Archived Information

[CPRE Finance Briefs - Reporting on Issues and Research in Education Finance]

Reinventing Teacher Compensation Systems

September 1995

by Carolyn Kelley and Allan Odden


Carolyn Kelley is an assistant professor at the University of Wisconsin-Madison where she directs CPRE's Teacher Compensation Project. She also has conducted research on school-linked services and the utility of private sector approaches to public school problems. Allan Odden is professor of education administration at the University of Wisconsin-Madison where he also serves as co-director of the Finance Center of CPRE. An expert on school finance and education policy, Dr. Odden is a prolific author.

The views expressed here are those of the authors and are not necessarily shared by CPRE or its funding agencies.


Over the years, state and local policymakers made several well-publicized efforts to reform teacher pay. Reformers tried to use salary structures to encourage and reward good teaching. Unfortunately, these efforts largely were ineffective. As a result, teacher compensation structures today look pretty much as they did decades ago. Most districts pay teachers according to a single-salary schedule that provides salary increases for differences among teachers in education units, university degrees and years of teaching experience.

In the 1980s, two main efforts were made to modify the single-salary schedule. Merit pay, designed to recognize and reward the best teachers, was tried in a few states and districts. And career ladder programs tried to alter the flat career structure of teaching. These efforts failed for generally the same reasons earlier efforts fizzled--they were not linked to the organizational needs and working processes of effective schools and thus were poorly designed.

For example, merit pay plans usually require individual teachers to compete against each other for a limited pool of funds. Such competition among teachers works against the collaborative culture found in most highly effective schools and thus is at odds with strategies to improve school performance.

Career ladder programs provide non-teaching jobs for a fixed number of excellent teachers, thus offering a way out of the classroom for the best professionals in schools, just the opposite of how a high-performance school should deploy its best workers. Further, teachers often were not integral partners in the design process, and too often funding was eliminated after the first years of implementation.

But other organizations in the country have been successful in implementing new compensation structures. Moreover, these new plans have been associated with wide worker acceptance, better employee morale, improved organizational performance, and higher individual salaries.

In this issue of CPRE Finance Briefs, the authors argue that it is now time for education to join these successful efforts and revise teacher pay systems. The brief provides a short history of changes in teacher compensation over the last century and a discussion of key organizational and educational changes today that could be reinforced by a new teacher compensation structure. It also suggests some new teacher pay elements and a set of principles states and districts could follow if they embark on the journey to redesign how teachers are paid.1 Examples of leading-edge compensation programs are included in sidebars within this brief.

  1. The CPRE Finance Center's research on teacher compensation has been informed by a series of meetings held with leaders from several key education organizations, supported in part by the Pew Charitable Trusts. We would like to thank the Teacher Compensation Working Group for their insightful comments. The opinions expressed in this paper are those of the authors, and do not necessarily reflect the opinions of the members of the Teacher Compensation Working Group, CPRE, or the Pew Charitable Trusts.


New CPRE-Sponsored Book Available Soon

Incentives in Systemic Reform

edited by Susan H. Fuhrman and Jennifer O'Day
Available Spring 1996 from Jossey-Bass, San Francisco, CA
(415)433-1740

Some of today's top policy analysts discuss issues such as teacher incentives and student performance, student incentives, standards and instructional reform, and going to scale with education reforms.

The Consortium for Policy Research in Education

CPRE Finance Briefs are published occasionally by the Consortium for Policy Research in Education. The Consortium operates two separate, but interconnected research centers: The Policy Center and The Finance Center. CPRE is funded by the U. S. Department of Education's Office of Educational Research. The Policy Center of CPRE is supported by grant #OERI- R117G1007; the Finance Center of CPRE is supported by grant #OERI-R117G10039.

The CPRE Policy and Finance Centers are part of a nationwide network of university-based research and development centers whose mission is to strengthen the performance of American students by providing useful and sound information. The research agenda for both Centers is built around three goals:

The views expressed in CPRE publications are those of individual authors and are not necessarily shared by the Consortium, its institutional members, or the U. S. Department of Education.

For further information on CPRE publications contact Dawn Weniger at CPRE, Carriage House at the Eagleton Institute of Politics, Rutgers University, 86 Clifton Ave., New Brunswick, NJ 08901-1568; 908/932-1331.


CPRE Management

Susan H. Fuhrman
Director, The Policy Center
Co-Director, The Finance Center
Graduate School of Education
University of Pennsylvania

Allan R. Odden
Co-Director, The Finance Center
Wisconsin Center for Education Research
University of Wisconsin-Madison

William H. Clune
Wisconsin Center for Education Research
University of Wisconsin-Madison

David K. Cohen
School of Education
University of Michigan

Richard F. Elmore
School of Education
Harvard University

Michael W. Kirst
School of Education
Stanford University

[CPRE - Consortium for Policy Research in Education]

-###-
[History of Teacher Pay Changes]
 Return to Publications page


[ Home ]