the NPP, such as encouraging the use of value-
added models as part of teacher evaluation systems and allowing 
planning periods for grantees.
    Discussion: The Department appreciates the support of these 
commenters for the priorities, requirements, definitions, and selection 
criteria proposed in the NPP.
    Changes: None.
    Comment: Several commenters expressed concern that the NPP relied 
excessively on indicators of student achievement and student growth as 
meaningful predictive measures of teacher and principal effectiveness. 
These commenters cited research that cautions against the use of 
student test scores to predict future teacher performance and that 
discourages the use of assessment results for purposes for which they 
have not been validated. One commenter also objected to the 
Department's statement in the NPP that studies using value-added 
assessments indicate that individual teachers make a significant 
difference in student achievement, claiming that this statement was 
``an inaccurate summation of the research'' on the use of value-added 
models to estimate individual teacher impact on student performance. 
Other commenters asserted that assessment data do not reflect other 
essential aspects of teacher performance, such as planning and 
preparation, the classroom environment, instructional methods, and 
other professional duties. In addition, two commenters claimed that the 
NPP ignored research and survey data showing that ``nearly all 
teachers'' would prefer supportive leadership and collaborative working 
environments to monetary rewards. These commenters noted that requiring 
payments ``substantial enough'' to change teacher behavior may be 
ineffective if leadership, climate, and other supports are lacking.
    Discussion: As noted in the NPP, the Department believes that 
student achievement (as defined in this notice) and student growth (as 
defined in this notice) data are meaningful measures of teacher and 
principal effectiveness, and, therefore, should be a significant factor 
in the PBCSs funded by the TIF program as part of rigorous, 
transparent, and fair evaluation systems that include multiple 
measures. The Department's citation of research showing that value-
added assessments can be used to demonstrate that individual teachers 
make a significant difference in student achievement was not intended 
to summarize all available research on the use of value-added models to 
measure teacher performance. Rather the citation was included in the 
NPP to emphasize research supporting the central premises of the TIF 
program: That since we know good teachers matter, it makes sense for 
compensation to take into account effectiveness, as measured by growth 
(as defined in this notice) in student achievement (as defined in this 
notice), and to offer financial incentives to encourage the most 
effective teachers to work in high-need schools. In addition, Congress 
has authorized and appropriated funding for the TIF program 
specifically to support the development and use of PBCSs that consider 
growth (as defined in this notice) in student achievement (as defined 
in this notice), among other factors. Thus, requiring growth (as 
defined in this notice) in student achievement (as defined in this 
notice) to be a significant factor in any PBCS supported with TIF funds 
is wholly consistent with the statutory authority for the TIF program.
    Moreover, this final notice, like the NPP, heeds the conclusion of 
much of the research cited by commenters that student achievement, no 
matter how it is measured, should not be the sole basis for making 
consequential decisions about teachers. In particular, this final 
notice retains the proposed requirement for at least two observation-
based assessments of teacher performance in TIF projects, while 
permitting an applicant to include other measures of its own choosing. 
This flexibility allows applicants to take into account other measures 
of teacher effectiveness and performance when developing teacher 
evaluation systems for use as part of their PBCSs. In addition, the 
final notice retains the emphasis on the need for each applicant to 
demonstrate that its PBCS is part of a coherent and integrated approach 
to strengthening the educator workforce, which may include efforts to 
improve school climate, create collaborative environments, and other 
support for teachers, as recommended by the commenters.
    Changes: None.
    Comment: Two commenters stated that the standard of reliability and 
validity for any teacher evaluation system must be higher when the 
results are used for high-stakes compensation, tenure, and termination 
decisions than when the results are used simply to identify and meet 
professional development needs. Another commenter recommended that the 
Department require multiple measures of teacher performance.

[[Page 28717]]

    Discussion: The Department agrees that the teacher and principal 
evaluation systems used by TIF grantees as part of their PBCSs must be 
rigorous, transparent, and fair, in part through the use of multiple 
measures of performance. The Department believes that this goal was 
fully reflected in the NPP and has been retained in this final notice. 
For example, priority 1 requires LEAs to use a combination of student 
achievement (as defined in this notice), classroom observation, and 
other measures of the LEA's choosing to evaluate teacher and principal 
effectiveness. Priority 2 requires evidence that the proposed PBCS is 
aligned with a coherent and integrated strategy for strengthening the 
educator workforce, including the use of data and evaluations for 
professional development, retention, and tenure decisions. The core 
elements that all applicants must put into place before beginning to 
make incentive payments are specifically intended to ensure that 
teachers and principals are involved in developing a PBCS and 
understand how it works, that evaluation systems include objectively 
collected data on classroom performance, and that applicant data 
systems are sufficiently robust to accurately link student achievement 
(as defined in this notice) data to individual teachers and human 
resources systems. The Department believes that these priorities and 
requirements, collectively, will ensure that TIF grantees implement a 
PBCS that meets the higher standard of reliability and validity for 
teacher evaluation systems called for by the commenters.
    Changes: None.
    Comment: One commenter expressed the view that increasing funding 
for education, including for programs to support teachers, is not 
likely to improve the overall quality of our education system. 
According to this commenter, spending has increased dramatically since 
the 1960s, but test scores have not improved. The commenter also stated 
that teachers need respect and support from parents and administrators.
    Discussion: The Department believes that increased resources for 
education, effectively used, will improve the quality of our education 
system. However, the TIF program is focused on improving the efficacy 
of existing State and local education resources by encouraging LEAs and 
other applicants to use a greater proportion of those resources to 
reward effective teaching and school leadership and provide new 
incentives for our best teachers and principals to work in our most 
challenging schools. The Department believes that one of the best ways 
to demonstrate respect and increase support for teachers and principals 
is to increase the compensation of those who demonstrate effectiveness, 
in particular, by raising student achievement (as defined in this 
notice).
    Changes: None.
    Comment: One commenter cautioned that while teacher evaluation is 
an essential component of a PBCS, effective teachers cannot be measured 
by test scores alone. Two other commenters emphasized the importance of 
collaborative partnerships of union leaders and administrators in the 
development of a successful PBCS, while another added that such 
collaboration is more important than the use of test scores. Other 
commenters asserted that changing the Nation's education system to 
improve teaching and learning requires more than just changes in 
compensation; they argued that it also requires professional teaching 
standards, standards for teaching and learning conditions, and 
standards for professional development.
    Discussion: The Department agrees that effective teachers cannot be 
measured by test scores alone. The final requirements for this program, 
like those in the NPP, do not provide otherwise. Rather, as required by 
the program's authorizing legislation, a PBCS must include the use of 
student achievement (as defined in this notice) data, classroom 
observations, and other measures selected by the grantee. Moreover, 
paragraph (c) of the Core Elements requires ``the involvement and 
support of unions in participating LEAs where they are the designated 
exclusive representatives for the purpose of collective bargaining that 
is needed to carry out the grant.'' Finally, the Professional 
Development requirement provides that applicants must demonstrate that 
their PBCSs include high-quality professional development targeted to 
needs identified through an evaluation system. We, therefore, believe 
that the final notice adequately addresses the commenters' concerns.
    Changes: None.
    Comment: One commenter urged the Department to make publicly 
available all successful grant applications so that these applications 
can serve as templates for future applicants and promote the sharing of 
promising practices.
    Discussion: The Department agrees with this commenter, and will 
post all successful TIF applications, for both the Main TIF competition 
and TIF Evaluation competitions, on its Web site at www.ed.gov.
    Changes: None.
    Comment: Two commenters asked for clarification as to whether the 
PBCSs required by the NPP must include both teachers and principals.
    Discussion: The Department interprets the program's authorizing 
legislation as requiring each PBCS supported with TIF funds to cover 
both teachers and principals in high-need schools. However, this does 
not mean that TIF funds must be used to pay performance-based 
compensation to both teachers and principals. If an LEA's PBCS already 
provides compensation to either teachers or principals, the LEA may 
implement a TIF project that would benefit the other group, provided 
that the PBCS, as a whole, covers both groups of educators for the 
duration of the TIF project period.
    Thus, in response to this commenter's question, the Department has 
revised the Additional Eligibility Requirement to extend eligibility to 
those applicants that have current PBCSs in their States or LEAs 
(including charter school LEAs), but currently provide performance-
based compensation either only to principals or only to teachers. The 
requirement now allows an applicant to propose to expand an existing 
PBCS to cover teachers or principals who are not currently being served 
through the PBCS provided that TIF funds are used to expand the 
coverage of existing projects only in high-need schools (as defined in 
this notice). An applicant creating an entirely new PBCS must apply to 
use TIF funds to develop and implement a PBCS for both teachers and 
principals, as required by absolute priority 1.
    Changes: The Additional Eligibility Requirement has been revised to 
allow applicants that are current TIF grantees with principal- or 
teacher-only projects to expand their current PBCSs to those teachers 
or principals who work in high-need schools (as defined in this notice) 
and who are not currently being served through the PBCS currently in 
place. If funded under the new competition, the PBCS for both teachers 
and principals must remain in place for the duration of the TIF 
project.
    Comment: One commenter recommended adding a definition of the term 
``teacher'' to the final notice, while two other commenters suggested 
clarifying that, under the TIF program, ``teachers and principals'' 
include other staff such as instructional specialists, counselors, 
librarians and media specialists, and assistant principals.
    Discussion: As in prior TIF competitions, the Department interprets 
the term ``teacher'' to include resource teachers and other staff who 
provide direct instruction, such as

[[Page 28718]]

paraprofessionals and classroom aides. However, in general, because the 
term ``teacher'' is not defined in Federal statute or regulation, the 
Department believes the definition of ``teacher'' should reflect 
applicable State and local laws and policy regarding the inclusion of 
other school staff, such as counselors, librarians, and media 
specialists.
    Moreover, during our review of public comments, we realized that 
the language authorizing the TIF program in the Department's FY 2010 
Appropriations Act expressly provides that TIF funds may support PBCSs 
that benefit teachers, principals, and other personnel (in those sites 
in which the grantee wishes to expand the PBCS to additional staff in 
its schools).
    Therefore, an applicant has flexibility to extend its PBCS to cover 
school personnel who are not teachers or principals and to define the 
range of other personnel who are eligible to participate in the PBCS.
    Changes: We have revised the requirements for the program to 
clarify that an applicant's PBCS must cover teachers and principals 
and, at the discretion of the applicant, may cover other school 
personnel.
    Comment: One commenter strongly recommended that the Department 
require teacher evaluators in the PBCS to have subject- or specialty-
area expertise specific to the position or positions that they are 
evaluating.
    Discussion: The Department believes that the language in paragraph 
(c) of the Core Elements, which specifies (1) that the evaluation 
process use objective evidence-based rubrics for observation, aligned 
with professional teaching standards, and (2) that evaluators have 
specialized training, is sufficient to ensure fair classroom 
observations of participating teachers. Moreover, requiring each 
evaluator to have the same subject or specialty area expertise as the 
individuals they are evaluating would be impracticable in many LEAs and 
would potentially limit the inclusion of classroom observations in 
teacher evaluation systems. For this reason, we do not believe it is 
appropriate to make the change requested by the commenter.
    Changes: None.
    Comment: One commenter recommended increasing to three the minimum 
number of observation-based assessments required each year under 
proposed priorities 1 and 4, believing that two observations are 
insufficient to obtain a fair review.
    Discussion: While the requirement for multiple observations 
necessitates at least two observations per year, as was proposed in the 
NPP, the Department believes that the precise number of observation-
based assessments should be left to the considered judgment of the 
applicant and its process of securing input from stakeholders. In 
particular, the quality of the observation-based assessment is likely 
to matter more than the number; two comprehensive observations by a 
well-prepared evaluator may provide a more accurate picture of teacher 
performance than five cursory classroom visits. For this reason, the 
Department declines to make the change recommended by the commenter. 
However, we note that grantees would have the flexibility to conduct 
additional assessments if desired.
    Changes: None.
    Comment: One commenter urged the Department to add statewide 
support, such as technical assistance, electronic networks, and 
regional meetings, to the list of activities described in the 
Background section of the NPP that may be supported with TIF funds.
    Discussion: Our final notice does not include the background 
statements provided in the NPP, so we are not making the change 
requested by the commenter. That said, to the extent that SEAs apply 
for TIF funds in conjunction with eligible LEAs, the activities 
described by the commenter generally would be permitted under the 
statutory authority for the TIF program, which allows the use of TIF 
funds to develop or improve systems and tools that would enhance the 
quality and success of the PBCS. The Department does not believe it is 
necessary to create a separate ``statewide support'' category.
    Changes: None.

Priority 1

    Comment: Several commenters recommended modifications to proposed 
priority 1 regarding differentiated levels of compensation for 
effective teachers and principals. One commenter stated that the 
requirement to give ``significant weight'' to student growth exceeded 
statutory authority, while others interpreted the requirement that LEAs 
give ``significant weight'' to student growth as the equivalent of 
basing the evaluation of teacher performance ``on a single test 
score.'' A few commenters also stated that because growth data are 
available for only 30 percent of the teaching force, a PBCS must use 
other measures to determine the effectiveness of most teachers and 
principals. One commenter suggested allowing applicants in States that 
do not have growth models to use status models to measure student 
learning. Other commenters recommended changing priority 1 to emphasize 
the use of multiple measures in a TIF-funded PBCS, such as classroom 
observations, portfolio reviews, student grades, and appraisals of 
lesson plans.
    One commenter also urged inclusion of school climate, resources, 
and professional development in teacher evaluations. Another commenter 
recommended including certification by the National Board for 
Professional Teaching Standards (NBPTS) as a specific option for 
measuring teacher effectiveness. On the other hand, one commenter 
called for maintaining the requirement in a previous TIF competition 
that bonuses be based ``primarily'' on student achievement and urged 
that the final notice require applicants to ``fully utilize'' student 
achievement data by mandating a 50-percent weighting for such data. 
Another commenter recommended strengthening the program's emphasis on 
student achievement by changing ``significant'' to ``predominant'' so 
that student achievement will not ``be obfuscated by multiple other 
objective and subjective criteria.''
    Discussion: The statute requires the Department to use TIF funds to 
support the development and implementation of PBCSs that use student 
achievement (as defined in this notice) and multiple classroom 
observations, as well as other factors, to determine incentive payments 
for teachers and principals. The Department believes that given the 
wide range of possible factors that might be included in their teacher 
evaluation systems, as well as the fact that improving student 
achievement is the underlying purpose of the TIF program, it is both 
appropriate and consistent with the statute to ensure that TIF grantees 
give student achievement ``significant'' weight among the factors 
included in such systems.
    While the Department appreciates the concerns of commenters who 
argued for giving greater, ``predominant'' weight to student growth (as 
defined in this notice) in TIF-funded PBCSs, we continue to require 
that this factor be given ``significant'' weight in this final notice. 
We do so both (1) to emphasize, consistent with the Department's Race 
to the Top program, that teacher effectiveness for TIF should not be 
determined solely on the basis of standardized test scores, and (2) in 
the belief that, given the statutory requirement that grantees also 
base their evaluations on multiple annual observations, among other 
factors, the LEA, in consultation with school staff and with the 
support of any teacher's union that represents teachers in collective 
bargaining, is in the best

[[Page 28719]]

position to determine the relative weight to give these other factors. 
Hence, this final notice requires a TIF-supported PBCS to use (1) 
student growth (as defined in this notice), (2) multiple classroom 
observations, and (3) other measures selected by the grantee to inform 
the payment decisions of the PBCS. These other measures might include, 
for example, outputs such as student portfolios or grades and inputs 
such as NBPTS certification.
    Congress established TIF as a competitive grant program to promote 
the use of PBCSs to improve student achievement (as defined in this 
notice) in high-need schools (as defined in this notice). Therefore, it 
is necessary only that LEAs that wish to apply for TIF funds be able to 
use the required student achievement (as defined in this notice) and 
growth (as defined in this notice) data for their teachers. Moreover, 
States or LEAs may, as a part of the TIF program, determine how to use 
assessments such as annual district assessments, interim assessments, 
or pre-tests/post-tests, to generate growth (as defined in this notice) 
data for a larger percentage of teachers and principals. However, the 
use of status model assessment data alone is not consistent with the 
emphasis of the TIF program on using student growth (as defined in this 
notice) to inform the decisions made under a PBCS.
    Changes: None.
    Comment: One commenter stated that priority 1 and paragraph (c) of 
the Core Elements are inconsistent with regard to the need to include 
principal observations in determinations of principal effectiveness. 
This commenter recommended revising priority 1 to reflect the 
requirement for at least two yearly observations of principals in 
paragraph (c) of the Core Elements. Another commenter recommended 
emphasizing ``growth'' in graduation and postsecondary enrollment rates 
in the examples of supplemental measures for determining the 
effectiveness of principals, while a third commenter proposed including 
in those examples nine separate ``measures of highly effective school 
leaders.''
    Discussion: The Department agrees that proposed absolute priority 1 
was unclear on the need for observation-based assessments of both 
teachers and principals as part of the evaluation system used to 
support a TIF-funded PBCS. In the final notice, we have changed the 
priority to include principal observations in determinations of 
principal effectiveness. We believe this change is fully consistent 
with the statutory requirement that a PBCS for teachers and principals 
include multiple classroom observations. We decline, however, to modify 
or add any other examples of specific measures of principal 
performance, as the absolute priority is not meant to provide an 
exhaustive list of all possible supplemental measures an LEA might use. 
We will, however, consider including such examples in any non-
regulatory guidance that we may issue for the TIF program.
    Changes: In paragraph (b) of priority 1, we have changed ``include 
observation-based assessments of teacher performance at multiple points 
in the year'' to read ``include observation-based assessments of 
teacher and principal performance at multiple points in the year.''
    Comment: One commenter recommended adding to proposed priority 1 a 
requirement that each applicant describe how its PBCS will include 
educators of both students with disabilities and gifted and talented 
students.
    Discussion: We do not believe that the Department should require an 
LEA to ensure that its PBCS apply to any specific group of teachers. 
Rather we believe that the LEA, in consultation with school staff and 
any teachers' union that represents teachers for the purpose of 
collective bargaining, where applicable, should extend to all teachers 
in a high-need school or to a subset of those teachers based on hard-
to-staff subjects or needs in particular specialty areas.
    We note that in the NPP, and now in this notice, we describe 
several ways in which a PBCS may include educators of both students 
with disabilities and gifted and talented students. First, under 
paragraph (a)(1)(i) of the selection criteria, the Department considers 
the extent to which the applicant demonstrates that the high-need 
schools that would participate in its PBCS have difficulty in 
recruiting highly qualified or effective teachers, particularly in 
hard-to-staff subject and specialty areas such as special education 
(these specialty areas also could include gifted and talented 
education).
    Second, under priority 5, the Department will give a competitive 
preference to an applicant showing that its proposed PBCS is designed 
to assist high-need schools to (1) serve high-need students (which, as 
defined in this notice, includes students with disabilities); (2) 
retain effective teachers in teaching positions in hard-to-staff 
subjects and specialty areas, such as mathematics, science, special 
education, and English language acquisition, and (3) fill vacancies 
with teachers of those subjects or specialty areas who are effective or 
likely to be effective. By implication, an LEA with a particular need 
for special education teachers could use its PBCS specifically to hire 
and retain such teachers. The Department has retained both of these 
provisions in this final notice, and believes that no additional 
language is needed to respond to the commenter's concern.
    Changes: None.

Priority 2

    Comment: Commenters had mixed reactions to absolute priority 2's 
requirements regarding the fiscal sustainability of a PBCS. For 
example, while one commenter stated that the current fiscal climate 
will make it difficult to meet this priority, other commenters 
supported the priority for the same reason, suggesting that current 
budget constraints make it even more important for each applicant to 
demonstrate a strong commitment to sustaining its PBCS. One commenter 
also expressed concern that requiring grantees to demonstrate 
sustainability could ``aggravate serious problems of school finance'' 
in States with school funding equity problems. Another commenter urged 
the Department to acknowledge the dependence of sustainability plans on 
economic and budget factors and to include ``contingency options'' for 
LEAs that may face extreme financial hardship both during and after the 
grant period.
    Other commenters objected to the priority's reference to the 
``redeployment'' of other existing resources, stating that most LEAs 
already have reallocated available resources to meet the current budget 
crisis, that such redeployment may undermine other LEA program 
priorities, that resources used to support continuing education for 
teachers and principals are essential to improving the skills of these 
staff, and that redeploying resources used for salary increments 
potentially would lower the standard of living for teachers and make it 
more difficult to obtain mortgages and own their own homes.
    Discussion: The Department acknowledges all of the concerns raised 
by commenters regarding the difficulty of ensuring the fiscal 
sustainability of TIF-funded PBCSs. However, in Public Law 111-117, the 
FY 2010 Appropriations Act that included funding for TIF, Congress 
provided that all applications for TIF grants ``shall include a plan to 
sustain financially the activities conducted and systems developed 
under the grant once the grant period has expired.'' We do not

[[Page 28720]]

believe any credible plan for financial sustainability is likely to 
succeed without a demonstration by an applicant of its readiness to 
make the hard choices needed to ensure that the funding will be 
available to sustain the PBCS after the TIF grant ends. For this 
reason, the Department also is extending this requirement to TIF awards 
made with ARRA funds.
    In addition, this final notice, like the NPP, does take into 
account the economic conditions facing the Nation's school systems. 
Unlike previous TIF awards, which required an increasing non-TIF share 
in years in which performance-based compensation is provided and 
established a percentage ceiling on the amount of TIF funds that could 
be used for incentive payments during the last year of the grant 
period, this notice requires only an increasing non-TIF share in years 
when performance-based compensation is provided. For all of these 
reasons, the Department declines to make the recommended changes to 
priority 2.
    Changes: None.
    Comment: One commenter requested clarification regarding the 
duration of an applicant's fiscal sustainability plan, i.e., how many 
years following the end of TIF funding must a PBCS be sustained?
    Discussion: Applicants have flexibility regarding the length of 
their sustainability plans. As a practical matter, we understand that 
the difficulty of making long-term predictions of economic conditions, 
State and local funding, and political factors may limit the required 
fiscal sustainability plans to no more than three to five years.
    Changes: None.

Priority 3

    Comment: Several commenters expressed support for priority 3 
regarding programmatic sustainability of the PBCS. One commenter also 
urged that the priority include a focus on strategies for supporting 
educators, such as professional development, mentoring, and induction 
programs. Similarly, another commenter cautioned against too much 
emphasis on the PBCS when other approaches related to recruiting, 
inducting, mentoring, evaluating, and retaining teachers may be more 
effective in improving student achievement. Another commenter 
encouraged the Department to require, as part of priority 3, 
professional development strategies designed to improve the 
identification and instruction of students with disabilities and gifted 
and talented students. In addition, this commenter recommended that the 
Department promote mentoring and induction programs supporting 
collaboration between general and special education.
    Discussion: Priority 3 is based on the idea that a PBCS works best 
in conjunction with a coherent and integrated approach to strengthening 
the educator workforce that specifically includes many of the 
strategies suggested by the commenters, such as teacher and principal 
recruitment, induction, professional development, evaluation, 
retention, and advancement into instructional leadership roles (as 
defined in this notice). Contrary to the second commenter's warning 
about ``too much emphasis'' on the PBCS, we believe the opportunity to 
receive incentive payments and other rewards from the PBCS will 
encourage educators to take full advantage of the various strategies 
and supports made available through the applicant's coherent and 
integrated approach to strengthening the educator workforce.
    Moreover, the Department also expects that, particularly as part of 
an overall strategy to improve instruction for high-need students, TIF 
grantees will provide professional development related to meeting the 
needs of students with disabilities and gifted and talented students, 
including induction and mentoring programs aimed at supporting 
collaboration between general and special education. However, the 
Department declines to add specific requirements in this area as we 
believe that TIF grantees should implement site-specific professional 
development opportunities for teachers and principals designed based on 
their specific needs, which may include professional development 
related to serving students with disabilities and gifted and talented 
students.
    Changes: None.

Priority 4

    Comment: Three commenters expressed strong support for priority 4, 
a competitive priority on the use of value-added measures of student 
achievement for purposes of determining differentiated levels of 
compensation in a PBCS. Two of these commenters recommended making this 
priority an absolute priority, ``since improving student achievement is 
the underlying purpose for all these incentives.'' Another commenter 
stated that the use of value-added models will address the problem of 
non-random assignment of students to individual teachers by helping to 
ensure that teachers with the highest-achieving students do not benefit 
disproportionately from a PBCS.
    However, several other commenters raised strong objections to the 
use of value-added models as part of a PBCS, citing research that shows 
significant variability in the results of such models, particularly for 
individual teachers, the limited availability of data to support such 
models for most teachers, the limited number of vendors experienced in 
developing and implementing value-added models, and the lack of 
evidence that such models are fair, reliable, and valid when used to 
evaluate teacher effectiveness or determine compensation levels. One 
commenter, for example, stated that value-added systems are not 
appropriate for ``high-stakes decisions regarding employee evaluation 
and compensation.'' Another commenter stated that the use of value-
added models in PBCSs generally would exclude both educators of 
students with disabilities and the impact of regular instructors on 
students with disabilities, leading to ``two separate systems for 
judging teacher performance.'' As a result of these various concerns, 
three commenters recommended eliminating priority 4 altogether. Other 
commenters suggested replacing the priority with a competitive 
preference for programs that enhance teaching and leadership skills 
through professional development or the pursuit of advanced 
certification or degrees, as well as the addition of multiple measures 
to value-added models. Finally, one commenter asked whether TIF funds 
could be used to refine a value-added model.
    Discussion: We appreciate the expressions of support for 
encouraging applicants to incorporate value-added measures into their 
PBCSs, in particular due to the potential for such measures to isolate 
the improved achievement that may be attributed to individual teachers 
regardless of the starting point of their students. The Department 
understands and, to some extent, shares the concerns of some commenters 
regarding the need to be judicious about the use of value-added models 
due to the public's limited experience with them. We also recognize 
that many researchers have expressed concern about the use of value-
added models to evaluate teacher performance. However, one purpose of a 
competitive grant program like the TIF program is to encourage 
innovation and the Department believes that a competitive preference on 
the use of value-added models as part of a PBCS is consistent with this 
purpose.
    We also note that many of the research-based concerns expressed by 
commenters focus on the potential use of value-added models as the sole 
or predominant indicator of teacher performance, an approach that is 
not required under either the statutory

[[Page 28721]]

authority for the TIF program or this final notice, which states that, 
in determining teacher effectiveness, the LEA must give significant 
weight to student growth (as defined in this notice) and must include 
observation-based assessments of performance. Moreover, we believe that 
priority 4 is fully consistent with the observation of one study cited 
by a commenter that value-added approaches ``may be appropriate for 
wider use as student assessment systems and value-added models 
evolve.'' One purpose of priority 4 is to promote such evolution by 
encouraging grantees to adapt value-added models to their PBCSs 
consistent with the safeguards for all PBCSs required by this final 
notice (i.e., the use of multiple measures in teacher evaluation 
systems, teacher involvement in developing such systems, and robust 
data systems).
    In addition, value-added models have the potential to improve the 
measurement of academic growth (as defined in this notice) for many 
students with learning disabilities, and thus should not be dismissed 
simply because they may not be appropriate for all students with 
disabilities. TIF funds also may be used to improve tools to measure 
growth (as defined in this notice) in student achievement (as defined 
in this notice), such as value-added models, and thus could be used to 
refine a value-added model, addressing some of the concerns raised by 
commenters. For this reason the Department does not agree with the 
commenters who suggested that we eliminate priority 4. Similarly, the 
Department does not agree that a competitive preference for programs 
that enhance teaching and leadership skills through professional 
development or attainment of professional credentials holds the same 
promise of improving our ability to measure teacher effectiveness as 
value-added measures of student achievement (as defined in this 
notice). We say this largely because such programs are not designed or 
intended to measure teacher effectiveness, as is statutorily required 
for the TIF program.
    Changes: None.
    Comment: One commenter requested clarification as to whether 
applicants could meet priority 4 by using value-added models only to 
evaluate teacher performance or whether they also must provide to 
teachers feedback aimed at improving instruction.
    Discussion: In the NPP, the background section for proposed 
priority 4 clearly stated that one goal of this competitive preference 
priority is to ensure that applicants have a plan to enable teachers 
``to use the data generated through the models to improve classroom 
practices.'' However, the language of the proposed priority 
inadvertently omitted any reference to improving classroom practice. 
The Department has revised priority 4 to require TIF applicants seeking 
to meet this priority to ensure that they will use value-added data to 
improve classroom instruction as well as to evaluate teacher 
performance. As these activities are directly related to providing 
feedback educators need to improve their performance, and thus are part 
of a coherent and integrated approach to strengthening the educator 
workforce (see priority 2), TIF funds may be used to pay for activities 
needed to help educators use the value-added data to improve classroom 
practices, including the development or enhancement of systems and 
tools used to generate feedback to teachers for the purpose of 
improving instruction.
    Changes: The Department has revised clause (2) of priority 4 to 
clarify that an applicant must demonstrate in its application that, as 
part of its PBCS, it has the capacity to clearly explain the chosen 
value-added model to teachers to enable them to use the data generated 
through the model to improve classroom practices.
    Comment: One commenter recommended that priority 4 be revised to 
require LEAs to have a plan for including career and technical 
education (CTE) teachers in value-added systems, although the commenter 
acknowledged that value-added measures are problematic in CTE due to 
the lack of comparative data for the end-of-course assessments 
typically used in CTE courses.
    Discussion: The Department declines, for the reason cited by the 
commenter, to require applicants to have a plan for including CTE 
courses in their value-added systems. However, applicants that have the 
capability to use such measures for CTE programs certainly may include 
them to meet the requirements of priority 4.
    Changes: None.

Priority 5

    Comment: One commenter recommended changing priority 5, the 
competitive preference priority on increased recruitment and retention 
of teachers in hard-to-staff subjects and specialty areas in high-need 
schools, to an absolute priority. Another commenter called for giving 
priority to applications that propose to increase recruitment or 
retention of teachers in hard-to-staff subjects in high-need schools. A 
third commenter sought clarification that an applicant could receive 
points for priority 5 by including an emphasis on recruiting and 
retaining teachers in hard-to-staff subjects and specialty areas as 
part of an overall PBCS for all teachers, rather than a PBCS focused 
solely on the goals of priority 5.
    Discussion: We agree with the first commenter that increased 
recruitment and retention of teachers in hard-to-staff subjects and 
specialty areas in high-need schools is an important goal; however, we 
also believe that designing and implementing a good PBCS is difficult, 
and that some LEAs may be reluctant to add to the challenge by making 
recruitment and retention bonuses a required component of the system. 
Consistent with our overall policy of establishing mandatory 
requirements only when necessary, we believe that retaining priority 5 
as a competitive preference priority is the appropriate way to 
encourage applicants to consider ways to use the PBCS to promote 
increased recruitment and retention of teachers in hard-to-staff 
subjects and specialty areas in high-need schools. The Department 
declines to give a competitive preference to an applicant that proposes 
to increase recruitment or retention, because we believe that it is the 
combination of the two strategies that is likely to be both most needed 
and most effective in serving high-need students in high-need schools. 
Finally, we agree that the components and activities required to meet 
priority 5 may be part of a broader TIF proposal for developing and 
implementing a PBCS that fulfills the full range of an applicant's 
recruitment and retention needs, not just those related to teachers in 
hard-to-staff subjects and specialty areas.
    Changes: None.
    Comment: Two commenters objected to what they described as the 
premise of priority 5--that an effective teacher will be effective in 
any school without regard to the school's conditions and climate. These 
commenters recommended that we address factors such as poor leadership 
and support, inadequate professional development, discipline and safety 
concerns, and planning time. The commenters argued that addressing 
these factors could help remove the ``hard-to-staff'' label from the 
school. A third commenter stated that any effort to attract and retain 
teachers should invest in teacher support and development.
    Discussion: Priority 5 is not premised on the assumption that an 
effective teacher will be effective in any school; rather, it is based 
on the premise that a teacher who has demonstrated the

[[Page 28722]]

ability to raise student achievement (as defined in this notice) in one 
school is more likely to be effective in another school than a teacher 
who has not demonstrated such effectiveness in any school setting. In 
addition, an applicant seeking to meet priority 5 will be expected to 
incorporate the strategies for doing so into its coherent and 
integrated strategy for strengthening the educator workforce, which 
may, and whenever necessary should, include efforts to address the 
other conditions described by the commenters.
    Changes: None.
    Comment: One commenter objected to the use of the terms 
``effective'' or ``likely to be effective'' in the context of priority 
5 because of concerns about the use of growth measures to determine 
``effectiveness.'' Another commenter recommended that the priority be 
revised to include NBPTS certification as one measure that could 
demonstrate whether a teacher who is filling a hard-to-staff vacancy is 
effective or likely to be effective.
    Discussion: We have addressed concerns about the use of student 
growth (as defined in this notice) measures to determine teacher and 
principal effectiveness under the General Comments section of this 
preamble. In addition, priority 5 requires applicants to provide an 
explanation for how they will determine that a teacher filling a 
vacancy is effective or likely to be effective. We believe that this 
language provides flexibility for an applicant to propose appropriate 
measures of effectiveness or likely effectiveness, including NBPTS 
certification, under priority 5.
    Changes: None.
    Comment: Three commenters provided suggestions about how to define 
``hard-to-staff'' subjects under priority 5. One commenter recommended 
that we add CTE to the list of hard-to-staff subjects and specialty 
areas. Another commenter requested that the priority provide 
flexibility to allow LEAs to change their lists of hard-to-staff 
subjects and specialty areas over the 5-year grant period. The last 
commenter asked the Department to clarify that LEAs have the authority 
to determine which subjects are hard-to-staff and which areas 
constitute ``specialty areas,'' and that specialty areas could include 
extended day, pre-K, or other areas in high-need schools that are 
difficult to staff.
    Discussion: Priority 5 requires applicants to demonstrate, in their 
applications, the extent to which the subjects or specialty areas they 
propose to target are hard-to-staff. The language of the priority 
leaves the determination of hard-to-staff subjects and specialty areas 
up to applicants and the LEAs that administer the affected high-need 
schools. The Department, therefore, believes that, under priority 5, 
applicants have the flexibility to define ``hard-to-staff'' subjects 
consistent with the suggestions made by the commenters, including 
flexibility to change their definitions over the 5-year grant period. 
Also, because of this flexibility, we do not believe that any of the 
specific suggestions for additions to the list of hard-to-staff 
subjects and specialty areas are necessary, and therefore decline to 
make any changes to the priority.
    Changes: None.
    Comment: One commenter stated that paying the teachers of some 
subjects more than teachers of other subjects undermines the basic 
equity of existing compensation systems. Instead, this commenter 
recommended that we address gaps in subject and specialty areas through 
scholarships, tuition assistance, and loan forgiveness programs.
    Discussion: The TIF program is premised on the belief that existing 
compensation systems do not serve the goal of increasing the number and 
proportion of effective teachers serving low-income, minority, and low-
achieving students, and the belief that providing financial rewards for 
both effectiveness and willingness to work in challenging schools is a 
promising education reform. Many high-need schools have particular need 
for teachers of certain subjects and specialty areas (e.g., 
mathematics, science, and special education), and we believe that 
higher pay for effective teachers in these areas who agree to work in 
high-need schools could help to alleviate this problem. We are 
confident that performance-based compensation available through TIF can 
be one means of addressing this problem. The Department agrees that 
other kinds of rewards and incentives described by the commenter also 
may be effective, but they fall outside the scope of the TIF program.
    Changes: None.
    Comment: One commenter asserted that the school intervention models 
required by the School Improvement Grants (SIG) program, some of which 
require the replacement of a school's teachers, could be a disincentive 
for teachers to take jobs in hard-to-staff schools.
    Discussion: Except for school closure, none of the school 
intervention models required by the SIG program mandates the 
replacement of all effective teachers. Moreover, the Department 
believes that the significant resources potentially made available 
through the SIG program (up to $6 million per school over 3 years) 
will, in many cases, create a strong incentive for effective teacher 
and leaders seeking the challenge of turning around a persistently 
lowest-achieving school.
    Changes: None.
    Comment: One commenter asked whether priority 5 includes principals 
as well as teachers.
    Discussion: Priority 5 is a competitive preference priority focused 
on recruiting and retaining teachers in hard-to-staff subjects and 
specialty areas and does not apply to principals. That said, applicants 
may include strategies and incentives to recruit and retain effective 
principals in high-need schools as part of the overall design of their 
PBCSs, but would not receive priority consideration for doing so under 
either the Main TIF or TIF Evaluation competitions.
    Changes: None.
Suggested Priorities
    Comment: Three commenters recommended that the Department establish 
additional absolute priorities for the TIF program. Two commenters 
called for an absolute priority on incentives to take on additional 
responsibilities and leadership roles, a recommendation that these 
commenters described as consistent with the treatment of other 
statutory mandates for this program. The third commenter suggested a 
new absolute priority on establishing and sustaining a competitive 
compensation schedule for school personnel that is comparable to 
compensation schedules of similar professions in the region. The 
commenter stated that such a priority is needed to avoid a situation in 
which a PBCS is perceived as preventing any teachers eligible for the 
PBCS from receiving a competitive, professional, or living wage, and 
that the schedule would need to be based on educational and 
professional attainment and provide annual increases that double the 
base salary within 10 years.
    Discussion: Under the Application Requirements, each applicant is 
required to describe in its application how its proposed PBCS will 
provide educators with incentives to take on additional 
responsibilities and leadership roles (as defined in this notice). The 
Department believes that this requirement adequately addresses the 
commenters' concern, and that it is unnecessary to add a new absolute 
priority on additional responsibilities and leadership roles (as 
defined in this notice). The recommendation to use the

[[Page 28723]]

TIF program to establish uniform higher compensation schedules that are 
not linked to student achievement (as defined in this notice) is 
inconsistent with the TIF program's authorizing legislation, which 
requires eligible entities to use TIF funds to develop and implement 
PBCSs that consider growth (as defined in this notice) in student 
achievement (as defined in this notice), as well as classroom 
evaluations conducted multiple times during each school year. The law 
does not give the Department authority to require changes in an LEA's 
regular staff compensation system.
    Changes: None.
    Comment: Three commenters recommended that the final notice include 
two new invitational priorities. Two of these commenters called for an 
invitational priority for applications from SEAs in order to ensure the 
sustainability and broader impact of TIF awards. One commenter 
requested an invitational priority for PBCSs in which effective 
teachers are required to share their instructional practices prior to 
receiving incentive payments or bonuses.
    Discussion: SEAs, like other eligible entities, must use TIF funds 
awarded to them to develop and implement a PBCS in high-need schools, a 
requirement that could involve efforts to ensure the sustainability and 
broader impact of TIF awards. However, the TIF program statute does not 
authorize TIF funds to be used to promote statewide support and broader 
impact of local TIF projects, and hence an invitational priority in 
this area does not seem appropriate. Furthermore, the Department agrees 
that having teachers share effective instructional practices could be a 
useful element of a TIF project, but declines to add an invitational 
priority to make incentive payments contingent on such practices 
because the primary purpose of the incentive payments required by the 
TIF program is to reward teachers for improving student achievement (as 
defined in this notice), not for sharing effective practices.
    Changes: None.
Application Requirements
    Comment: One commenter stated that the application process 
described in the NPP was unnecessarily complex due to ``repetitive and 
inconsistent'' priorities, application requirements, and selection 
criteria. The commenter recommended that because paragraphs (c) and (d) 
of the Core Elements already are covered by priorities 1 and 3, 
incorporating the remaining core elements into a new priority 6 
regarding input from and communication with teachers would permit the 
elimination of the ``core elements'' section in the final notice.
    Discussion: The Department acknowledges that proposed priorities 1 
and 3 and paragraphs (c) and (d) of the Core Elements share some 
elements and language, but believes that there are differences in 
emphasis and detail that favor retention of the proposed structure of 
priorities, application requirements, core elements, selection 
criteria, and definitions. In addition, this structure facilitates the 
implementation of a planning period when necessary. For these reasons, 
the Department declines to change that structure in this final notice.
    Changes: None.
    Comment: One commenter was concerned that many of the terms used in 
paragraph (c) of the Core Elements related to professional development 
and evaluation systems are not defined (e.g., ``multiple,'' 
``professional teaching standards,'' and ``inter-rater reliability''). 
One commenter proposed the use of a specific model of teacher 
evaluation for the TIF program, while another commenter called for 
replacing the requirement in paragraph (c) of the Core Elements that 
principal and teacher effectiveness be measured in significant part by 
student achievement with a system that (1) uses multiple measures of 
educator performance based on clear and comprehensive professional 
expectations and (2) is linked to continuous professional development 
and opportunities to demonstrate newly acquired knowledge and skills.
    Another commenter asserted that few current performance evaluation 
systems are fair, valid, and reliable and recommended that the 
Department reconsider requiring the use of performance evaluation 
systems as part of a PBCS unless funding and other support (especially 
at the SEA level) is available to develop and implement new performance 
evaluation systems. Similarly, one commenter also suggested that, for a 
small LEA, the data management system called for in paragraph (d) of 
the Core Elements should be required to link student achievement data 
only to the teacher evaluation system and not to payroll and human 
resources systems.
    Discussion: The Department believes that applicants should have 
some flexibility to define the terms cited by the first commenter, and 
that, if necessary, the Department may clarify such terms through non-
regulatory guidance. We also believe that TIF applicants should be able 
to develop their own teacher evaluation systems in response to their 
own needs and circumstances, and thus we decline to require the use of 
any particular model for teacher evaluation. The recommendation that 
teacher evaluations should be based not on student achievement (as 
defined in this notice), but only on professional expectations and 
participation in professional development activities is not consistent 
with the statutory requirement that PBCSs take into account student 
achievement (as defined in this notice), and the Department, therefore, 
declines to make this change.
    The Department generally agrees that few States or LEAs have 
implemented high-quality teacher evaluation systems; this is why 
building such systems is both a priority and a prerequisite under 
priorities 1 and 4, all five core elements, and selection criterion 
(b). Moreover, as the NPP made clear, grantees may use TIF funds to 
develop or improve systems and tools (which may be developed and used 
either for the entire LEA or only for schools served under the grant) 
that would enhance the quality and success of the PBCS, such as 
linkages that may not otherwise exist in the data systems used in small 
LEAs. For this reason, the Department does not believe it is necessary 
to permit exceptions to the requirements of paragraph (d) of the Core 
Elements for small LEAs.
    Changes: None.
    Comment: One commenter recommended adding a paragraph to the Core 
Elements that would require the PBCS to be aligned with an LEA's 
coherent and integrated strategy for strengthening its educator 
workforce, because without such a strategy, an applicant cannot meet 
priorities 1 and 3, and is therefore not eligible to receive a grant 
under the TIF program. Making the strategy one of the core elements 
would allow an LEA that does not already have such a strategy to use 
the planning period to develop one, thereby allowing them to meet 
priorities 1 and 3.
    Discussion: To the extent that an eligible LEA does not already 
have a coherent and integrated strategy for strengthening its educator 
workforce, it must develop and document such a strategy as part of its 
application process. Moreover, an applicant would also be able to 
propose further work needed to design and implement its strategy for 
strengthening the educator workforce as part of its work during the 
Planning Period on Core Element (c). Therefore, we decline to follow 
the commenter's recommendation.
    Changes: None.
    Comment: One commenter requested clarification of the requirement 
that the

[[Page 28724]]

proposed PBCS provide participating teachers and principals with 
professional development that is shown to be effective.
    Discussion: The specific language cited by the commenter that the 
professional development must be ``shown to be effective'' was included 
as background material in the Requirements section of the NPP and does 
not appear in this final notice. However, under paragraphs (3), (4), 
and (5) of the Professional Development requirement in the Requirements 
section of this notice, an applicant must demonstrate, in its 
application, that it provides effective professional development to 
teachers and principals covered by the PBCS and include a process for 
regularly assessing the effectiveness of this professional development 
in improving teacher practice and student achievement (as defined in 
this notice) and making the modifications necessary to improve its 
effectiveness. Therefore, we believe that the language in the 
Requirements section of this notice provides clarification and no 
additional language has been added.
    Changes: None.
    Comment: Several commenters expressed concern about ensuring 
involvement by and input from teachers, principals, and other school 
staff, as well as the involvement of unions representing these 
individuals, during the development of each LEA's PBCS. One commenter 
requested that the Department clarify that developing, communicating, 
and implementing a PBCS is a joint process involving teachers, 
administrators, and other school personnel. In other words, the 
commenter asserted, involvement in developing the PBCS must precede 
communicating its elements. Another commenter stated that the timing of 
the application process could make it difficult to obtain required 
input from teachers and principals. Two commenters recommended 
replacing the reference to unions in paragraph (b) of the core elements 
with ``local teacher associations,'' to ensure that there is a 
mechanism for local teacher input in right-to-work States.
    Discussion: The Department believes that the language included in 
paragraph (b) of the Core Elements, which states that PBCSs must be 
developed with the involvement and support of teachers, principals, and 
other personnel, including unions in participating LEAs where they are 
designated exclusive representatives for the purpose of collective 
bargaining that is needed to carry out the grant, is sufficiently clear 
to meet the concerns of the commenters. The Department also believes 
that while an applicant will certainly want to discuss its proposal 
with affected educators and their union representatives as it develops 
its application, concerns about the availability of sufficient time to 
provide such input are addressed by the Planning Period provision, 
which allows a successful applicant to take up to one year during which 
it will use its TIF funds to develop the core element or elements it 
lacks. The Department certainly agrees that including local teacher 
input is important; however, the Department believes that the existing 
language in the notice is sufficient to address the need to involve 
both educators and union representatives in developing a PBCS and a TIF 
application.
    Changes: None.
    Comment: One commenter recommended that the final notice require 
that both the LEA and the collective bargaining representative involved 
in a TIF proposal certify that they understand the proposals reflected 
in the TIF program application and will negotiate terms and conditions 
needed to implement a TIF award without reopening for negotiation other 
contract provisions that are not implicated by the program. In 
addition, three commenters recommended that the Department require 75 
percent of teachers in non-bargaining LEAs to approve a TIF project in 
order to demonstrate the significant buy-in from those affected by the 
plan that is needed to ensure successful implementation. Another 
commenter objected to the requirement for support from teacher unions 
to receive a TIF grant because it would give unions effective veto 
power over an LEA decision to apply for and carry out a Federal grant. 
Instead, this commenter called for the Department to require evidence 
of support from teachers and principals for the proposed PBCS, as well 
as a description of any legal barriers to carrying out a proposed PBCS 
and plans to overcome those barriers.
    Discussion: The Department believes that, in general, the issues 
raised by the commenters about the TIF application and negotiating its 
terms and conditions for successful implementation should be the 
subject for local negotiation rather than Federal requirement. In 
addition because the creation of a PBCS directly affects employee 
compensation, which is a key issue in local collective bargaining 
agreements, the Department believes that cooperation from and agreement 
with local union representatives, where a union is a representative in 
collective bargaining, is essential to successful implementation of a 
PBCS. For these reasons, the Department has determined that it is not 
appropriate to revise the requirements as requested by the commenters.
    Changes: None.
    Comment: One commenter expressed concern about the complexity of 
many growth and value-added models and recommended that the Department 
add language to paragraph (e) of the Core Elements to ensure that the 
pay formulas used in a PBCS are transparent and understandable by 
teachers and principals.
    Discussion: The Department believes that paragraphs (a), (b), and 
(e) of the Core Elements, which contain specific requirements related 
to communicating the components of the PBCS to teachers and principals, 
involving teachers and principals and ensuring their support for the 
PBCS, and ensuring that teachers and principals understand the measures 
of effectiveness included in the PBCS, are sufficient to ensure that 
PBCSs and related teacher evaluation systems are transparent and 
understandable by teachers and principals.
    Changes: None.
    Comment: Two commenters urged the Department to ensure that the 
data management systems required by paragraph (d) of the Core Elements 
protect the privacy of students and educators.
    Discussion: The Department is committed to protecting the privacy 
of students and educators and, therefore, has added a clarifying 
footnote to paragraph (d) of the Core Elements to remind applicants 
that data systems used to pay incentives based on student growth (as 
defined in this notice) to teachers, principals, and other personnel 
(in those sites in which the grantee wishes to expand the PBCS to 
additional staff in its schools) must comply with any applicable 
requirements under FERPA. Privacy of data in these systems also is 
subject to any applicable State or local law.
    Changes: We have added a footnote to paragraph (d) of the Core 
Elements stating that each successful applicant will need to ensure 
that its PBCS, including related data systems, complies with FERPA and 
applicable State or local privacy laws.
    Comment: Two commenters expressed concern that limiting 
participation to high-need schools could make it difficult for many 
LEAs to implement a PBCS, and is inconsistent with the requirement that 
a PBCS be part of a district-wide coherent and integrated approach to 
strengthening the educator workforce. In addition, these commenters 
stated that limiting the

[[Page 28725]]

program to high-need schools would prevent a comparison of the impact 
of PBCSs in high-need and non-high-need schools.
    Discussion: Public Law 111-117, which contains the Department's FY 
2010 appropriation, authorizes the Department to use TIF funds to make 
competitive grants to eligible entities to develop and implement a PBCS 
in high-need schools. While this statute authorizes grantees to use TIF 
funds to develop or improve systems and tools, such as high-quality 
teacher evaluations and measurements of growth (as defined in this 
notice) in student achievement (as defined in this notice), that would 
enhance the quality and success of the PBCS either district-wide or 
only for participating high-need schools, it does not authorize the use 
of TIF funds to implement the PBCS in schools that are not high-need. 
Limiting the use of TIF funds to implement PBCSs in high-need schools 
does not necessarily prevent a grantee from evaluating the impact of 
having a PBCS in high-need schools versus non-high-need schools. If a 
grantee wishes to evaluate the impact of its PBCS on staff in high-need 
schools relative to staff in schools that are not high-need, however, 
it would need to ensure that (1) its use of TIF funds to conduct the 
study is reasonable and necessary to its implementation of its PBCS for 
staff in high-need schools, and (2) it does not use TIF funds for any 
of the costs associated with implementing the PBCS in non-high-need 
schools.
    Changes: None.
Planning Year
    Comment: In general, commenters praised the Department for 
proposing a planning year provision in the NPP, during which TIF 
applicants that need additional time to put in place the five core 
elements of a PBCS can do so. However, there were many suggestions for 
modifying or providing flexibility in the requirements of the planning 
period. A few commenters recommended that all grantees use a planning 
year to prepare to implement their PBCSs. Two commenters sought 
flexibility to begin implementing some core elements before plans for 
all five elements are in place. One commenter recommended that members 
of a consortium be permitted to have different starting points 
reflecting different levels of preparedness. Another commenter 
requested clarification regarding the portion of TIF funds that may be 
used for activities carried out during an approved planning year, 
whether TIF funds are available only for planning, and any other 
technical assistance and support that may be available during a 
planning period.
    Discussion: The Department appreciates expressions of support from 
commenters for the proposed planning period of up to one year for 
grantees to put in place the five core elements prior to beginning 
incentive payments. We disagree with the recommendation to mandate a 
planning year, as such a requirement would needlessly delay 
implementation of a PBCS in a site that has all the key requirements in 
place and is ready to move forward. We agree that grantees should be 
able to begin implementing some core elements before all five elements 
are in place, as long as the grantee does not begin making incentive 
payments before all five core elements are completed. For example, an 
LEA might begin conducting observation-based assessments before it is 
able to link student achievement data to individual teachers. While the 
LEA may begin conducting observation-based assessments using TIF funds, 
it may not begin making incentive payments solely on the basis of these 
observation-based assessments. We believe that the Planning Period 
provision allows for this flexibility and that no changes are necessary 
in the final notice.
    In addition, the Department agrees that members of a consortium 
could have different starting dates depending on their respective 
readiness relative to the five core elements and believes that, as 
proposed, the Planning Period provision and Core Elements would allow 
this and that no changes to the final notice are necessary. With 
respect to the portion of TIF funds that may be used for a planning 
year, whether TIF funds are available only for planning, and any other 
technical assistance and support that may be available during a 
planning period, an applicant may propose to use a specific amount of 
its TIF awards for a planning period, subject to negotiation and 
approval by the Department; however, TIF awards are not available 
solely for planning purposes. The Department may be able to provide 
limited technical assistance during a planning period.
    Changes: None.
    Comment: One commenter asserted that the Planning Period provision 
is unnecessary and ``potentially unlawful'' because a grantee that does 
not meet requirements, including the core elements, after the planning 
period may have spent grant funds unlawfully. For this reason, the 
commenter recommended that the Department eliminate the Planning Period 
in the final notice.
    Discussion: The Department disagrees with this interpretation of 
the authorizing statutes; provided that it expends its TIF funds 
properly during the Planning Period to implement its planning 
responsibilities, a grantee that fails to complete the required core 
elements during its planning period simply would become ineligible to 
receive or otherwise obligate the remainder of its five-year grant 
amount.
    Changes: None.
Eligibility
    Comment: A large number of commenters objected to excluding current 
TIF grantees from the Main TIF and TIF Evaluation competitions, as 
proposed in the NPP. In particular, commenters stated that the 
prohibition on awarding new TIF funds to existing grantees would 
prevent the expansion of many promising PBCSs. One commenter added that 
excluding current grantees from the new competitions appeared to be 
contrary to the Department's emphasis on rewarding and replicating 
successful practices. Commenters recommended several alternatives to 
the exclusion of existing TIF grantees from these competitions, 
including extending eligibility to current grantees but giving priority 
to new applicants, limiting eligibility for the TIF Evaluation 
competition to new applicants but allowing existing grantees to apply 
for the Main TIF competition, and permitting awards to existing 
grantees that want to expand their programs to cover teachers or other 
educators who currently are not served (e.g., a PBCS currently in place 
in high-need schools for principals only could be expanded to serve 
teachers).
    Discussion: The Department did not propose to exclude existing TIF 
grantees from applying for new TIF awards; instead, the NPP proposed to 
limit eligibility for the Main TIF competition and the TIF Evaluation 
competition to applicants proposing to serve schools not already served 
(or to be served) under current TIF grants. A grantee, for example, 
that is serving only some of its high-need schools would have been 
eligible for a new award to expand coverage of its PBCS to additional 
high-need schools. The intention, as stated in the NPP, was to use new 
TIF funding to extend PBCSs to new high-need schools, rather than to 
provide more funding for PBCSs in schools already supported by the TIF 
program. Nonetheless, the Department is persuaded by the commenters 
that this proposal might have a negative impact upon the continued 
success of existing PBCSs. Because we do not want to impede the 
expansion of current TIF-funded PBCSs

[[Page 28726]]

to cover additional groups of educators in high-need schools, we have 
revised the eligibility requirement to permit existing TIF grantees 
that want to expand their PBCSs to cover unserved staff (as in the 
example cited by the last commenter) to expand a PBCS currently serving 
only principals to cover teachers as well. However, because we believe 
existing TIF grantees generally will have a competitive advantage in 
applying for new TIF funds, we also are adding a new competitive 
preference priority for new TIF applicants to promote a more level 
playing field for both existing grantees and new applicants. We have 
extended this competitive preference priority to the nonprofit 
organizations that (1) had previously received a TIF grant as part of a 
partnership, and (2) apply in partnership with one or more new LEAs or 
States. We do so because we believe that, given the focus of the TIF 
application requirements on conditions within the implementing LEA(s), 
these nonprofit organizations will not likely have a competitive 
advantage over other applicants.
    Changes: We have revised the Additional Eligibility Requirement to 
allow existing TIF grantees to propose expanding their PBCSs to high-
need schools not currently funded by TIF, as well as to include new 
categories of staff in schools currently funded by TIF. We have also 
added a new competitive preference priority that would give additional 
points to those applicants not currently funded by TIF. For this 
reason, we extend the availability of these competitive preference 
points to these nonprofit organizations as well. This new competitive 
preference priority is called Competitive Preference Priority 6--New 
Applicants to the Teacher Incentive Fund
    Comment: One commenter recommended expanding the TIF program to 
include high schools.
    Discussion: There is no restriction on serving high schools under 
the TIF program as long as applicants are able to meet all applicable 
requirements, including the use of data on student growth (as defined 
in this notice) as a significant factor in the evaluation of teachers, 
principals, and other school personnel that applicants may choose to 
include in the PBCS. Issues affecting high school participation in the 
evaluation are discussed in the following section under the sub-heading 
TIF Evaluation Competition.
    Changes: None.
TIF Evaluation Competition
    Comment: A few commenters noted that the NPP appears to limit 
participation in the TIF Evaluation competition to schools that have 
grades covered by assessment requirements under the Elementary and 
Secondary Education Act of 1965, as amended (ESEA) (i.e., tested grades 
3 through 8), and recommended that the Department should consider 
expanding the range of allowable tests to include advanced placement 
tests or the ACT to encourage greater participation by high schools, as 
well as the inclusion of a broader variety of subjects. Other 
commenters added that excluding high schools from the TIF Evaluation 
competition unfairly penalizes States and LEAs with assessment systems 
capable of providing value-added data for all teachers at all grade 
levels.
    Discussion: The Department agrees that some high school tests would 
be suitable for the national evaluation. However, we also believe that 
the circumstances under which these tests would meet the requirements 
of the national evaluation are too complicated and varied to describe 
fully in this notice. The suitability of high school tests would depend 
upon the psychometric properties of the tests and the alignment between 
the subject matter taught by individual teachers and their students. In 
addition, the Department's Institute of Education Sciences (IES) 
evaluator would need to investigate whether the circumstances in which 
each high school test is used is consistent with the evaluation design. 
For example, tracking of courses at the high school level makes such 
comparisons more complicated and less reliable within the current study 
design. Also, because the expected effects of PBCSs on the issues to be 
studied are lower at higher grade levels, efforts to evaluate the 
effects of PBCSs on recruitment and retention of staff and student 
achievement at high school grade levels would require the evaluator to 
add significant numbers of new schools to the evaluation in order to 
assess the areas that are the pivotal to the study design.
    Therefore, the Department believes it is neither cost-efficient nor 
practical to include high schools in the national evaluation plan, and 
therefore has limited the evaluation to the effects of the PBCSs on 
recruitment and retention of staff and student achievement in schools 
with grades 3 through 8. An applicant to the TIF Evaluation competition 
may propose a PBCS that also covers staff who work in high-need high 
schools and, if selected for the evaluation competition, may use TIF 
funds for PBCSs in those schools. However, for reasons we summarize in 
the preceding paragraph, we have determined that an LEA's high-need 
high schools will not count toward the minimum of eight schools 
required under the TIF Evaluation competition.
    Changes: None.
    Comment: Three commenters cited the potential for confusion 
regarding the evaluation requirements for both the Main TIF competition 
and the TIF Evaluation competition; in particular, these commenters 
expressed concern that some applicants may believe that applying for 
the TIF Evaluation competition obviates the need for a local project 
evaluation required under the Main TIF competition.
    Discussion: The Department agrees that the local project evaluation 
described in the selection criteria of the Main TIF competition would 
add little or no utility for participants in the national evaluation 
selected under the TIF Evaluation competition and so does not believe 
that applicants selected under the TIF Evaluation competition should be 
required to conduct the local evaluations they propose in response to 
the Quality of Local Evaluation selection criteria. However, in the 
event that an applicant is not selected under the TIF Evaluation 
competition, the applicant's response to the local evaluation selection 
criteria will be reviewed as part of the Main TIF competition. For this 
reason, we are adding a Local Evaluation requirement to the TIF 
Evaluation requirements.
    Changes: We have added a new requirement, called the Local 
Evaluation requirement in the TIF Evaluation competition requirements. 
This new requirement clarifies that, in order to be eligible to receive 
points under the selection criteria of the Main TIF competition, 
applications must include a description of its local evaluation, 
demonstrated in its response to the selection criterion Quality of 
Local Evaluation. If an applicant is selected under the TIF Evaluation 
competition, the local evaluation plan will not be reviewed and will 
not be applicable for program implementation.
    Comment: Several commenters expressed concern about various aspects 
of the TIF Evaluation competition, including: The timeline and high 
matching requirements that could prevent many LEAs from applying, 
possible unfairness resulting from the selection of TIF Evaluation 
grantees before making awards under the Main TIF competition, lack of 
support in the statute for additional funding for Evaluation grantees, 
and unintended consequences on teacher employment decisions at control 
schools (e.g., teachers may leave control schools if they know that 
they cannot receive performance pay regardless of their

[[Page 28727]]

effectiveness). Finally, one commenter recommended an independent 
validation and peer-review of the IES evaluation.
    Discussion: The Department recognizes that the challenge of 
conducting an evaluation of the TIF program that uses randomized 
controlled methodology to the extent feasible, as required by the 
statute, has created a variety of concerns among commenters, including 
the fair treatment of applicants for both the Main TIF and TIF 
Evaluation competitions, tight timelines and high non-TIF program 
costs, and the difficulty of ensuring adequate participation by control 
schools that, by definition, will not be able to offer incentive 
payments to their teachers for the duration of the grant period. In 
response to many of these concerns, and to ensure high-quality 
evaluation results consistent with the statute, the Department has 
decided to implement, as outlined in this final notice, a hybrid of 
proposed comparison designs 1 and 2 that would provide a comparison 
between PBCSs implementing differentiated effectiveness incentive 
payments and PBCSs providing a small (i.e., 1 percent) across-the-board 
bonus to all teachers and principals. Through the TIF program, the 
Department will pay the full cost of this modest across-the-board bonus 
in order to make participation in the TIF Evaluation competition more 
appealing to potential applicants. This approach will permit a study 
design that examines the effectiveness of substantial differentiated 
payments on teacher and principal performance while keeping program 
costs reasonable and providing a sufficient incentive for participation 
by control schools.
    The Department does not believe, however, that additional financial 
support for TIF Evaluation grantees is inconsistent with the statutory 
authority for the TIF program, because this additional funding is 
essential to ensure the feasibility of the randomized controlled 
methodology specifically required by the statute. Finally, IES, which 
will manage the evaluation contract, will be guided by the expertise of 
an external technical working group to ensure the integrity and rigor 
of its study design, and all IES evaluations are subject to a rigorous 
external review process before the release of any findings.
    Changes: We have revised the study design in this final notice to 
include a comparison of the implementation of differentiated 
effectiveness incentive payments in Group 1 schools with the payment of 
annual, 1 percent across-the-board bonuses in Group 2 schools. Under 
the new hybrid comparison design, the IES evaluator will select, by 
lottery, one-half of the evaluation schools within an LEA to implement 
the applicant's proposed differentiated effectiveness incentive payment 
component of the PBCS. The other half of the schools within the LEA 
participating in the evaluation will implement a 1 percent across-the-
board annual bonus for teachers and principals, without implementing 
the differentiated effectiveness payment component. Both sets of 
schools would implement all of the non-payment components of the PBCS. 
Under this design, both treatment and control schools will receive 
additional TIF funds they may use for bonuses to attract educators as 
well as to pay for PBCS components. The evaluation will use a random 
assignment design consistent with the statute. Furthermore, we have 
removed the non-TIF match requirement that would have been applicable 
to proposed comparison design 2; there is no match requirement for the 
new hybrid design.
    Comment: Two commenters requested clarification regarding IES's 
data collection plans, as well as when collected information would be 
available to grantees.
    Discussion: IES's current data collection plan is designed to 
provide rich information about participating schools and staff, grant 
implementation, and rigorous impact data on educator recruitment, 
mobility, and student achievement. Data instruments will include 
grantee surveys and interviews, teacher and principal surveys, and 
student administrative records. IES expects to provide Evaluation 
competition grantees with regular and continuous evaluation results as 
they become available during and beyond the life of the 5-year grant 
period.
    Changes: None.
Evaluation Models
    Comment: A few commenters expressed a preference for comparison 
design 1 in the proposed TIF Evaluation competition, largely due to the 
higher cost of proposed comparison design 2, which would have required 
across-the-board salary increases that could be difficult to sustain 
beyond the grant period. In addition, one commenter expressed concern 
about predicting the required level of the across-the-board increases 
in the control schools before data are available on the actual size of 
incentive payments in the treatment schools.
    Discussion: As discussed earlier in this notice, upon consideration 
of the public comments, the Department has determined that neither 
proposed comparison design 1 nor proposed comparison design 2 is likely 
to produce the high-quality evaluation results that the law anticipates 
for the required randomized study. Consequently, the final TIF 
Evaluation competition requirements reflect a hybrid of these two 
designs, described elsewhere in this notice, which will compare the 
outcomes obtained by PBCSs implementing differentiated effectiveness 
incentive payments and PBCSs providing a small (i.e., 1 percent) 
across-the-board bonus to all teachers and principals. In particular, 
this new hybrid approach addresses the cost concerns raised by the 
commenters about the need for LEAs to be able to accurately predict 
their capacity to provide across-the-board salary increases.
    Changes: None.
    Comment: A number of commenters cited concerns about the proposed 
TIF Evaluation competition requirements, including the potential for 
high payouts (e.g., 15 percent of salary) limiting the number of 
applicants that can afford to participate in the TIF Evaluation 
program, uncertainty about defining ``significantly'' better 
performance, and doubts that two months provides sufficient advance 
notice to change behavior.
    Discussion: The Department believes that the potential for highly 
effective teachers and principals to receive substantially larger 
incentive rewards is essential both (1) to producing the measurable 
treatment effects required for meaningful and reliable evaluation 
results and (2) to implementing absolute priority 1. Hence, we envision 
that TIF Evaluation grantees and Main TIF grantees will have comparable 
differentiated incentive payment amounts.
    Moreover, certainly not all teachers who are eligible to 
participate in the PBCS will likely earn the additional compensation. 
The issue really is the amount that, on average, an LEA must set aside 
for performance-based compensation per teacher (i.e., higher incentive 
payments for the highest-performing teachers and principals will be 
offset by lower or no incentive payments for modestly performing 
teachers and principals), a context that we believe many if not most 
LEAs will find manageable.
    With regard to the meaning of ``significantly better'' performance, 
the Department believes that this definition will vary from one teacher 
evaluation system to another, and that it is appropriate to allow 
applicants to

[[Page 28728]]

propose their own locally based criteria for determining what 
constitutes ``significantly better.''
    Finally, while we agree that applicants should work with the IES 
evaluator to provide as much advance notice as possible of each 
school's status under the TIF Evaluation grant implementation plan, we 
believe that a minimum of two months notice is sufficient for affected 
teachers and principals to learn about the potential impact of the 
proposed PBCS and change their teaching practice in response. The 
Department also notes that a significant potential benefit of the 
planning period will be to give teachers and principals considerably 
more time to learn about a proposed PBCS prior to its implementation.
    Changes: None.
    Comment: Several commenters expressed concern about (1) the 
possible unintended consequences of the TIF Evaluation model designs, 
including the motivational effects on teachers of seeing performance-
based compensation withheld from them while it is granted to teachers 
in other high-need schools; (2) the possibility of incentives luring 
both effective and ineffective teachers to treatment schools, where 
they have a chance to earn more money through bonus and incentive 
payments; and (3) the reluctance of teachers to participate in a 
lottery-based selection process that would make only some of them 
eligible for increased compensation.
    Discussion: The Department agrees that these are legitimate 
concerns about the likely feasibility of the proposed comparison 
designs in the proposed TIF Evaluation competition; indeed, similar 
concerns led the Department to invite comment on two different proposed 
study designs. Ultimately, in considering public comment, the 
Department decided to implement a hybrid evaluation study design, 
described elsewhere in this final notice, which we believe is the best 
approach to minimizing the concerns raised by the commenters within the 
context of the TIF statute's requirement of a randomized design.
    Changes: None.
    Comment: Three commenters expressed concern that requiring eight 
schools with students in grades 3 through 8 would eliminate many small 
and medium-sized LEAs from consideration for TIF Evaluation awards. 
These commenters recommended that the selected evaluation design should 
ensure that a representative sample of schools (small, large, urban, 
rural, suburban) can meet the final design requirements. One commenter 
suggested that smaller LEAs could join consortia for purpose of 
reaching the eight-school requirement.
    Discussion: The Department agrees that larger LEAs are more likely 
to meet the proposed minimum number of schools requirement, but 
believes that this limitation is necessary due to the need to conduct a 
rigorous evaluation with limited resources. Extending the evaluation 
design to better accommodate LEAs with a smaller number of high-need 
schools in grades 3 through 8 will make the evaluation prohibitively 
complicated and expensive. For this reason, the study design emphasizes 
rigor over representativeness. We acknowledge that although the 
national evaluation will not provide representative estimates of the 
effect of the TIF program on all LEAs in the Nation, it will provide 
descriptive information on all grantees funded under the FY 2010 
competition. Also, we do agree that including consortia or intermediary 
units in the Evaluation design would be consistent with the needs of 
the evaluation design. Specifically, we believe it is appropriate to 
permit consortia or intermediary units that are considered LEAs under 
State law and that serve a coordinating function (i.e., where data are 
available from a centralized or coordinating entity) to participate in 
the TIF Evaluation competition.
    Changes: Consortia or intermediary units that are considered LEAs 
under State law and serve a coordinating function (i.e., data are 
available from a centralized or coordinating entity) are now eligible 
for the TIF Evaluation competition. The minimum number of schools 
required for the overall consortia or intermediary unit is still eight 
and proposed consortia or intermediary unit schools must meet other 
requirements (i.e., within the eight, each school is at least paired 
with another school at the same grade level and within the same State).
    Comment: Several commenters recommended changes to the IES 
evaluation plan. These changes included: (1) Gathering data about the 
preparation of teachers who receive incentive payments to help 
determine the effectiveness of such preparation; (2) requiring a letter 
from each participating LEA's superintendent, board, principals, and 
research office indicating agreement to comply with evaluation 
requirements; (3) measuring the impact of PBCSs on teachers of students 
with disabilities and gifted and talented students; (4) protecting the 
rights of students and other participants in the TIF Evaluation; and 
(5) ensuring that key decisions regarding the conduct of the evaluation 
are made in the best interests of students and staff in participating 
schools.
    Discussion: The Department believes that the data that will be 
collected as part of the rigorous, fair, and valid teacher evaluation 
systems required of TIF grantees will provide an excellent source for 
investigating the relative effectiveness of various forms of teacher 
preparation. However, investigations of factors affecting the 
preparation of teachers who receive incentive payments, while 
potentially important, are outside the scope of the TIF Evaluation 
competition, which is statutorily focused on the impact that PBCSs have 
on teacher and principal performance in high-need schools. We also note 
that the Commitment to Evaluation requirement of the proposed TIF 
Evaluation, which is retained unchanged in this final notice, requires 
letters from LEA superintendents, principals, and research offices 
indicating agreement to comply with all applicable TIF Evaluation 
requirements. In addition, to the extent that applicant PBCSs cover 
teachers of students with disabilities and teachers of gifted and 
talented students, the Department expects that these teachers will be 
included in the national TIF evaluation. As for protecting the rights 
and interests of students and other participants in the TIF Evaluation 
program, IES follows accepted ethical study procedures and its study 
designs and data collections are approved by both the Office of 
Management and Budget (OMB) and an independent Institutional Review 
Board. In addition, the statute authorizing IES requires protections 
related to data security and confidentiality, which IES follows. Also, 
IES is guided by the expertise of an external technical working group 
to ensure the integrity and rigor of its study design. Therefore, the 
Department believes that the IES evaluation plan already adequately 
addresses the commenters' concerns.
    Changes: None.
Matching Funds
    Comment: One commenter recommended that the Department allow prior 
investments in the planning and design of a PBCS to count as matching 
funds under new TIF awards.
    Discussion: The primary purpose of requiring a matching 
contribution under the TIF program is to encourage grantees to commit, 
over time, the resources they need to continue making incentive 
payments once the period of Federal funding has ended. Funding or other 
resources expended on planning prior to receipt of a TIF grant would 
not

[[Page 28729]]

promote this purpose. Moreover, the Department's regulations regarding 
matching contributions (34 CFR 74.23(a)(4) and 80.24) and cost 
principles issued by the OMB in its Circulars A-21 and A-87 (codified 
in 2 CFR parts 20 and 225) require that, to be allowable, a matching 
contribution must be something that would be an allowable cost if paid 
with Federal grant funds. A grantee's prior investment in other 
services or activities is not such a cost. For these reasons, the 
Department declines to permit such prior investments to count toward 
the required non-TIF match.
    Changes: None.
    Comment: One commenter requested flexibility, in recognition of the 
current State and local budget climate, to allow a greater contribution 
from TIF grant funds toward incentive payments in the initial award 
years. Another commenter noted that the percentage of an applicant's 
budget used for incentives may not increase in a linear fashion due to 
such factors as uneven assessment results and local budget issues such 
as declining enrollments and school closures. This commenter 
recommended that the final notice include instead the expectation for 
``an upward trend'' in both student achievement growth and the 
percentage of the applicant's budget used for incentive payments.
    Discussion: The NPP specifically proposed allowing grantees to 
begin with a small contribution in the early years of a TIF project, 
stating in the Background section that while there is no required 
minimum percentage local contribution, the Department ``would expect 
that as an LEA's PBCS becomes institutionalized, the percentage of its 
budget that is used for incentive payments would increase throughout 
the five-year grant period.'' In addition, priority 2 requires an 
applicant to provide, in its application, evidence that the applicant 
will provide, from non-TIF funds over the course of the five-year 
project period, an increasing share of performance-based compensation 
paid to teachers and principals in those project years in which the LEA 
provides such payments as part of its PBCS.
    With regard to the concern that the need for an increasing annual 
match may not materialize if actual need for compensation payments 
decreases from one year to another, we note that the costs of 
implementing a PBCS involve more than the performance-based 
compensation payments themselves. Beyond this, should the level of a 
grantee's contribution to supplemental staff compensation costs 
decrease from year to year because an LEA's overall level of 
compensation payments under its PBCS also decreases, the Department 
will be able to work with the grantee to adjust the level of match so 
that it corresponds to the amount of TIF funds needed for compensation 
payments compared to the amount that had been budgeted and anticipated.
    Changes: None.
Compensation Plans
    Comment: Three commenters stated that there is no research to 
support paying bonuses to individual teachers who increase student test 
scores and urged the Department to revise the final notice to encourage 
school-wide incentive systems. On the other hand, one commenter 
objected to mixed-group compensation, largely for the reason cited in 
the NPP--that the incentive for individuals to perform better 
potentially is weakened if their compensation depends on the 
performance of others.
    Discussion: The NPP proposed to allow, and not require, a grantee 
to use individual, group, or mixed-group incentives in its PBCS, and 
the Department sees no reason to prohibit any of these approaches, as 
each may have benefits and advantages depending on local circumstances. 
Moreover, permitting a variety of incentive models will encourage 
greater innovation and provide data to help determine which models work 
best and under what circumstances.
    Changes: None.
    Comment: One commenter recommended that the final notice permit an 
applicant to focus its PBCS on certain subjects or grade levels (or 
both) because, the commenter claimed, focusing on high-need subject 
areas could have greater impact than systems targeting other subjects. 
Another commenter asked whether an LEA could focus a PBCS on particular 
staff or schools (e.g., new teachers or elementary schools).
    Discussion: Applicants have flexibility under the final priorities, 
requirements, definitions, and selection criteria to design their PBCSs 
to reflect and meet local needs, including the selection of subjects 
and grade levels that will be included in the PBCSs. For example, an 
applicant with growth (as defined in this notice) or value-added data 
for certain subjects and grades would be permitted to develop a PBCS 
covering only teachers and principals responsible for those subjects 
and grades. An applicant also could choose to include only certain 
high-need schools, such as elementary schools, in its PBCS.
    Changes: None.
    Comment: One commenter urged that the final notice allow the use of 
TIF funds to pay at least a portion of master, mentor, or lead teacher 
salaries, while another recommended allowing payment of salaries for 
principal coaches.
    Discussion: As discussed in the NPP, the notice inviting 
applications (NIA) will demonstrate the Department's commitment to 
limiting the use of TIF funding awarded in the Main TIF competition to 
paying the salary of only one master, mentor, lead teacher, or academic 
coach per school. Paying for more than one such salary per school could 
significantly reduce the resources available for the performance-based 
incentives and rewards that are by law the primary focus of the TIF 
program. That said, grantees may use TIF funds for bonuses paid to such 
staff if the staff assume additional responsibilities under the PBCS. 
TIF Evaluation grantees, on the other hand, will receive at least $1 
million in additional funding over their five-year grant period that 
they can use to pay other TIF-related costs, and these funds may be 
used to pay the salaries of multiple master teachers, mentors, lead 
teachers or academic coaches in participating schools.
    Changes: None.
    Comment: One commenter requested that the Department clarify that 
incentives for taking on additional responsibilities and leadership 
roles could include financial incentives, such as salary increases and 
bonus payments.
    Discussion: The Application Requirements require each applicant to 
describe in its application how its proposed PBCS will provide 
educators with incentives to take on additional responsibilities and 
leadership roles (as defined in this notice). This language encompasses 
both financial and non-financial incentives.
    Changes: None.
    Comment: One commenter asserted that LEA-wide PBCSs are essential 
to obtain the ``complete buy-in'' from both local unions and school 
boards necessary for successful outcomes; this commenter recommended 
that the final notice allow use of TIF funds to support a PBCS for an 
entire LEA, not just specific schools within an LEA. In such cases, the 
commenter added, the PBCS could support teacher quality and improved 
student achievement broadly across an LEA while providing specific 
incentives for hard-to-staff schools and high-need students.
    Discussion: While the Department does not dispute the potential 
advantages of LEA-wide PBCSs, the statutory authority for the TIF 
program does not allow TIF funds to be used for incentive payments in 
such broad-based

[[Page 28730]]

systems. Instead, TIF funds may be used only for incentives and rewards 
provided to teachers, principals, and other school personnel who work 
in high-need schools (as defined in this notice) within an LEA. TIF 
funds also may be used more generally to help develop and implement the 
tools and systems required for a LEA-wide PBCS; however, incentive 
payments to teachers, principals, and other school personnel who work 
in non-high-need schools (as defined in this notice) must be paid for 
with non-TIF funds.
    Changes: None.
    Comment: One commenter suggested that meeting TIF program 
requirements could be difficult for resource-poor high-need schools and 
might have a negative impact on other reform efforts.
    Discussion: The Department recognizes that meeting all the 
requirements of the TIF program, as proposed in the NPP and described 
in this final notice, may be challenging for many high-need schools (as 
defined in this notice). However, while TIF funds are specifically 
intended to help high-need schools overcome such challenges, the 
Department believes that the development and implementation of an 
appropriate PBCS necessitates the requirements proposed in the NPP and 
retained in this final notice.
    Changes: None.
Incentives
    Comment: Two commenters asked for clarification regarding the size 
of incentive payments required by the TIF program; in particular, the 
commenters wanted to know if there is any research suggesting an 
appropriate incentive amount, or if the overall average of 5 percent of 
teacher salaries suggested in the TIF Evaluation requirements was the 
minimum required amount.
    Discussion: The Department is not aware of any definitive research 
regarding the optimal size of incentive payments for an effective PBCS 
and believes that a wide range of such payment amounts may be 
effective, depending on local circumstances and market conditions. The 
figure of 5 percent of the average teacher salary was provided only as 
an example; perhaps more important was the suggestion that creating 
meaningful differences in performance could require that the top-
performing teachers and principals receive 3 times this average amount, 
or 15 percent of a salary. In any case, this final notice, like the 
NPP, makes clear in priority 1 that the Department is not requiring a 
minimum incentive amount, but expects applicants to clearly explain why 
the amounts they choose for their PBCSs are ``high enough to create 
change in the behavior of current and prospective teachers and 
principals.''
    Changes: None.
    Comment: Several commenters recommended providing additional 
flexibility with respect to the types and amounts of incentives used in 
an LEA's PBCS. In particular, the commenters highlighted the importance 
of non-financial incentives such as professional development, time for 
collaboration and leadership opportunities, uncertainty about the 
precise level of financial incentive needed to change educator behavior 
and performance, and local market needs and requirements.
    Discussion: An applicant has flexibility to design its PBCS so that 
financial incentives and rewards are provided in combination with other 
incentives and support. In particular, as proposed in the NPP and 
finalized in this notice, the TIF program not only encourages, but also 
requires, high-quality professional development that is linked to the 
specific measures of teacher and principal effectiveness included in 
the PBCS, as well as opportunities to take on additional 
responsibilities and leadership roles (as defined in this notice).
    Changes: None.
    Comment: One commenter urged the Department to consider allowing 
TIF grantees to pay incentives only after positive student outcomes are 
obtained.
    Discussion: The priorities and requirements proposed in the NPP and 
announced in this final notice require grantees to develop and 
implement PBCSs that pay incentives based on improved student learning. 
Under paragraph (a) of priority 1, the PBCS must give significant 
weight to student growth (as defined in this notice) in determining and 
rewarding teacher and principal effectiveness. However, other important 
goals of the TIF program, such as encouraging effective teachers and 
principals to work in the most challenging schools and recruiting and 
retaining teachers for hard-to-staff subjects and specialty areas, may 
require incentive payments independent of improved student outcomes, 
because the positive outcome desired is improved recruitment and 
retention of effective teachers and principals.
    Changes: None.
    Comment: Two commenters recommended allowing incentive pay and 
other additional compensation for teachers who obtain further 
education, professional development, national certification, or who 
work in challenging schools, or serve as mentors or on school 
improvement committees.
    Discussion: The recommended factors described by the commenters are 
permitted as supplemental multiple measures that may be used when 
evaluating teacher and principal effectiveness under paragraph (c) of 
Priority 1. However, because such evaluations must give significant 
weight to student growth (as defined in this notice), these factors 
alone could not be the only measures used for compensating a teacher or 
principal under the proposed PBCS.
    Changes: None.
Definition of High-Need School
    Comment: Two commenters agreed with the definition of high-need 
school proposed in the NPP, which defines such a school as a school 
with 50 percent or more of its enrollment from low-income families, 
based on eligibility for free or reduced-price lunch subsidies under 
the Richard B. Russell National School Lunch Act, or other poverty 
measures that LEAs use. However, several other commenters recommended 
that the definition be changed to reflect the 40-percent poverty 
threshold used for schoolwide program eligibility under title I, part A 
of the ESEA. Other commenters also recommended that the definition be 
structured to consider academic need, and not just poverty status, to 
determine the eligibility of schools to participate in TIF-funded 
projects. For example, one commenter suggested that schools and LEAs in 
ESEA improvement status should be eligible for participation under the 
TIF program, regardless of poverty status. One commenter recommended 
using the persistently lowest-achieving schools definition from the SIG 
program. Two commenters urged the Department to change the definition 
so that high-need status is based only on academic factors. Finally, 
other commenters recommended defining need for the purposes of the TIF 
program at the LEA level rather than at the school level, as well as 
giving LEAs flexibility to determine need, particularly in cases where 
a school may miss the poverty threshold by one or two percentage 
points.
    Discussion: The Department gave careful consideration to the 
alternative definitions of high-need school recommended by commenters, 
but ultimately decided to retain the definition of high-need school 
that was proposed in the NPP. In Title I, Part A of the Elementary and 
Secondary Education Act of 1965, as amended, Congress authorized the 
lower 40-percent schoolwide program threshold in order to expand 
flexibility for schools to participate in Title I schoolwide

[[Page 28731]]

programs. However, the purpose of our definition of a high-need school 
in the NPP is to focus the limited funding that Congress has 
appropriated for TIF on assisting schools that serve the neediest 
communities. We are very concerned that lowering the poverty threshold 
for this program from 50 to 40 percent eligibility for free-and 
reduced-price lunch subsidies, as some commenters desire, will dilute 
the program's emphasis on helping such schools use PBCSs as one means 
to help increase student academic achievement. Moreover, the available 
data shows that even at the 50-percent poverty threshold, a regrettably 
large number of LEAs and States, in all parts of the Nation and in both 
urban and rural areas, will be able to identify enough high-need 
schools to support participation in the TIF program. Incorporating 
academic measures would dilute this focus on high-poverty schools, as 
many schools identified for improvement under the ESEA are low-poverty 
schools. Also, schools may be identified for ESEA improvement due to 
the performance of one or two relatively small subgroups of students, 
rather than the broader weaknesses in student achievement more commonly 
associated with our neediest schools. Finally, defining need at the LEA 
level would be inconsistent with the statutory authority for the TIF 
program, which clearly requires that the need for TIF program funds be 
measured at the school and not the LEA level.
    Changes: None.
Definition of Student Achievement
    Comment: One commenter suggested adding industry-recognized 
certificates and college credit to the alternative measures of student 
learning in the definition of student achievement.
    Discussion: Paragraph (b) of the definition of student achievement 
permits the use of alternative measures of student learning, which 
could include those suggested by the commenter, provided that they are 
rigorous and comparable across schools. Therefore, we do not believe 
that a change to the definition is necessary.
    Changes: None.
    Comment: One commenter urged the Department to delete from the 
definition of student achievement the requirement that alternative 
measures of student learning must be ``rigorous and comparable across 
schools,'' because the requirement effectively limits other measures to 
assessment results.
    Discussion: The Department declines to make the requested change 
because ensuring that alternative measures of student learning are 
rigorous and comparable across schools is essential if student 
achievement data based on such measures are to be part of a fair, 
valid, and reliable teacher evaluation system. Using non-comparable 
achievement data could result in unfair teacher ratings.
    Changes: None.
Definition of Student Growth
    Comment: One commenter argued that applicants for the TIF program 
should be able to use ``status'' measures of student achievement to 
evaluate teacher effectiveness if the LEAs in which the PBCS is to be 
implemented are in States that do not currently have assessment systems 
capable of measuring student growth (as defined in this notice).
    Discussion: Student achievement alone, as measured, for example, on 
the annual assessments required by the ESEA, is not sufficient for 
measuring the change in individual student achievement over time, which 
is an essential element of the teacher evaluation systems required by 
the TIF program. For this reason, all TIF applicants must be able to 
measure individual student growth (as defined in this notice), and may 
not use the ``snapshot'' of student achievement provided by ESEA 
assessments as a substitute for measuring growth (as defined in this 
notice).
    Changes: None.
Definition of Additional Responsibilities and Leadership Roles
    Comment: One commenter stated that the proposed definition of 
additional responsibilities and leadership roles in the NPP is too 
prescriptive. Another commenter recommended that the Department change 
this definition so that it is targeted specifically at improving 
teacher capacity and is linked to increasing student achievement, 
rather than student-focused activities, such as tutoring or mentoring 
individual students.
    Discussion: The Department believes that the definition of 
additional responsibilities and leadership roles is sufficiently broad 
to provide applicants with flexibility to define which duties and roles 
satisfy the definition. Moreover, as we acknowledged in the NPP, the 
list of additional responsibilities and leadership opportunities in the 
definition is not intended to be exhaustive, and we encourage 
applicants to develop opportunities for additional responsibilities and 
leadership roles (as defined in this notice) for their teachers, 
principals, and, at the applicant's discretion, other school personnel.
    Changes: None.

Selection Criteria

    Comment: One commenter recommended adding a new selection criterion 
related to sustainability, to encourage and reward the creation of LEA 
consortia that support PBCS sustainability. Another commenter suggested 
that an applicant's previous progress and achievements in developing or 
implementing a PBCS should be taken into account in scoring 
applications.
    Discussion: The Department believes that the sustainability goal 
recommended by the commenter is amply supported by priorities 2 and 3, 
related to financial sustainability and comprehensive approaches needed 
for PBCSs, and that adding an additional sustainability requirement to 
the selection criteria is unnecessary. We also believe that, in 
general, applicants that have started or completed various elements of 
a PBCS will likely be in a position to submit stronger applications 
than applicants that have not, and that therefore there is no need to 
give additional weight or priority to these ``early adopters.''
    Changes: None.
    Comment: None.
    Discussion: In reviewing the proposed selection criteria, the 
Department determined that in order to address criterion (b)(i), 
applicants would have to explain how the effectiveness of teachers, 
principals, and other personnel (in those sites in which the grantee 
wishes to expand the PBCS to additional staff in its schools) would be 
determined. However, the notice of proposed priorities did not 
specifically provide for applicants to submit this information. In 
order to ensure that peer reviewers may review this key information, 
the Department has decided to request it as part of the selection 
criteria.
    Changes: The Department has added sub-criterion (b)(1)(iii) to the 
selection criterion that asks applicants to provide a clear explanation 
of how teachers, principals, and other personnel (in those sites in 
which the grantee wishes to expand the PBCS to additional staff in its 
schools) are determined to be ``effective'' for the purposes of the 
proposed PBCS.
    Comment: None.
    Discussion: In reviewing the proposed selection criteria, the 
Department has determined that it is necessary to change (b)(1)(ii) to 
request an applicant's proposed methodology for determining the 
effectiveness of teachers, principals, and other personnel (in those 
sites in which the

[[Page 28732]]

grantee wishes to expand the PBCS to additional staff in its schools) 
using measures of student growth (as defined in this notice) instead of 
student achievement (as defined in this notice). The Department would 
like to be consistent in promoting student growth (as defined in this 
notice) as a significant component of an applicant's measure of 
effectiveness, as noted throughout the notice as well as in selection 
criterion (b)(1). Given this change, under selection criterion 
(b)(1)(ii), the Department has also removed the reference to norm- and 
criterion-referenced statewide assessment scores as valid and reliable 
measures of student growth. This reference is redundant with the 
definition of student growth (as defined in this notice), which 
references student achievement as a student's score on the State's 
assessments under the ESEA.
    Changes: Under selection criterion (b)(1)(ii), the term student 
achievement (as defined in this notice) has been replaced with student 
growth (as defined in this notice) and the statement regarding norm- 
and criterion-referenced statewide assessment scores has been removed.

Final Priorities

Types of Priorities

    When inviting applications for a competition using one or more 
priorities, we designate the type of each priority as absolute, 
competitive preference, or invitational through a notice in the Federal 
Register. The effect of each type of priority follows:
    Absolute priority: Under an absolute priority, we consider only 
applications that meet the priority (34 CFR 75.105(c)(3)).
    Competitive preference priority: Under a competitive preference 
priority, we give competitive preference to an application by (1) 
awarding additional points, depending on the extent to which the 
application meets the priority (34 CFR 75.105(c)(2)(i)); or (2) 
selecting an application that meets the priority over an application of 
comparable merit that does not meet the priority (34 CFR 
75.105(c)(2)(ii)).
    Invitational priority: Under an invitational priority, we are 
particularly interested in applications that meet the priority. 
However, we do not give an application that meets the priority a 
preference over other applications (34 CFR 75.105(c)(1)).

Final Priorities

    The Secretary establishes the following priorities for the TIF 
program. We may apply these priorities in any year in which this 
program is in effect. All of the priorities are applicable under both 
the Main TIF competition and the TIF Evaluation competition.

Absolute Priorities

Priority 1 (Absolute)--Differentiated Levels of Compensation for 
Effective Teachers and Principals
    To meet this absolute priority, an applicant must demonstrate, in 
its application, that it will develop and implement a PBCS that 
rewards, at differentiated levels, teachers and principals who 
demonstrate their effectiveness by improving student achievement (as 
defined in this notice) as part of the coherent and integrated approach 
of the local educational agency (LEA) to strengthening the educator 
workforce. In determining teacher and principal effectiveness as part 
of the PBCS, the LEA--
    (a) Must give significant weight to student growth (as defined in 
this notice), based on objective data on student performance;
    (b) Must include observation-based assessments of teacher and 
principal performance at multiple points in the year, carried out by 
evaluators trained in using objective evidence-based rubrics for 
observation, aligned with professional teaching standards; and, if 
applicable, as part of the LEA's coherent and integrated approach to 
strengthening the educator workforce; and
    (c) May include other measures, such as evidence of leadership 
roles (as defined in this notice), that increase the effectiveness of 
other teachers in the school or LEA.
    In determining principal effectiveness as part of a PBCS, the LEA 
must give significant weight to student growth (as defined in this 
notice) and may include supplemental measures such as high school 
graduation and college enrollment rates.
    In addition, the applicant must demonstrate that the differentiated 
effectiveness incentive payments will provide incentive amounts that 
are substantial and provide justification for the level of incentive 
amounts chosen. While the Department does not propose a minimum 
incentive amount, the Department encourages applicants to be thorough 
in their explanation of why the selected incentive amounts are likely 
high enough to create change in the behavior of current and prospective 
teachers and principals in order to ultimately improve student 
outcomes.
Priority 2 (Absolute)--Fiscal Sustainability of the Performance-Based 
Compensation System (PBCS)
    To meet this absolute priority, the applicant must provide, in its 
application, evidence that:
    (a) The applicant has projected costs associated with the 
development and implementation of the PBCS, during the project period 
and beyond, and has accepted the responsibility to provide such 
performance-based compensation to teachers, principals, and other 
personnel (in those sites in which the grantee wishes to expand the 
PBCS to additional staff in its schools) who earn it under the system; 
and
    (b) The applicant will provide from non-TIF funds over the course 
of the five-year project period an increasing share of performance-
based compensation paid to teachers, principals, and other personnel 
(in those sites in which the grantee wishes to expand the PBCS to 
additional staff in its schools) in those project years in which the 
LEA provides such payments as part of its PBCS.
Priority 3 (Absolute)--Comprehensive Approaches to the Performance-
Based Compensation System (PBCS)
    To meet this absolute priority, the applicant must provide, in its 
application, evidence that the proposed PBCS is aligned with a coherent 
and integrated strategy for strengthening the educator workforce, 
including in the use of data and evaluations for professional 
development and retention and tenure decisions in the LEA or LEAs 
participating in the project during and after the end of the TIF 
project period.
Competitive Preference Priorities (Priorities 4 through 6) Priority 4 
(Competitive Preference)--Use of Value-Added Measures of Student 
Achievement
    To meet this competitive preference priority, the applicant must 
demonstrate, in its application, that the proposed PBCS for teachers, 
principals, and other personnel (in those sites in which the grantee 
wishes to expand the PBCS to additional staff in its schools) will use 
a value-added measure of the impact on student growth (as defined in 
this notice) as a significant factor in calculating differentiated 
levels of compensation provided to teachers, principals, and other 
personnel (in those sites in which the grantee wishes to expand the 
PBCS to additional staff in its schools).
    Under this priority, the applicant must also demonstrate that it 
has a plan to ensure that, as part of the PBCS, it has

[[Page 28733]]

the capacity to (1) implement the proposed value-added model (e.g., 
through robust data systems that collect the necessary data and ensure 
data quality), and (2) clearly explain the chosen value-added model to 
teachers to enable them to use the data generated through the model to 
improve classroom practices.
Priority 5 (Competitive Preference)--Increased Recruitment and 
Retention of Effective Teachers to Serve High-Need Students and in 
Hard-to-Staff Subjects and Specialty Areas in High-Need Schools
    To meet this competitive preference priority, the applicant must 
demonstrate in its application that its proposed PBCS is designed to 
assist high-need schools (as defined in this notice) to (1) serve high-
need students (as defined in this notice), (2) retain effective 
teachers in teaching positions in hard-to-staff subjects and specialty 
areas, such as mathematics, science, special education, and English 
language acquisition, and (3) fill vacancies with teachers of those 
subjects or specialty areas who are effective or likely to be 
effective. The applicant must provide an explanation for how it will 
determine that a teacher filling a vacancy is effective or likely to be 
effective. In addition, applicants must demonstrate, in their 
applications, the extent to which the subjects or specialty areas they 
propose to target are hard-to-staff. Lastly, applicants must 
demonstrate, in their applications, that they will implement a process 
for effectively communicating to teachers which of the LEA's schools 
are high-need and which subjects and specialty areas are considered 
hard-to-staff.
Priority 6 (Competitive Preference)--New Applicants to the Teacher 
Incentive Fund
    To meet this competitive preference priority, an applicant must be 
a new applicant to the TIF program. For the purposes of this priority, 
a new applicant is (1) an eligible entity that has not previously been 
awarded a grant under the TIF program, or (2) a nonprofit organization 
that previously received funding through TIF, as part of a partnership 
with one or more LEAs or SEAs, but that is applying to work with a 
different group of eligible LEAs or SEAs than it worked with under any 
previous TIF grant. Under this competitive preference priority, a 
current nonprofit grantee may not propose to use new TIF funds to 
compensate for any activities related to the development and 
implementation of its PBCS in LEAs and high-need schools (as defined in 
this notice) already served under the current grant. Rather, a 
nonprofit organization that is a current TIF grantee may only use new 
TIF funds for the costs of implementing the PBCS in high-need schools 
(as defined in this notice) that have not previously received TIF 
funds.

Final Main TIF Competition Requirements

    The Secretary establishes the following requirements for the Main 
TIF competition. We may apply these requirements in any year in which 
this program is in effect.
    Selection of Competition. An applicant may submit an application 
for either the Main TIF competition or the TIF Evaluation competition. 
Each applicant must identify in its application the competition for 
which it is applying. Decisions regarding awards for the TIF Evaluation 
program will be made prior to doing so for the Main TIF competition, so 
that applicants not funded in the TIF Evaluation competition will still 
be eligible for funding under the Main TIF competition.
    Application Requirement. Each applicant must describe in its 
application how its proposed PBCS will provide educators with 
incentives to take on additional responsibilities and leadership roles 
(as defined in this notice).
    Core Elements of a PBCS and a Potential Planning Period. Each 
applicant must either--
    (a) Demonstrate in its application that it has in place the five 
core elements that follow; or
    (b) If the applicant cannot demonstrate in its application that it 
has in place each of the five core elements--
    (1) Agree, as part of its application, to implement a planning 
period of up to one year, during which it will use its TIF funds to 
develop the core element or elements it lacks; and
    (2) Include, in its application, a plan for how it will implement 
the core element or elements it lacks during the planning period.
    Core Elements.
    (a) A plan for effectively communicating to teachers, 
administrators, other school personnel, and the community at-large the 
components of its PBCS;
    (b) The involvement and support of teachers, principals, and other 
personnel (including input from teachers, principals, and other 
personnel in the schools and LEAs to be served by the grant) and the 
involvement and support of unions in participating LEAs (where they are 
the designated exclusive representatives for the purpose of collective 
bargaining) that is needed to carry out the grant;
    (c) Rigorous, transparent, and fair evaluation systems for teachers 
and principals that differentiate effectiveness using multiple rating 
categories that take into account student growth (as defined in this 
notice) as a significant factor, as well as classroom observations 
conducted at least twice during the school year. The evaluation process 
must: (1) Use an objective, evidence-based rubric aligned with 
professional teaching or leadership standards and the LEA's coherent 
and integrated approach to strengthening the educator workforce; (2) 
provide for observations of each teacher or principal at least twice 
during the school year by individuals (who may include peer reviewers) 
who are provided specialized training; (3) incorporate the collection 
and evaluation of additional forms of evidence; and (4) ensure a high 
degree of inter-rater reliability (i.e., agreement among two or more 
raters who score approximately the same);
    (d) A data-management system \1\ that can link student achievement 
(as defined in this notice) data to teacher and principal payroll and 
human resources systems; and
---------------------------------------------------------------------------

    \1\ Successful applicants that receive Teacher Incentive Fund 
program grant awards must ensure that the program's PBCS, including 
the necessary data systems, complies with the Family Educational 
Rights and Privacy Act (FERPA), including the regulations in 34 CFR 
Part 99, as well as any applicable State and local requirements 
regarding privacy.
---------------------------------------------------------------------------

    (e) A plan for ensuring that teachers and principals understand the 
specific measures of teacher and principal effectiveness included in 
the PBCS, and receive professional development that enables them to use 
data generated by these measures to improve their practice.
    Planning Period Requirements. Each grantee that implements a 
planning period to develop the core element or elements it lacks, is--
    (a) Required to demonstrate in its annual performance report or 
other interim performance report that it has implemented any of the 
five core elements it had lacked at the start of the project; and
    (b) Prohibited from using TIF program funds to provide incentive 
payments to teachers, principals, and other personnel (in those sites 
in which the grantee wishes to expand the PBCS to additional staff in 
its schools) until it has implemented a PBCS that, to the Secretary's 
satisfaction, has all five core elements.
    Professional Development. Each applicant must demonstrate, in its

[[Page 28734]]

application, that its proposed PBCS will include a high-quality 
professional development component for teachers and principals 
consistent with the definition of the term professional development in 
section 9101(34) of the ESEA.
    The applicant must demonstrate that its PBCS has a professional 
development component in place, or a specific plan for developing one, 
that is directly linked to the specific measures of teacher and 
principal effectiveness included in the PBCS. The professional 
development component of the PBCS must--
    (1) Be based on needs assessed either at the high-need schools (as 
defined in this notice) participating in the applicant's proposed PBCS 
or LEA-wide;
    (2) Be targeted to individual teachers' and principals' needs as 
identified in the evaluation process;
    (3) Provide--
    (a) Those teachers and principals in participating TIF schools who 
do not receive differentiated compensation based on effectiveness under 
the PBCS with the tools and skills they need to improve their 
effectiveness in the classroom or school and be able to raise student 
achievement (as defined in this notice); and
    (b) Those teachers and principals who are deemed to be effective 
and who, therefore, receive differentiated compensation under the PBCS, 
with the tools and skills they need to (1) continue effective practices 
in the classroom or school and raise student achievement (as defined in 
this notice), and (2) successfully assume additional responsibilities 
and leadership roles (as defined in this notice);
    (4) Support teachers and principals to better understand and use 
the measures of effectiveness in the PBCS to improve practice and 
student achievement (as defined in this notice); and
    (5) Include a process for regularly assessing the effectiveness of 
this professional development in improving teacher and leadership 
practice to increase student achievement (as defined in this notice) 
and making modifications necessary to improve its effectiveness.
    High-Need Schools Documentation. Each applicant must demonstrate, 
in its application, that the schools to be served by the proposed PBCS 
are high-need schools (as defined in this notice). Each applicant must 
provide, in its application, a list of schools in which the proposed 
PBCS will be implemented as well as the most current data on the 
percentage of each identified school's students who are eligible for 
free or reduced-price lunch subsidies under the Richard B. Russell 
National School Lunch Act, or other poverty measures that the LEA uses 
(see section 1113(a)(5) of the ESEA (20 U.S.C. 6313(a)(5))). Data 
provided to demonstrate eligibility as a high-need school (as defined 
in this notice) must be school-level data; the Department will not 
accept LEA- or State-level data for purposes of documenting whether a 
school is a high-need school (as defined in this notice).
    Additional Eligibility Requirement. Each applicant that currently 
participates in a TIF project must confirm in its application either 
that--
    (a) Its proposed PBCS would be available to educators in high-need 
schools (as defined in this notice) in which the LEA does not currently 
make a TIF-supported PBCS available; or
    (b) If the applicant's current TIF project serves only principals 
or only teachers, its proposed project would add teachers or 
principals, respectively, who work in high-need schools (as defined in 
this notice) and who are not eligible for performance-based 
compensation under the applicant's current TIF project's PBCS.
    If awarded a grant, the grantee must maintain its PBCS for teachers 
and principals in high-need schools (as defined in this notice) for the 
duration of the new TIF project period. An applicant may also propose 
to have other personnel (in those sites in which the grantee wishes to 
expand the PBCS to additional staff in its schools) who work in high-
need schools (as defined in this notice) benefit from the PBCS.

Final TIF Evaluation Competition Requirements

    In addition to the requirements and priorities for the Main TIF 
competition, which applicants for the TIF Evaluation competition are 
also required to meet, the Secretary includes the following 
requirements for the TIF Evaluation competition only:
    Budget Information. In exchange for its agreement to participate in 
the national TIF Evaluation, a successful applicant for the TIF 
Evaluation competition will receive a minimum of $1 million of 
additional funding over the 5-year grant period (above the amount of 
funding awarded to it to implement the PBCS proposed in its 
application) for the four pairs of schools selected to participate in 
the evaluation. For each additional pair of schools participating in 
the evaluation, a successful applicant will receive an additional 
$250,000, up to a maximum total additional award of $2 million.
    An applicant for the TIF Evaluation competition must provide, in 
its application, a proposed budget that indicates how it plans to use 
the additional funds the Department would award. While these additional 
funds must be used for TIF-related activities, examples of acceptable 
expenses include the costs of:
    (1) Academic coaches such as mathematics and reading coaches, and 
Master, Mentor, or Lead Teacher salaries beyond those the Department 
will otherwise fund under the Main TIF competition (the Department 
approves expenses related to one salary, per position, per high-need 
school (as defined in this notice) within the project scope);
    (2) Activities such as expenses related to release time for 
teachers to attend professional development beyond those the Department 
will otherwise fund under the Main competition (the Department does not 
allow for an unreasonable amount of substitute teacher salaries to 
compensate for this release time);
    (3) Support for the PBCS that would otherwise need to be paid with 
non-TIF funds in order to implement the applicant's plan for fiscal 
sustainability under absolute priority 2; and
    (4) Costs associated with participating in the national evaluation, 
such as preparing administrative student records for use by the 
national evaluator.
    Incentive Amounts. Consistent with absolute priority 1, an 
applicant for the TIF Evaluation competition must demonstrate, in its 
application, that it will implement a PBCS that uses--
    (1) Incentive payments to principals based on differentiated levels 
of effectiveness in which--
    (a) The average principal payout (defined as the total amount of 
principal payments divided by the total number of principals in the 
schools participating in the differentiated effectiveness incentive 
payment component of the PBCS) is substantial (e.g., 5 percent of the 
average principal salary);
    (b) The criteria for determining whether a principal is eligible 
for payment are challenging (e.g., payments are made to only those who 
perform significantly better than the current average performance among 
study schools within the LEA) \2\ and
---------------------------------------------------------------------------

    \2\ For the purposes of the TIF Evaluation competition, an 
``LEA'' includes consortia and intermediary units, so long as they 
are considered an LEA under State law.
---------------------------------------------------------------------------

    (c) There is an expectation of meaningful differences in resulting 
principal pay (e.g., at least some principals could reasonably expect 
to receive an incentive payment of three

[[Page 28735]]

times the average principal payout, and the applicant's documentation 
of cost projections is consistent with this expectation); and
    (2) Incentive payments to teachers based on differentiated levels 
of effectiveness in which--
    (a) The average teacher payout (defined as the total amount of 
teacher payments divided by the total number of teachers in the schools 
participating in the differentiated effectiveness incentive payment 
component of the PBCS) is substantial (e.g., 5 percent of the average 
teacher salary);
    (b) The criteria for determining whether a teacher is eligible for 
payment are challenging (e.g., payments are made only to those who 
perform significantly better than the current average performance among 
study schools within the LEA); and
    (c) There is an expectation of meaningful differences in resulting 
teacher pay (e.g., at least some teachers could reasonably expect to 
receive an incentive payment of three times the average teacher payout 
and the applicant's documentation of cost projections is consistent 
with this expectation).
    Implementation of Evaluation. Each applicant under the TIF 
Evaluation competition must agree, in its application, to implement its 
differentiated effectiveness incentive component of the PBCS and a 1 
percent across-the-board annual bonus in at least one LEA in accordance 
with the implementation plan developed by the Institute of Education 
Sciences (IES) evaluator, Mathematica Policy Research (http://www.mathematica-mpr.com/education/tifgrantee.asp). Specifically, the 
IES evaluator will select by lottery one-half of the evaluation schools 
within the LEA (i.e., ``Group 1'') to implement the applicant's 
proposed differentiated effectiveness incentive payment component of 
the PBCS. The other half of the schools within the LEA (i.e., ``Group 
2'') participating in the evaluation will implement a 1 percent across-
the-board annual bonus for teachers, principals, and other personnel 
(in those sites in which the grantee wishes to expand the PBCS to 
additional staff in its schools). The applicant must identify, in its 
application, the schools that are proposed for participation in the 
evaluation.
    In participating LEAs that have the five core elements in place at 
the time of the initial grant award, the first group of schools in that 
LEA (Group 1 schools) must begin implementation of all components of 
the PBCS at the beginning of the 2010-2011 school year. In a 
participating LEA that does not yet have in place the five core 
elements necessary to implement a successful PBCS at the time of award, 
the first group of schools in that LEA (Group 1 schools) must begin 
implementation of all components of the PBCS no later than the 2011-
2012 school year.
    The following table illustrates the TIF Evaluation random 
assignment plan, depending on the amount of planning time an applicant 
needs:

------------------------------------------------------------------------
                                Random assignment  Pay component of PBCS
                                       \a\                  \b\
------------------------------------------------------------------------
LEAs Ready for 2010-11          Group 1..........  Differentiated pay
 Implementation.                                    implemented starting
                                                    in 2010-11.
                                Group 2..........  Across-the-board
                                                    annual 1 percent
                                                    bonus implemented
                                                    starting in 2010-11
                                                    through 2014-15.
LEAs Ready for 2011-12          Group 1..........  Differentiated pay
 Implementation.                                    implemented starting
                                                    in 2011-12.
                                Group 2..........  Across-the-board
                                                    annual 1 percent
                                                    bonus implemented
                                                    starting in 2011-12
                                                    through 2014-15.
------------------------------------------------------------------------
\a\ For each LEA, the IES evaluator will randomly assign the schools
  participating in the Evaluation into 2 groups (Groups 1 and 2).
\b\ The school year listed is the first year in which the differentiated
  effectiveness incentive component of the PBCS will be implemented in
  the LEA's schools participating in the designated group.

    Commitment to Evaluation. An applicant for the TIF Evaluation 
competition must demonstrate, in its application, that each 
participating LEA and school is willing to participate in the TIF 
Evaluation. Documentation demonstrating this commitment must include, 
for each participating LEA--
    (1) A letter from the LEA superintendent and the principals of the 
participating schools stating that those officials agree to meet the 
TIF Evaluation competition requirements, including adhering to the 
implementation plan of the IES evaluator, which involves selection 
through a lottery of those schools to implement the differentiated 
effectiveness component among the schools participating in the 
evaluation.
    (2) A letter from the research office or research board of the 
participating LEA that expresses an agreement to comply with the TIF 
Evaluation requirements (if the LEA requires such research office 
approval).
    Advance Notice. Each applicant must agree, in its application, to 
work with the IES evaluator to notify all eligible schools 
participating in the TIF Evaluation at least two months prior to the 
assigned Group 1 implementation schedule. The Department will waive 
this advance notice for any applicants that are eligible to implement 
their PBCS in 2010-11 (i.e., meet the five core requirements) so long 
as the program is implemented according to the evaluator's assigned 
group status (Note: The evaluator will be ready to assign group status 
immediately upon grant award, or if the applicant prefers, the 
applicant can discuss with Mathematica prior to grant award how to 
comply with the evaluation requirements by contacting Mathematica at 
http://www.mathematica-mpr.com/education/tifgrantee.asp).
    Implementation of All Non-differentiated Effectiveness Incentive 
Components. Each applicant must agree, in its application, to implement 
the non-differentiated effectiveness incentive components of its PBCS 
(e.g., bonuses for leadership or additional responsibilities and 
professional development activities) in all of the LEA's participating 
schools (those in Groups 1 and 2) starting at the same time as the 
differentiated effectiveness incentive component of its PBCS is 
implemented in the Group 1 schools. The schools in Group 2 must not 
implement the differentiated effectiveness incentive component of its 
PBCS for the duration of the TIF grant.
    Scope of Schools. An applicant for the TIF Evaluation competition 
must demonstrate, in its application, that it will implement a PBCS in 
eight or more high-need schools (as defined in this notice) in an LEA 
that has students in tested subjects or grades (i.e., students in 
grades three through eight). At least two of the schools proposed to 
participate in the TIF Evaluation must be from within the same grade 
configuration (i.e., if elementary schools are proposed there are at 
least two elementary schools among the minimum of eight schools all 
within the same LEA; if middle schools are proposed there are at least 
two middle schools among the minimum of eight

[[Page 28736]]

schools all within the same LEA). Applicants that include multiple LEAs 
must meet the scope of schools requirement in at least one LEA. In 
addition, no LEA will have more than 16 high-need schools (as defined 
in this notice) selected for the TIF Evaluation.
    An applicant that is a consortium of small LEAs or an intermediary 
unit that is considered an LEA under State law does not have to have 
eight eligible schools in a participating LEA provided that the 
consortium or intermediary unit serves a coordinating function (i.e., 
data are available from a centralized or coordinating entity). In this 
case, the minimum number of schools required for the consortium or 
intermediary unit is still eight, and within the eight, each school is 
at least paired with another school at the same grade level and within 
the same State. The Department will use the number of eligible schools, 
up to 16 per LEA, that a successful applicant makes available for the 
TIF Evaluation.
    Local Evaluation. In order to be eligible to receive points under 
the selection criteria, TIF Evaluation competition applicants must 
include a description of its local evaluation, demonstrated in its 
response to the selection criterion Quality of Local Evaluation. For 
the purposes of the TIF Evaluation competition, the score for this part 
of the application will not be used to rank the application. For the 
purposes of the Main TIF competition, if applicable, the score for this 
part of the application will be used to rank the application. If an 
applicant is selected under the TIF Evaluation competition, the local 
evaluation plan will not be reviewed and will not be applicable for 
program implementation.

Final Definitions

    The Secretary establishes the following definitions for the TIF 
program. We may apply these definitions in any year in which this 
program is in effect.
    High-need school means a school with 50 percent or more of its 
enrollment from low-income families, based on eligibility for free or 
reduced-price lunch subsidies under the Richard B. Russell National 
School Lunch Act, or other poverty measures that LEAs use (see section 
1113(a)(5) of the ESEA (20 U.S.C. 6313(a)(5)). For middle and high 
schools, eligibility may be calculated on the basis of comparable data 
from feeder schools. Eligibility as a high-need school under this 
definition is determined on the basis of the most currently available 
data.
    Student achievement means--
    (a) For tested grades and subjects--
    (1) A student's score on the State's assessments under the ESEA; 
and
    (2) As appropriate, other measures of student learning, such as 
those described in paragraph (b) of this definition, provided that they 
are rigorous and comparable across schools; and
    (b) For non-tested grades and subjects, alternative measures of 
student learning and performance, such as student scores on pre-tests 
and end-of-course tests; student performance on English language 
proficiency assessments; and other measures of student achievement that 
are rigorous and comparable across schools.
    Student growth means the change in student achievement (as defined 
in this notice) for an individual student between two or more points in 
time. A State or LEA may also include other measures that are rigorous 
and comparable across schools.
    High-need students means students at risk of educational failure or 
otherwise in need of special assistance and support, such as students 
who are living in poverty, who attend high-minority schools, who are 
far below grade level, who have left school before receiving a regular 
high-school diploma, who are at risk of not graduating with a diploma 
on time, who are homeless, who are in foster care, who have been 
incarcerated, who have disabilities, or who are English learners.
    Additional responsibilities and leadership roles means additional 
duties teachers may voluntarily accept, such as: (1) Serving as master 
or mentor teachers who are chosen through a performance-based selection 
process (including through assessment of their teaching effectiveness 
and the ability to work effectively with other adults and students) and 
who have responsibilities to share effective instructional practices 
and/or to assess and improve the teaching effectiveness of other 
teachers in the school; (2) roles in induction and mentoring of novice 
teachers or high-need students (as defined in this notice); (3) 
tutoring students; or (4) roles in establishing and developing learning 
communities designed to continually improve the capacity of all 
teachers in a school to advance student learning, using a shared set of 
practices, instructional principles, or teaching strategies.

Selection Criteria

    The Secretary establishes the following selection criteria for 
evaluating an application under the TIF program. We may apply one or 
more of these criteria in any year in which this program is in effect. 
In the notice inviting applications, we will announce the maximum 
possible points assigned to each criterion.
    (a) Need for the project. In determining the need for the proposed 
project, the Secretary will consider the extent to which the applicant 
establishes that--
    (1) The high-need schools (as defined in this notice) whose 
educators would be part of the PBCS have difficulty--
    (i) Recruiting highly qualified or effective teachers, particularly 
in hard-to-staff subjects or specialty areas, such as mathematics, 
science, English language acquisition, and special education; and
    (ii) Retaining highly qualified or effective teachers and 
principals.
    (2) Student achievement (as defined in this notice) in each of the 
schools whose educators would be part of the PBCS is lower than in what 
the applicant determines are comparable schools in the LEA, or another 
LEA in its State, in terms of key factors such as size, grade levels, 
and poverty levels;
    (3) A definition of what it considers a ``comparable'' school for 
the purposes of paragraph (2) of this selection criterion is 
established.
    (b) Project design. The Secretary will consider the quality of the 
design of the proposed project. In determining the quality of the 
design of the proposed project, the Secretary will consider the extent 
to which the proposed PBCS--
    (1) Is part of a proposed LEA or statewide strategy, as 
appropriate, for improving the process by which each participating LEA 
rewards teachers, principals, and other personnel (in those sites in 
which the grantee wishes to expand the PBCS to additional staff in its 
schools) in high-need schools (as defined in this notice) based upon 
their effectiveness as determined in significant part by student growth 
(as defined in this notice). With regard to the effectiveness of 
teachers, principals, and other personnel, the Secretary will consider 
whether--
    (i) The methodology the LEA or SEA proposes to use in its PBCS to 
determine the effectiveness of a school's teachers, principals, and 
other personnel (in those sites in which the grantee wishes to expand 
the PBCS to additional staff in its schools) includes valid and 
reliable measures of student growth (as defined in this notice);
    (ii) The participating LEA would use the proposed PBCS to provide 
performance awards to teachers, principals, and other personnel (in 
those sites in which the grantee wishes to expand the PBCS to 
additional staff in its schools) that are of sufficient size to affect 
the behaviors of teachers,

[[Page 28737]]

principals, and other personnel and their decisions as to whether to go 
to, or remain working in, the high-need school; and
    (iii) The applicant provides a clear explanation of how teachers, 
principals, and other personnel (in those sites in which the grantee 
wishes to expand the PBCS to additional staff in its schools) are 
determined to be ``effective'' for the purposes of the proposed PBCS.
    (2) Has the involvement and support of teachers, principals, and 
other personnel (in those sites in which the grantee wishes to expand 
the PBCS to additional staff in its schools), including input from 
teachers, and principals, and other personnel in the schools and LEAs 
to be served by the grant, and the involvement and support of unions in 
participating LEAs where they are the designated exclusive 
representatives for the purpose of collective bargaining that is needed 
to carry out the grant;
    (3) Includes rigorous, transparent, and fair evaluation systems for 
teachers and principals that differentiate levels of effectiveness 
using multiple rating categories that take into account data on student 
growth (as defined in this notice) as a significant factor, as well as 
classroom observations conducted at least twice during the school year;
    (4) Includes a data-management system, consistent with the LEA's 
proposed PBCS, that can link student achievement (as defined in this 
notice) data to teacher and principal payroll and human resources 
systems; and
    (5) Incorporates high-quality professional development activities 
that increase the capacity of teachers and principals to raise student 
achievement (as defined in this notice) and are directly linked to the 
specific measures of teacher and principal effectiveness included in 
the PBCS.
    (c) Adequacy of Support for the Proposed Project. In determining 
the adequacy of the support for the proposed project, the Secretary 
considers the extent to which--
    (1) The management plan is likely to achieve the objectives of the 
proposed project on time and within budget, and includes clearly 
defined responsibilities and detailed timelines and milestones for 
accomplishing project tasks;
    (2) The project director and other key personnel are qualified to 
carry out their responsibilities, and their time commitments are 
appropriate and adequate to implement the project effectively;
    (3) The applicant will support the proposed project with funds 
provided under other Federal or State programs and local financial or 
in-kind resources; and
    (4) The requested grant amount and project costs are sufficient to 
attain project goals and reasonable in relation to the objectives and 
design of the project.
    (d) Quality of Local Evaluation. In determining the quality of the 
local project evaluation, the Secretary considers the extent to which 
the applicant's evaluation plan--
    (1) Includes the use of strong and measurable performance 
objectives (that are clearly related to the goals of the project) for 
raising student achievement (as defined in this notice), increasing the 
effectiveness of teachers, principals and other personnel (in those 
sites in which the grantee wishes to expand the PBCS to additional 
staff in its schools), and retaining and recruiting effective teachers, 
principals, and other personnel;
    (2) Will produce evaluation data that are quantitative and 
qualitative; and
    (3) Includes adequate evaluation procedures for ensuring feedback 
and continuous improvement in the operation of the proposed project.
    This notice does not preclude the Department from proposing 
additional priorities, requirements, definitions, or selection 
criteria, subject to meeting applicable rulemaking requirements.

    Note: This notice does not solicit applications. In any year in 
which we choose to use one or more of these priorities, 
requirements, definitions, and selection criteria, we invite 
applications through a notice inviting applications published in the 
Federal Register.

    Executive Order 12866:
    Under Executive Order 12866, the Secretary must determine whether 
this regulatory action is ``significant'' and, therefore, subject to 
the requirements of the Executive Order and subject to review by OMB. 
Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action likely to result in a rule that may 
(1) have an annual effect on the economy of $100 million or more, or 
adversely affect a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
tribal governments, or communities in a material way (also referred to 
as an ``economically significant'' rule); (2) create serious 
inconsistency or otherwise interfere with an action taken or planned by 
another agency; (3) materially alter the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raise novel legal or policy 
issues arising out of legal mandates, the president's priorities, or 
the principles set forth in the Executive order. Pursuant to the 
Executive order, it has been determined that this regulatory action 
will have an annual effect on the economy of more than $100 million 
because the amount of government transfers provided through the TIF 
program will exceed that amount. Therefore, this action is 
``economically significant'' and subject to OMB review under section 
3(f)(1) of the Executive order.
    The potential costs associated with this regulatory action are 
those resulting from statutory requirements and those we have 
determined as necessary for administering this program effectively and 
efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of this regulatory action, we have determined that the 
benefits of the final priorities, requirements, definitions, and 
selection criteria justify the costs.
    We have determined, also, that this regulatory action does not 
unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.

Need for Federal Regulatory Action

    These final priorities, requirements, definitions, and selection 
criteria are needed to implement the TIF program. The Secretary does 
not believe that the statute, by itself, provides a sufficient level of 
detail to ensure that the program achieves the greatest national impact 
in promoting educational innovation. The authorizing language is very 
brief and provides only broad parameters governing the program. The 
final priorities, requirements, definitions, and selection criteria 
established in this notice provide greater clarity on the types of 
activities the Department seeks to fund, and permit the Department to 
fund projects that are closely aligned with the Secretary's priorities.
    In the absence of specific selection criteria for the TIF program, 
the Department would use the general selection criteria in 34 CFR 
75.210 in selecting grant recipients. The Secretary does not believe 
the use of those general criteria would be appropriate for the Main TIF 
grant and TIF Evaluation competitions, because they do not focus on the 
development of PBCSs or activities most likely to increase the quality 
of teaching and school administration and improve educational outcomes 
for students.

Regulatory Alternatives Considered

    The Department considered a variety of possible priorities, 
requirements, definitions, and selection criteria before deciding to 
establish those included in

[[Page 28738]]

this notice. The final priorities, requirements, definitions, and 
selection criteria are those that the Secretary believes best capture 
the purposes of the program while clarifying what the Secretary expects 
the program to accomplish and ensuring that program activities are 
aligned with Departmental priorities. The final priorities, 
requirements, definitions, and selection criteria also provide eligible 
applicants with flexibility in selecting activities to apply to carry 
out under the program. The Secretary believes that the final 
priorities, requirements, definitions, and selection criteria thus 
appropriately balance a limited degree of specificity with broad 
flexibility in implementation.

Summary of Costs and Benefits

    The Secretary believes that the final priorities, requirements, 
definitions, and selection criteria do not impose significant costs on 
eligible applicants. The Secretary also believes that the benefits of 
the final priorities, requirements, definitions, and selection criteria 
outweigh any associated costs.
    The Secretary believes that the final priorities, requirements, 
definitions, and selection criteria will result in the selection of 
high-quality applications to implement activities that are most likely 
to improve the quality of teaching and educational administration. The 
final priorities, requirements, definitions, and selection criteria are 
intended to provide clarity as to the scope of activities the Secretary 
expects to support with program funds and the expected burden of work 
involved in preparing an application and implementing a project under 
the program. Eligible applicants need to consider carefully the effort 
that will be required to prepare a strong application, their capacity 
to implement a project successfully, and their chances of submitting a 
successful application.
    The Secretary believes that the costs imposed on applicants by the 
final priorities, requirements, definitions, and selection criteria 
will be limited to paperwork burden related to preparing an application 
and that the benefits of the final priorities, requirements, 
definitions, and selection criteria outweigh any costs incurred by 
applicants. The costs of carrying out activities will be paid for with 
program funds and with matching funds. Thus, the costs of 
implementation are not a burden for any eligible applicants, including 
small entities. However, under the final selection criteria the 
Secretary will assess the extent to which an eligible applicant is able 
to sustain a project once Federal funding through the TIF program is no 
longer available. Thus, eligible applicants should propose activities 
that they will be able to sustain without funding from the program and, 
thus, in essence, should include in their project plan the specific 
steps they will take for sustained implementation of the proposed 
project.

Accounting Statement

    As required by OMB Circular A-4 (available at http://www.Whithouse.gov/omb/Circulars/a004/a-4.pdf), in the following table, 
we have prepared an accounting statement showing the classification of 
the expenditures associated with the provisions of this final 
regulatory action. This table provides our best estimate of the Federal 
payments to be made to States, LEAs, and nonprofit organizations under 
this program as a result of this final regulatory action. This table is 
based on funds available for new awards under this program from the 
ARRA supplemental appropriation and the fiscal year 2010 appropriation. 
Expenditures are classified as transfers to those entities.

      Accounting Statement Classification of Estimated Expenditures
------------------------------------------------------------------------
                 Category                      Transfers (in millions)
------------------------------------------------------------------------
Annual Monetized Transfers................  $437.0.
From Whom to Whom.........................  Federal Government to
                                             States, LEAs, and
                                             nonprofits.
------------------------------------------------------------------------

    Paperwork Reduction Act of 1995: The requirements and selection 
criteria established in this notice require the collection of 
information that is subject to review by OMB under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3520). The Department has 
received approval to submit the information collections described in 
this section for OMB review under emergency processing.
    We estimate that each applicant will spend approximately 248 hours 
of staff time to address the requirements and selection criteria, 
prepare the application, and obtain necessary clearances. Based on the 
number of applications the Department received in the first competition 
it held (in FY 2006), we expect to receive approximately 120 
applications for these funds. The total number of hours for all 
expected applicants is an estimated 29,760 hours. We estimate the total 
cost per hour of the applicant-level staff who carry out this work to 
be $30 per hour. Therefore, the total estimated cost for all applicants 
will be $892,800.
    Waiver of Congressional Review Act:
    These regulations have been determined to be major for purposes of 
the Congressional Review Act (CRA) (5 U.S.C. 801, et seq.). Generally, 
under the CRA, a major rule takes effect 60 days after the date on 
which the rule is published in the Federal Register. Section 808(2) of 
the CRA, however, provides that any rule which an agency for good cause 
finds (and incorporates the finding and a brief statement of reasons 
therefore in the rule issued) that notice and public procedure thereon 
are impracticable, unnecessary, or contrary to the public interest, 
shall take effect at such time as the Federal agency promulgating the 
rule determines.
    These final priorities, requirements, definitions, and selection 
criteria are needed to implement the new TIF authority provided by the 
Departments of Labor, Health and Human Services, and Education, and 
Related Agencies Appropriations Act, 2010 and the ARRA. The Department 
must award TIF funds authorized under both the Appropriations Act and 
the ARRA to qualified applicants by September 30, 2010, or the funds 
will lapse. Even on an extremely expedited timeline, it is 
impracticable for the Department to adhere to a 60-day delayed 
effective date for the final priorities, requirements, definitions, and 
selection criteria and make grant awards to qualified applicants by the 
September 30, 2010 deadline. When the 60-day delayed effective date is 
added to the time the Department will need to receive applications 
(approximately 45 days), review the applications (approximately 21 
days), and finally approve applications (approximately 65 days), the 
Department will not be able to award funds authorized under the 
Appropriations Act and ARRA to applicants by September 30, 2010. The 
delayed effective date would be impracticable and contrary to the 
public interest. The Department has therefore determined that, pursuant 
to section 808(2) of the CRA, the 60-delay in the effective date 
generally required for congressional review is impracticable, contrary 
to the public interest, and waived for good cause.

Regulatory Flexibility Act Certification

    The Secretary certifies that this final regulatory action will not 
have a significant economic impact on a substantial number of small 
entities. The small entities that this proposed regulatory action may 
affect are (1) small LEAs, and (2) nonprofit organizations applying for 
and receiving funds under this program in partnership with an LEA or 
SEA. The Secretary

[[Page 28739]]

believes that the costs imposed on an applicant by the final 
priorities, requirements, definition, and selection criteria will be 
limited to paperwork burden related to preparing an application and 
that the benefits of implementing these proposals outweigh any costs 
incurred by the applicant.
    Participation in the TIF program is voluntary. For this reason, the 
final priorities, requirements, definitions, and selection criteria 
impose no burden on small entities unless they apply for funding under 
a TIF program using the priorities, requirements, definitions, and 
selection criteria established in this notice. We expect that in 
determining whether to apply for TIF funds, an eligible entity will 
evaluate the requirements of preparing an application and implementing 
a TIF project, and any associated costs, and weigh them against the 
benefits likely to be achieved by implementing the TIF project. An 
eligible entity will probably apply only if it determines that the 
likely benefits exceed the costs of preparing an application and 
implementing a project. The likely benefits of applying for a TIF 
program grant include the potential receipt of a grant as well as other 
benefits that may accrue to an entity through its development of an 
application, such as the use of its TIF application to spur development 
and implementation of PBCSs without Federal funding through the TIF 
program.
    The U.S. Small Business Administration (SBA) Size Standards define 
``small entities'' as for-profit or nonprofit institutions with total 
annual revenue below $7,000,000 or, if they are institutions controlled 
by small governmental jurisdictions (that are comprised of cities, 
counties, towns, townships, villages, school districts, or special 
districts), with a population of less than 50,000. The Urban 
Institute's National Center for Charitable Statistics reported that of 
146,802 nonprofit organizations that had an educational mission and 
reported revenue to the Internal Revenue Service (IRS) by January 2010, 
142,357 (97 percent) had revenues of $5 million or less. In addition, 
there are 12,484 LEAs in the country that meet the SBA's definition of 
small entity. While these entities are eligible to apply for funding 
under the TIF program, the Secretary believes that only a small number 
of them will be interested in applying, thus reducing the likelihood 
that the priorities, requirements, definitions, and selection criteria 
proposed in this notice will have a significant economic impact on 
small entities. In the first TIF competition that the Department held 
in FY 2006, approximately 21 nonprofit organizations applied for 
funding in partnership with an LEA or SEA, and few of these 
organizations appeared to be a small entity. The Secretary has no 
reason to believe that a future competition under this program would be 
different. To the contrary, we expect that the competitions run under 
Public Law 111-8 and the ARRA will be similar to the FY 2006 
competition because only a limited number of nonprofit organizations 
are working actively on the development of teacher and school leader 
PBCSs and many of these organizations are larger organizations.
    In addition, the Secretary believes that the priorities, 
requirements, definitions, and selection criteria established in this 
notice do not impose any additional burden on a small entity applying 
for a grant than the entity would face in the absence of the final 
action. That is, the length of the applications those entities would 
submit in the absence of the final regulatory action and the time 
needed to prepare an application would likely be the same.
    Further, this final regulatory action may help a small entity 
determine whether it has the interest, need, or capacity to implement 
activities under the program and, thus, prevent a small entity that 
does not have such an interest, need, or capacity from absorbing the 
burden of applying.
    This final regulatory action will not have a significant economic 
impact on a small entity once it receives a grant because it will be 
able to meet the costs of compliance using the funds provided under 
this program and with any matching funds provided by private-sector 
partners.
    Intergovernmental Review: This program is subject to Executive 
Order 12372 and the regulations in 34 CFR 79. One of the objectives of 
the Executive Order is to foster an intergovernmental partnership and a 
strengthened federalism. The Executive Order relies on processes 
developed by State and local governments for coordination and review of 
proposed Federal financial assistance.
    This document provides notification of our specific plans and 
actions for this program.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or computer diskette) on request to the program contact 
person listed under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: You can view this document, as 
well as all other documents of this Department published in the Federal 
Register, in text or Adobe Portable Document Format (PDF) on the 
Internet at the following site: www.ed.gov/news/fedregister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site.

    Note:  The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: www.gpoaccess.gov/nara/index.html.

    Dated: May 18, 2010.
Thelma Mel[eacute]ndez de Santa Ana,
Assistant Secretary for Elementary and Secondary Education.
[FR Doc. 2010-12218 Filed 5-20-10; 8:45 am]
BILLING CODE 4000-01-P
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