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Teacher-Designed Incentive Pay in Texas. A Presentation to the IES Research Conference by Lori L. Taylor. A Presentation of Ongoing Research by the. National Center on Performance Incentives. Why is Incentive Pay Interesting?.

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teacher designed incentive pay in texas

Teacher-Designed Incentive Pay in Texas

A Presentation to the IES Research Conference


Lori L. Taylor

why is incentive pay interesting
Why is Incentive Pay Interesting?
  • Merit pay / Pay for performance is a popular school reform initiative
    • Denver public schools
    • New York City public schools
    • Houston ISD
  • Theory suggests that well designed incentive pay programs could improve school effectiveness
what do we know about incentive design
What Do We Know About Incentive Design?
  • Multiple prizes can be more effective than a single prize
    • Freeman and Gelber (2006), Harbring and Irlenbusch (2003), Vandegrift et al. (2007)
  • Individual incentives more effective than group incentives
    • Freeman and Gelber(2006), Nalbantian and Schotter (1997)
  • Group incentives more effective in at least some situations
    • Chillemi (2008), Encinosa, Gaynor and Rebitzer (2007), Lavy (2004)
  • Group and individual incentives equally effective
    • Muralidharan and Sundararaman (2006)
incentive pay plans in texas
Incentive Pay Plans in Texas
  • Governor’s Educator Excellence Grants Program (GEEG)
    • $10 million per year in federal funding for high performing schools serving low income students
    • 3-year commitment
  • Texas Educator Excellence Grant Program (TEEG)
    • $100 million per year in state funding for high performing schools serving low income students
  • District Awards for Teaching Excellence (DATE)
    • $147.5 million per year in state funding for any Texas district or independent charter school willing to provide matching funds
program guidelines
Program Guidelines
  • Participation was voluntary
  • Incentive plans must be developed and approved by a school-based committee with significant teacher participation
    • At least 3 teachers must write letters of support for the plan
  • Incentive plans must be approved by both the district and the local school board
geeg funding
GEEG Funding
  • Non-competitive, three-year grants to 99 schools
    • Third year of grants distributed fall 2008
  • $60,000 to $220,000 per year, based on fall enrollments in 2004-05
    • Average award 5.1% of instructional payroll in 2005-06
    • Awards range from 2.6% to 16.5% of instructional payroll
teeg funding
TEEG Funding
  • Non-competitive, one-year grants to 1,000+ schools
  • Three Cycles of funding
    • Cycle 1 eligibility based on 2004-05
    • Cycle 2 eligibility based on 2005-06
    • Cycle 3 eligibility based on 2006-07
  • $40,000 to $295,000 per year, based on fall enrollments in eligibility year
two parts to funding
Two Parts to Funding
  • Part 1 funds (75%) provide incentive awards for full-time teachers
  • Part 2 funds (25%) provide incentive awards to other school personnel, or fund professional development, mentoring programs, new teacher induction, etcetera
guidelines for part 1 incentives
Guidelines for Part 1 Incentives
  • Part 1 incentive awards must be based on
    • Success in improving student performance by objective measures, and
    • Collaboration with faculty and staff that contributes to improving overall student performance at the campus
  • Part 1 incentives can also be based on
    • Teachers’ on-going initiative, commitment, and professional involvement in activities that have a direct impact on student achievement, or
    • Assignment to a hard-to-staff subject area
  • Part 1 incentives should be at least $3,000 and no more than $10,000 per teacher
guidelines for part 2 incentives
Guidelines for Part 2 Incentives
  • Part 2 funding may be given to any school personnel
    • Who did not receive Part 1 awards
    • Who contributed to improving student performance
    • Who were not athletic coaches
  • Part 2 funding may also be used for
    • professional development activities
    • signing bonuses
    • teacher mentoring programs
    • new teacher induction programs
    • funding for feeder campuses
    • any other program that directly contributes to improving student performance
who was eligible
Who Was Eligible?
  • GEEG Schools in the top third with respect to the share of economically disadvantaged students
    • At least 81.3% for elementary schools
    • At least 70.5% for all grade schools
    • At least 65.4% for middle schools
    • At least 55.8% for high schools
  • TEEG schools in the top half
two performance criteria
Two Performance Criteria
  • High performing
    • Rated Recognized or Exemplary, or
    • High TAKS passing rates if it is a registered alternative education campus
  • High improving
    • In the top quartile of Comparable Improvement for math and reading
  • TEA tried for balance of high performing and high improving by grade level
the proposed distribution of geeg teacher awards
The Proposed Distribution of GEEG Teacher Awards

Source: GEEG applications submitted to TEA for 93 schools.

the determinants of individual awards
The Determinants of Individual Awards

Most teachers in GEEG and TEEG schools received an award

Newly-arrived teachers received significantly smaller awards

Teacher experience and educational attainment generally unrelated to teacher awards

Teachers in tested grades and subjects received larger awards

hedonic model of teacher turnover
Hedonic Model of Teacher Turnover



  • Race and gender
  • Years of experience
  • Educational attainment
  • Coaching status
  • Certification status
  • Salary
  • Teaching assignment

Market Characteristics

  • Unemployment rate
  • School fixed effects

Program Characteristics

individual awards and teacher turnover
Individual Awards and Teacher Turnover

Teachers are presumed to know by the end of the school year whether or not they will receive an award the following fall, and if so, how much

Teachers who anticipate no award are much more likely to turnover

The probability of turnover falls as the size of the award increases

the impact of geeg on student performance
The Impact of GEEG on Student Performance
  • Two-stage analysis strategy
  • First stage estimates school effects by year from individual student data
    • GEEG and nonGEEG schools
    • Math and reading test score gains
    • Within-transformed data
  • Second stage estimates the impact of program characteristics on school effects
    • GEEG schools only
    • Campus fixed effects
    • Student demographics and school resources
findings on geeg student performance
Findings on GEEG Student Performance

Only insignificant differences in student outcomes across incentive structures

Small number of schools in the GEEG program and noise in the outcome measures could be masking significant effects

the impact of teeg on student performance
The Impact of TEEG on Student Performance
  • Two estimation strategies
    • Individual student fixed effects
    • Regression discontinuity analysis
  • No evidence of systematic effects

Program schools were already high performing

Teachers designed weak incentives

No evidence of impact on student performance

Assuming that award recipients were more effective in the classroom than non-recipients, GEEG and TEEG increased retention of teachers schools particularly wished to retain