To be successful, Odden and Kelley suggest that one percent of a community's total education budget should be allocated to its performance-based teacher bonus system.
Funding can come from a variety of sources.
Re-inventing Teacher Compensations Systems presents case studies of four performance pay programs, including one in Dallas, Texas. There a school-based performance reward program is part of the district's accountability program, the report notes. The program, created by a 1990 Commission with substantial business community involvement, provides cash awards to teachers based on standardized test results. In 1994, a second tier of awards was added to provide incentives to those lower ranked, but improving, schools. The School Incentive Reward Program, begun in 1984, awards performance bonuses to be used for instructional purposes.