When Principals Rate Teachers

March 2006
Brian Jacob, Lars Lefgren

Elementary- and secondary-school teachers in the United States traditionally have been compensated according to salary schedules based solely on experience and education. Concerned that this system makes it difficult to retain talented teachers and provides few incentives for them to work to raise student achievement while in the classroom, many policymakers have proposed merit-pay programs that link teachers’ salaries directly to their apparent impact on student achievement.

Until recently, only a handful of isolated districts had attempted such programs. Now entire state systems are moving toward merit pay, with new policies established recently in Florida and Texas requiring districts to set teachers’ salaries based in part on the gains their students are making on the state’s accountability exam.

Implementing a merit-pay system, however, comes with challenges. Students often have more than one teacher but take only one high-stakes test. How do we know which teacher to reward? If students are not tested annually in each subject, how do we determine the merit of a teacher in a year without testing? How do we fairly assess the impact of a teacher during a testing year if we do not know how students performed during the previous school year? Can a merit-pay system overcome these obstacles?