Pay-for-performance for educators continues to attract attention and support. The Teacher Incentive Fund (TIF) has funded over $2 billion in grants to support performance-based teacher and principal compensation aimed at attracting top talent to high-needs schools. Mathematica’s seven-year, $13.9 million study for the U.S. Department of Education's Institute of Education Sciences involves a rigorous national evaluation of TIF. The study was mandated by the legislation authorizing the American Recovery and Reinvestment Act (ARRA).

Created by Congress in 2006, TIF was expanded and supported with ARRA funding in 2009. TIF's goals included reforming teacher and principal compensation to support rewards based on improved student performance; increasing the number of effective teachers teaching poor, minority, and disadvantaged students; and creating sustainable pay-for-performance systems. The 2015 reauthorization of the Elementary and Secondary Education Act renamed TIF the Teacher and School Leader Incentive Fund, continuing federal support for performance-based compensations systems in high-needs schools.

This study is evaluating these performance-based compensation systems to examine issues like the impact of pay-for-performance on student achievement and educator effectiveness, and helping to answer pressing policy questions about how the programs are designed, communicated, and implemented.

Key findings from this third report include:

• Schools’ student achievement on standardized tests were higher by 1 to 2 percentile points in reading and math – the equivalent of about four weeks of additional learning – for schools that offered pay-for-performance bonuses, compared with ones that did not.
• Most teachers (over 70%) received a bonus, suggesting that bonuses were not challenging to earn. Although the average bonus was about $1,800, the highest performing teachers received much larger bonuses, more than 3 times the average bonus.
• Many teachers misunderstood whether they were eligible for performance bonuses or the amount they could earn. In the program’s third year, about 40 percent of teachers still did not understand they were eligible for a bonus. And teachers continued to underestimate the potential size of the bonuses, believing that the largest bonuses were only about two-fifths the size of the actual maximum bonuses awarded.

Vanderbilt University’s Peabody College partnered with Mathematica on this project.