Charter Schools and Performance Pay

In some ways, it looks like charter schools are delivering on their promise to innovate when it comes to merit pay for teachers. Economist Michael Podgursky’s analysis of data from the U.S. Department of Educations suggests that charter schools are more likely to pay extra for particular skills or qualifications than are traditional public schools.  Thirty- eight percent of charters offer teachers incentives or bonuses for “excellence in teaching,” compared to only six percent of traditional public schools. 

Charter schools are also more likely to offer extra incentives for teachers with hard-to-find skills or working in hard-to-hire subjects like science and math. Even though 62% of charters are still using traditional salary schedules, they do not work in the same way that they do in traditional public schools, because of the absence of teacher tenure. Charter schools are more likely to dismiss teachers early in their careers, and if these dismissals are due to poor performance, charter school salary schedules may, in effect, reward both experience and performance. However, charter schools could do even better when it comes to performance pay. Only 35% of them use merit incentives, and a low 15 % use subject-area incentives. It seems that state policy and institutional context constrain non-traditional approaches toward compensation. So, for charter schools, the challenge is to overcome traditional thinking and make full use of their autonomy to attract and retain the highest-quality teachers. For policymakers, the challenge is to make sure that laws and regulatory environments support innovation.