The Debate Over Differentiated Pay:
The Devil is In the Details

By Barbara Miner

If you want to stir up a hornet’s nest of controversy, propose merit pay for teachers. Based on decades of experience with programs that rewarded a few teachers based on standardized test scores, legions of teachers will search for the biggest, deadliest cans of Raid they can find.

But if you want to start an interesting discussion, propose an alternative pay structure that goes beyond the traditional reliance on seniority and graduate-level credits and also promotes teacher leadership. Educators who agree on any number of issues, from the dangers of privatization to the importance of smaller class sizes, may differ strongly on how to respond to your proposal.

Welcome to pay for performance. Or alternative compensation. Or differentiated pay. Whatever you call it, it is emerging as a leading debate in education reform. The only surefire agreement among progressive teachers and union activists: Don’t use the term “merit pay” unless you want to end the discussion before it begins. Even noneducators President Barack Obama and Education Secretary Arne Duncan know better. Despite media headlines that consistently refer to their “merit pay” proposals, neither has used that term in their speeches or initiatives.

“Everybody knows we are against merit pay, that’s not new,” notes Kay Brilliant, director of education policy and practice for the National Education Association (NEA). “The question for everybody who is writing and thinking about it is: ‘What is it we are actually talking about here? What do we want?’”

Both the NEA and the American Federation of Teachers (AFT) have made it clear they do not outright oppose modifications in the traditional salary system, but insist it be done at the local level with the input and support of teachers and, in states with collective bargaining, as part of the union contract. They have also made clear that the devil is in the details.

Historically, those details have often proved poisonous for students, teachers, and schools because the merit pay plans focused on standardized test scores, distorted the curriculum, set teachers against each other in a scramble for crumbs from a limited pie of money, and were imposed by noneducators with little understanding of classroom and school realities.

In recent years, however, the discussion has evolved and, particularly among union activists, has moved far beyond the merit pay proposals of previous decades. Some union locals have linked differentiated pay to “career ladders” for teachers, to encouraging national board certification, or to supporting teachers as mentors and districtwide curriculum leaders. Younger teachers, frustrated that they can’t reach the maximum salary without postgraduate degrees and many years of seniority, have increased the pressure to rethink pay structures.

‘My favorite term is differentiated pay, with the differentiation
on grounds that are both plausible and credible to teachers’
—Adam Urbanski, president of the Rochester Teachers Union
and founder of the Teacher Union Reform Network.

At the same time, other developments have narrowed the debate. No Child Left Behind (NCLB) and the testing craze, for instance, have forced schools to narrow the definition of student achievement to results on standardized tests; a crudely economist approach has increasingly limited the purpose of public schooling to getting ahead in the global marketplace. Within that context, any suggestion of linking pay to student achievement becomes suspect.

And now there are the Obama administration’s Race to the Top proposals, under which $4.3 billion in federal monies will be granted to spur innovation and to reform public schools. After the proposed guidelines were issued in late July, discussions over differentiated pay suddenly became more contentious as the administration linked quality teaching to standardized test scores.

The NEA, for instance, in Aug. 21 comments regarding the proposed guidelines, noted: “Up to this point, the NEA has been a vocal supporter of the Obama administration’s plans to transform public education. . . . Given the details of the Race to the Top grant proposal, NEA must now ask: Where did that commitment to local communities go? . . . [Regarding assessing student learning,] what is being proposed is simply tweaking the current top-down, federally mandated insistence on hewing to standardized test scores.”

To get a hint of the variety of approaches on how to respond to the debate on differentiated pay, which is separate from but now intertwined with the Obama/Duncan proposals, consider these comments:

Adam Urbanski, president of the Rochester Teachers Union in New York and founder of the Teacher Union Reform Network:

First of all, I believe a response is required and is long overdue. And the reason we are dealing with such bad renditions of this issue is because we have not come to a consensus among ourselves about what should be the conversation. And so, as Machiavelli said, if you don’t have an agenda, theirs will do. . . .

If you don’t come to the table, you run the risk of finding yourself on the menu. The single salary schedule that we now have is indeed on its way out. And it should be replaced, or at least amended, in important ways.

Monty Neill, executive director of FairTest, a national advocacy group exposing the misuse of standardized testing:

If it’s merit pay or performance pay and it’s a bad idea based on the history of its use or its use in other areas, then it’s a bad idea and should be rejected and you’re not required to have an alternative. . . . Coming out of the Duncan Department of Ed is the assumption that this differential pay or other variations is going to improve learning outcomes. We don’t know that.

We are being asked to make all these changes with no evidence that it is going to improve student learning, which, according to Duncan, is the point of it all.

Mark Simon, former president of the Montgomery County Education Association and currently with the Tom Mooney Institute for Teacher and Union Leadership:

I think that people who are worried and upset that Obama’s policies aren’t changing enough [from the Bush administration], they have a right. They have a basis. But I think the flip side is also right, because Obama and Duncan have really taken to heart the phrase, we want to do it with you, not to you. . . .

There is a sufficient degree of openness on the details that teacher unions and other organizations that represent teachers need to jump in with ideas and pilot projects. This is the moment for educators to not just be part of the conversation, but to drive the conversation. Shame on us if we don’t.

Henry Giroux, a professor at McMaster University in Canada and a leading educational theoretician, in a commentary July 24 on the TruthOut website:

Arne Duncan, by any educational standard, is a hardwired disciple of free-market ideology, who largely views schools as a business and defines educational reform within the language of market-driven values and social relations. . . . In fact, his language largely echoes the conservative market-driven values of both the Bush administration and the chamber of commerce. . . .

Obama and Duncan want to treat teachers as low-skilled factory workers by creating market-based notions of reward and competitiveness.

‘This is the moment for educators to not just be part  of the conversation, but to drive the conversation. Shame on us if we don’t.’
—Mark Simon, Mooney Institute for Teacher and Union Leadership

What’s the Plan?
Bill Raabe, director of collective bargaining and member advocacy for the NEA, has experience with differentiated pay structures across the country. “When I talk to my members, I say, ‘Don’t focus on the words so much as what’s underneath them.’”

Raabe advises that educators ask, first and foremost, what is the purpose of proposed changes in the pay structure. To place experienced teachers in hard-to-staff schools? To attract and retain younger teachers? To promote new forms of professional development? To nurture mentor teachers and help them share their expertise? Or, as was true with many traditional merit pay proposals, to more easily blame teachers for the failures of public education by fostering the assumption that teachers would do a better job if they competed against each other in order to win merit bonuses?

The NEA advocates that any proposed change in pay structure must answer three basic questions: What is going to be measured? How is it going to be measured? Is there a sustainable source of money to pay for it?

The complexity of negotiations is underscored by the fact that there isn’t even agreement on what to call the various plans being discussed. Even the most common term among educators, performance pay, grates on many (“It makes me feel like a circus animal,” said one union activist).

“My favorite term is differentiated pay, with the differentiation on grounds that are both plausible and credible to teachers,” says Urbanski, whose Rochester union has more than two decades of experience with negotiating contracts outside the traditional pay structure. At this point, according to Urbanski, the district has four tiers of teachers, each with differing salary ranges and obligations: intern, resident, professional, and lead teacher.

Much of the impetus for re-examining the pay structure has come from noneducators, in particular politicians and the business community. But within teaching, younger teachers are more open to looking at changing the pay structure. At a time when teacher retention is a growing problem, it is hard to attract and retain young people who feel the current structures are unfair because they have to wait 20 years to reach the same pay scale as the burned-out teacher down the hall. What’s more, if they move to another district, they often lose their seniority-based pay.

Jim Carlson, a regional staffer for the Wisconsin Education Association Council and a founder of the Educator Compensation Institute, helped develop a union-supported proposal in Wisconsin called A-PATH (Accomplished Teaching Pathways). Carlson says he is “absolutely convinced” that differentiated compensation is an issue whose time has come: “We need to allow a broader, more systemic view of teacher compensation that is designed to accomplish four primary objectives: attract quality teachers; retain them; improve and enhance their teaching skills once they are there; and, finally, to add to the collective body of knowledge of what constitutes effective teaching practices.”

Carlson and Urbanski are representative of a new breed of teacher union and labor advocates who have been operating under the radar screen of a media preoccupied with headlines about failing urban schools, lemon teachers, abysmal test scores, and the much-needed stick of merit pay. But, they stress, for every potentially useful change in pay structure that is done in collaboration with teachers under the rubric of the union contract, there are horror stories of misguided measures imposed from the top and driven by test scores. Younger teachers may be open to new ideas, but veteran teachers are rightfully suspicious of tampering with their pay in an era of economic uncertainty and budget cutbacks.

There are any number of merit pay horror stories. Take Florida, where the legislature has come up with four different plans in seven years.

“Florida is the poster child of how to do alternative pay the wrong way,” notes Carlson. “They made every mistake you could think of.”

There was no teacher involvement in the program’s creation or implementation, and no attempt to gather data on whether the program met its goals.Additional pay was limited to a minority percentage of teachers, merit was determined largely by standardized test scores, districts had little ability to modify the program, and the pot of money was predetermined—so if more teachers became eligible, they received a smaller amount of money.

Even in recent reincarnations, the plan has been criticized as an expensive failure. An investigation last year by the St. Petersburg Times, for instance, found that about three-quarters of the nearly 5,000 teachers who received merit pay in Hillsborough County worked at more affluent schools, and only 3 percent worked in low-income schools. The program was so poorly conceived that 60 of Florida’s 67 school districts refused to participate, even though it held the promise of more money for the district. As the St. Petersburg Times editorialized after its investigation, “The biggest obstacle to performance pay in Florida schools is not the unions. It’s the ham-handed attempts by lawmakers and DOE [Department of Education] to dictate how teachers must be judged.”

‘Coming out of the Duncan Department of Ed is the assumption
that this differential pay or other variations is going to improve
learning outcomes. We don’t know that.’
—Monty Neill, executive director of FairTest

Beyond the Florida Fiasco
It’s easy to develop a performance pay plan that will distort the curriculum and enrage teachers. The more difficult question is whether and how to modify the traditional pay structure in a way that has the potential to promote better teaching, improve teacher pay, and give teachers control, via the union contract, of the program’s implementation.

Nor should differentiated pay be a substitute for demanding decent minimum pay for all teachers. A 2007 study by the international management consultant firm McKinsey & Company found that starting teacher salaries in the United States are far below the international norm. In South Korea and Germany, starting salaries were about 141 percent of per capita GDP. The figure for the United States was only 81 percent, the lowest of the 10 countries surveyed. A report from the Economic Policy Institute last year found that when teachers are compared to professionals in occupations with comparable education levels and skills (accountants, registered nurses, computer programmers), teachers’ weekly earnings were, on average, almost 15 percent less.

Although the media promotes the view that teacher unions are inflexibly opposed to modifying the traditional pay structure, both the AFT and NEA have been involved in local initiatives that differentiate teacher pay. Nor are teachers as a group opposed to discussing changes. A 2008 national survey by the AFT found that teachers would support additional compensation for reasons such as additional responsibilities (85 percent), high evaluations by administrators and other teachers (58 percent), and gains in student achievement as measured by portfolios, projects, and other nonstandardized test results (53 percent). Some 88 percent favored giving additional pay to teachers working in a hard-to-staff school. The teachers’ biggest concerns were that changes would be unfair to teachers in classes and schools with the most difficult students to teach (49 percent), and that salaries would be tied to test scores rather than to teaching children (36 percent).

It’s not surprising that teachers would be concerned about pay plans that are too rigidly tied to standardized test scores. Such fears are borne out by the history of merit pay, by the media and business community’s fascination with test scores, with the growing emphasis in this digitalized world on “data,” and with misperceptions that surround differentiated pay plans that go far beyond test scores. Take the case of Denver.

Cases in Point: Denver and Minneapolis
Generally seen as the most developed differentiated pay plan in any major district, Denver’s plan is a complicated, union-bargained system that was implemented only after a union-supported pilot program. “There is a great deal about Denver’s plan that is terrific,” argues Carlson, who was a consultant with the pilot program. “But people always focus on a very tiny part, which is the bonus tied to test scores, which is only less than 1 percent of the total compensation system. I get frustrated because the merit pay stuff, even though it’s a small amount, is extremely sexy to the media.”

NEA leader Brilliant argues that the Denver pay structure, whether it is ultimately deemed a success or failure, is a model in how the issue was approached and negotiated. “They took a lot of time, involved a lot of people, practiced before they made it mandatory, and went out and found the money,” she says.

As with any contract-negotiated change in pay, the Denver plan is complicated. The NEA website describes it this way:
In 2005, Denver became the first big city school system to buy into pay-for-performance with a complex system called “ProComp.” Teacher approval was contingent on voters passing a $25 million tax increase, enough for an average of $6,000 per teacher.

The plan was bargained, not imposed, after a union-management pilot project. It is optional for teachers already in the system, mandatory for new hires. It replaces the old salary schedule. There are no seniority steps. The extra money goes to individuals, but there’s no limit on how many teachers can get raises at a school, so colleagues are not competing. The biggest raises are for graduate degrees and extra courses. Teachers can also qualify for more money by getting good evaluations from principals, by working in schools or fields in which there is a shortage of candidates, and for helping their students meet test score goals. Test score goals are not one-size-fits-all. They are negotiated, case-by-case, between teachers and principals.

Brad Jupp, who served six years as a union representative and teacher leader to help create the Denver plan (and who recently joined Duncan’s Department of Education), has co-authored a book on it. In a chapter titled “Adapt or Die?” the authors explain that they wrote the book in part “to encourage other districts, states, and unions to give alternative forms of teacher compensation a try, to convince them that it is not like eating glass—at least most of the time—and that many of the obstacles can be overcome by simply refusing to give up on an idea whose time has come.”

Although Denver is the most widely known differentiated pay structure negotiated in collaboration with the union, labor advocates often cite other examples, from Rochester, N.Y., to Manitowoc, Wis., to Minneapolis.

As in Denver, the Minneapolis plan developed over a decade and currently has four different categories in which people can increase their pay: education, professional development, professional leadership, and professional responsibility. In June 2006, teachers voted for the Alternative Teacher Professional Pay System, with additional votes of support in subsequent years. Under the plan, individual teachers have the choice whether to move to a new salary schedule or stay with the traditional salary package. At this point, most teachers have moved to the alternative pay plan, according to Louise Sundin, a founder of the Teacher Union Reform Network who was a national vice president of the AFT for 25 years and served 22 years as president of the Minneapolis Federation of Teachers.

Sundin argues that, done right, differentiated pay addresses not only questions of teachers receiving the money they deserve, but also is an important tool to reshape professional development in a district. “If you are going to pay teachers for professional development, it then needs to go through the pay process and collective bargaining,” she says. “If teachers are smart, they are in control of that entire plan. So it wrests some of the power away from the district and helps put it collaboratively in the hands of the union and district.”

Sundin says she “absolutely” believes we are in a new era and that there is an opportunity to counter the overarching influence of standardized tests on education reform. “The people who are involved in the new direction of the Education Department are people who I think understand how destructive the punishment part of AYP [adequate yearly progress] was. You’ll notice that they don’t use the term NCLB anymore, and are going back to ESEA,” she said, referring to the original name of federal involvement in K-12 schools, the Elementary and Secondary Education Act, which dates back to the Johnson administration and its War on Poverty in the 1960s.

A number of other union activists are more cautious about the Obama administration’s direction on education, and stress the importance of holding Duncan and Obama to their oft-repeated statements that they want to do reform “with” teachers and not “to” them. “We need to develop a strategy of beating them at their own game,” argues Simon. “That’s the best approach, and it’s an opportunity for unions to step up to the plate.”

By the time school doors opened in September, concerns about the Obama education policies had increased, based on everything from Duncan’s history in Chicago, to appointments to the Department of Education of non-educators with a pro-testing mind-set, to the initial guidelines for Race to the Top funds.

“It’s true that Obama and Duncan are not using the term NCLB, because they have agreed that the name is toxic,” notes Neill. “The question is, will they change the substance? . . . I would argue that this [the Obama/Duncan Race to the Top initiative] is a major push to tie teacher salary and evaluation in some form to student test scores. That is the overarching context; it is very problematic and is essentially a bad idea.”

But, one might argue, the Obama/Duncan train has left the station, whether one likes it or not. “Every time someone says, ‘We can’t stop the train,’ it increases the likelihood that the train won’t be stopped,” Neill counters. “If it’s a train down a bad track, that’s bad news.”

Urbanski takes a different approach. If the train is going in a bad direction, he says, “let’s get into one of the cars in the train and make it a whole lot better than the rest of the train. So that at least the Obama administration would have a choice. Right now they are largely proceeding on a path of their own because of lack of alternatives from teachers and unions.”

Clearly, there are strong differences on how to respond to differentiated pay, especially given the controversies over the Obama/Duncan proposals. But that doesn’t bother Urbanski. “It’s OK to argue about important things, and this is important. It’s only a problem when you argue about petty things.”

“I think we want the same thing,” he continues, noting agreement among progressive activists about the need for reforming public schools, and the importance of respecting and supporting both teachers and students and treating them as more than standardized-test robots. “We are arguing about how to get there.”

Does the Private Sector‘Pay for Performance’?

One of the persistent arguments in support of pay for performance is that the private sector successfully uses merit pay to reward and/or fire workers, so why should teachers be exempt from this proven strategy?
Consider this recent statement by Theodore Hershberg, a University of Pennsylvania professor and executive director of Operation Public Education in Philadelphia: “The whole society is based on merit. Why is public education the only place where we don’t give a damn if you’re any good?”
Or the view by billionaire and education philanthropist Eli Broad, that he “could not think of any other profession [besides teaching] that does not have any rewards for excellence.”

It turns out, however, that such assumptions are simplistic—and wrong.

A study released in May by the Economic Policy Institute (EPI), “Teachers, Performance Pay, and Accountability,” found that “relatively few private sector workers have pay that varies in a direct, formulaic way with their productivity, and that the share of such workers is probably declining.”

The EPI study on the private sector and performance pay is not a quick read—it’s 118 pages, and incorporates a variety of studies with differing definitions of performance pay. Its section on education refers primarily to plans driven by standardized test results, and thus some might argue it does not encompass the range of proposals in local districts throughout the country. Overall, however, the study is a much-needed collection of data on performance pay in the private sector and what lessons there might be for public education.

Performance pay now covers only about one in seven workers and accounts for only a small part of their pay, according to the report.

There is only one sector where performance pay structures are increasing: According to the study, expansion in performance pay in the private sector “is largely a non-union, male phenomenon concentrated among managers and professionals and in finance, insurance, and real estate.” by Barbara Miner