ARCC Teacher Compensation Initiative: Literature Review August 2014 Submitted to the Tennessee State Board of Education and the Tennessee Department of Education 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org This project has been funded at least in part with Federal funds from the U.S. Department of Education under contract number S283B120023. The content of this document does not necessarily reflect the views or policies of the U.S. Department of Education nor does mention of trade names, commercial products, or organizations imply endorsement by the U.S. Government. i Acknowledgments ARCC gratefully acknowledges the Center on Great Teachers and Leaders for their helpful consultation and review in preparation of this report. 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org ii Table of Contents Acknowledgments ................................................................................................................................................. i Table of Contents .................................................................................................................................................. ii List of Tables and Figures ................................................................................................................................. vi Executive Summary.............................................................................................................................................. 1 Section I: Introduction ........................................................................................................................................ 8 Preparation of Report ..................................................................................................................................... 8 Purposes of Report .......................................................................................................................................... 9 Organization of Report ................................................................................................................................ 10 Section II: Key Findings and Recommendations from the 2013 BEP Review Committee Discussions and Decisions .............................................................................................................................. 11 Introduction .................................................................................................................................................... 11 History of the BEP ......................................................................................................................................... 11 BEP Review Committee and Annual Report ....................................................................................... 11 Section III: Tennessee Compensation Reform Context ....................................................................... 14 Introduction .................................................................................................................................................... 14 Current Salary Schedule for Teachers in Tennessee ....................................................................... 14 Percentages of School Spending on Instruction ................................................................................ 15 Overview of the History of Tennessee Teacher Compensation Reform ................................. 16 Comprehensive Education Reform Act and Career Ladder Exploration in Tennessee (1984-1997) ............................................................................................................................................... 16 Salary Equity Plan (1995-2002) ......................................................................................................... 19 Teacher Salaries Added to BEP (2004) ............................................................................................ 19 Differentiated Pay Plans in Tennessee (2007-2010) ................................................................. 19 Tennessee State Law Revised in 2010 ............................................................................................. 21 Race to the Top Grant and Competitive Compensation Initiatives (2010–Present) ...... 21 Differentiated Pay Plans (2013-Present) ........................................................................................ 28 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org iii Summary ........................................................................................................................................................... 30 Section IV: Evidence on Teacher Supply and Demand in Tennessee ............................................. 31 Introduction .................................................................................................................................................... 31 Teacher Shortages in Tennessee ............................................................................................................. 33 Tennessee Teacher Demand Data ...................................................................................................... 34 Tennessee Teacher Supply Data ......................................................................................................... 34 Tennessee New Teacher Supply Data ............................................................................................... 36 Summary ........................................................................................................................................................... 40 Section V: The Research Base for Market-based Teacher Pay.......................................................... 42 Introduction .................................................................................................................................................... 42 1. Overall, how should we characterize the research literature on the evidence base of market-based teacher pay? ....................................................................................................................... 42 2. What does the survey research literature suggest about the importance of pay for teacher retention? ......................................................................................................................................... 44 3. What does the survey research literature suggest about the importance of pay for teacher recruitment? ................................................................................................................................... 48 4. What does the survey research literature suggest about the importance of pay for teacher effectiveness? ................................................................................................................................. 49 5. What are the benefits and limitations of relying on survey-based research? ............... 51 6. What does the econometric/observational research literature suggest about the importance of pay for teacher retention? ............................................................................................ 51 7. What does the econometric/observational research literature suggest about the importance of pay for teacher recruitment? ...................................................................................... 53 8. What does the econometric/observational research literature suggest about the importance of pay for teacher effectiveness? ..................................................................................... 53 9. What are the benefits and limitations of relying on econometric/observational research? .......................................................................................................................................................... 54 10. What is the evidence concerning teacher salaries for specific groups of teachers, such as math/science teachers or teachers from Generation Y? ................................................ 54 11. What additional research is underway that will address the above questions? ..... 57 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org iv 12. What can be learned from internal/external program evaluations of teacher compensation reform initiatives in other states and districts? .................................................. 58 Summary ........................................................................................................................................................... 58 Section VI: Emerging Practices and Lessons Learned by States and Districts ........................... 59 Introduction .................................................................................................................................................... 59 1. Where has market-based pay been implemented? ................................................................. 59 Douglas County, Colorado ..................................................................................................................... 59 The Equity Project Charter School, New York City ...................................................................... 61 2. What other innovative approaches to increase teacher pay, particularly in shortage areas, have been implemented? .............................................................................................................. 63 Public Impact’s Opportunity Culture Model .................................................................................. 63 2012 TIF Grantees .................................................................................................................................... 65 District and State Compensation Reforms Addressing STEM Teachers ............................. 67 Georgia Differentiated Compensation for New Math and Science Teachers ..................... 68 Ohio STEM Teacher-Signing Bonuses ............................................................................................... 70 Ohio STEM Teacher Loan-Forgiveness Program ......................................................................... 71 Virginia STEM Teacher Recruitment and Retention Pilot Incentive .................................... 71 3. Have any pay reforms taken place within existing school budgets? ................................ 72 4. Have business community members assisted in supporting teacher pay that is closer to market-based? ............................................................................................................................. 73 5. What can be learned informally or anecdotally from market-based teacher salary initiatives in other states and districts? ............................................................................................... 73 Summary ........................................................................................................................................................... 74 Section VII: Practical Questions and Considerations ........................................................................... 75 Introduction .................................................................................................................................................... 75 Approaches for Financing Market-based Teacher Pay ................................................................... 75 Redeploying Current Resources ......................................................................................................... 77 Repackaging Federal and State Categorical Aid Programs ...................................................... 80 Redirecting Future Resources or Expenditures ........................................................................... 83 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org v Seeking Philanthropic and/or Corporate Support ...................................................................... 83 Obtaining Additional Public Funding................................................................................................ 84 Applying for Discretionary Federal Grants .................................................................................... 85 Summary ...................................................................................................................................................... 87 Effective Communication and Stakeholder Engagement in Compensation Reform ........... 88 Strategies for Effective Stakeholder Communication and Engagement.............................. 88 Summary ...................................................................................................................................................... 91 What role might teacher voice groups play in reforming teacher compensation in Tennessee? ....................................................................................................................................................... 92 Summary ...................................................................................................................................................... 94 References ........................................................................................................................................................ 95 Appendix: Glossary of Terms .................................................................................................................. 111 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org vi List of Tables and Figures Table 1. ................................................................................................................................................................... 16 Summary of Early Career Ladder Levels, Eligibility Requirements, and Incentives in Tennessee ............................................................................................................................................................... 16 Table 2. ................................................................................................................................................................... 25 Summary of Tennessee Districts Receiving Grants for Teacher Compensation Reform and Types of Compensation Models ...................................................................................................................... 25 Table 3. ................................................................................................................................................................... 32 Prevalence of District Compensation Reform Initiatives Over Time ................................................. 32 Table 4. ................................................................................................................................................................... 37 Endorsement Areas Earned by 2012-2012 Tennessee Teacher Training Program Completers ............................................................................................................................................................. 37 Table 5. ................................................................................................................................................................... 38 Number of STEM Endorsement Areas Earned by 2011-2012 Graduates......................................... 38 Table 6. ................................................................................................................................................................... 39 Tennessee Higher Education Institutions with the Largest Number of STEM Endorsements .. 39 Table 7. ................................................................................................................................................................... 40 Numbers of Completers Continuing to Teach in Tennessee Public Schools .................................... 40 Figure 1. Former Teachers Compare Aspects of Teaching and their New Positions .................... 45 Figure 2. Factors that would Change Teachers’ Minds about Leaving the Profession ................ 47 Figure 3. Teachers’ Top-Rated Changes to Improve the Profession .................................................. 50 Figure 4. Teachers’ Views on Differential Salaries .................................................................................. 56 Figure 5. Teachers’ Views on Strategies that would be “Very Effective” for Improving the Profession .............................................................................................................................................................. 57 Table 8 .................................................................................................................................................................... 60 Sample Douglas County (Colorado) Salary Bands ................................................................................... 60 Figure 6. Public Impact Opportunity Culture Model ............................................................................... 64 Table 9 .................................................................................................................................................................... 86 Funding Sources for Different Stages of Development and Implementation ................................. 86 Table 10. ................................................................................................................................................................ 92 Characteristics of Teacher Voice Organizations ...................................................................................... 92 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org 1 Executive Summary Overview. In February 2014, the Tennessee State Board of Education (SBE) requested that the Appalachia Regional Comprehensive Center (ARCC) provide assistance to the SBE’s Basic Education Program (BEP) Review Committee. The request came in response to the BEP Review Committee’s 2013 Annual Report, which discussed competitive, market-based teacher pay. The SBE requested additional information on the use and effectiveness of market-based teacher compensation and market-based incentives by districts and states to recruit science, technology, engineering, and mathematics (STEM) teachers. The SBE is interested in using this information to encourage school districts to align teacher salaries with the salaries offered by competing employers to improve teacher recruitment and retention in Tennessee, particularly in areas of shortage. As a federally funded technical assistance center that serves state education agencies (SEAs) in Tennessee, Kentucky, Virginia, and West Virginia, ARCC’s key objective is to provide high-quality, relevant, and useful technical assistance that enhances specific SEA capacities to successfully implement and sustain important education reforms. In response to the request for information from the SBE, ARCC consulted with the Center on Great Teachers and Leaders (GTL Center), one of the seven content centers in the Comprehensive Center network, to supply research and provide feedback on a review of the report. Identifying a lack of evidence about the impact and costs of such initiatives, GTL Center staff also conducted informal interviews with leaders of emerging market- based compensation initiatives to seek additional, unpublished information. Given these methods, findings in this report should be considered descriptive and limited by the relatively few market-based incentive programs currently underway; additional studies, to be published in autumn 2014, should shed further light on this important topic. The report includes (1) background information on the BEP Review Committee and the history of teacher compensation reforms in Tennessee, (2) a summary of the literature and evidence on the effectiveness of market pay, and (3) examples of emerging practices, challenges, and lessons learned to support the committee’s decision-making. Tennessee’s teacher compensation policy background. Tennessee has long been a leader in innovative teacher compensation policy, active in this arena for three decades, as described below: 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org 2  Contemporary teacher compensation reform began in Tennessee in 1984, with the introduction of teacher career ladders under the Tennessee Comprehensive Education Reform Act.  In 2007, the SBE developed guidelines for local educational agencies (LEAs) to submit plans that would offer loan forgiveness strategies, fellowships, salary supplements, and/or signing bonuses to address one of the following areas: (1) recruiting teachers to hard-to-staff schools, (2) recruiting new teachers, (3) filling LEA-specific academic shortage areas, and (4) retaining effective teachers. The specific salary initiatives were to be determined based on teacher supply and demand data.  Teacher compensation reform accelerated under Tennessee’s First to the Top legislation and the award of a first round Race to the Top Grant in 2010, supplemented by 2010 and 2012 Teacher Incentive Fund grants from the U.S. Department of Education.  Most recently, in 2013, Tennessee asked districts statewide to submit differentiated pay plans for the 2014-2015 school year, according to SBE guidelines, and the Tennessee Department of Education will begin to enforce implementation of those plans in 2014-2015. Impact of Tennessee’s prior teacher pay reforms and on-going needs. As demonstrated above, Tennessee has experimented with numerous forms of alternative compensation, including performance-based differentiated salary initiatives. The extent to which these programs have improved the quality of education that students have received in Tennessee is not yet known, due to a lack of systematic evaluation. Moreover, despite three decades of experimentation with teacher compensation reform, teacher recruitment, attrition, motivation, and morale continue to present challenges. For example, the following subject areas were identified by the U.S. Department of Education (2014) as 2014-2015 areas of teacher shortage in Tennessee:  Mathematics (Grades 7-12),  Science (Grades 7-12),  Special Education (Kindergarten-Grade 12),  World Languages (Grades 7-12),  English as a Second Language (Pre-Kindergarten–Grade 12),  English (Grades 7-12), and  Social Studies (Grades 7-12). 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org 3 Whether these shortages stem from supply or demand factors is not entirely clear, because of the limitations of the available data. The data indicate that, of approximately 5,000 individuals who complete teacher preparation programs in Tennessee each year, about half remain in Tennessee and are teaching in schools within one year; however, the percentage of teachers who continue in the classroom declines over time (Tennessee Higher Education Commission and Tennessee State Board of Education (SBE), 2013). Meanwhile, a recent report found that between the school years of 2011-2012 and 2012- 2013, eight percent of teachers left Tennessee’s public schools and ten percent moved to another Tennessee school. Teachers from minority backgrounds were considerably more likely to leave, and teachers new to the profession and teachers with lower evaluation ratings were slightly more likely to leave, with significant variation in attrition rates across school districts (Tennessee Department of Education, Office of Policy and Research, 2014). However, given the limitations of the available supply and demand data, drawing judgments about the adequacy of teacher supply to meet demand in specific subjects and specific high-need schools was not possible in this report. One data point worth considering is that, according to the Alliance for Excellent Education (Haynes, 2014), teacher attrition from the profession costs Tennessee somewhere in the range of $23 million to more than $50 million per year, depending on how it is calculated. Market-based teacher compensation across the nation. Although an early adopter and leader, Tennessee is not alone in thinking about how to strategically use teacher compensation as a vehicle to strengthen the state’s teaching force and schools. Over half of the states in the nation had mandated or implemented a pilot or full career ladder program in the 1980s; however, only four states still operated these programs by the mid-1990s, due to high costs, reduced teacher cooperation in reaction to a more competitive environment, and difficulty in measuring the success of the programs (Wesson, 2013). In recent years, Georgia, Ohio, and Virginia have implemented new teacher compensation initiatives specifically focused on recruiting and retaining effective teachers in STEM fields. In Georgia, $9.59 million was allocated in 2009 for a STEM teacher differentiated salary program. In Ohio, $4 million was allocated in 2007 for a STEM and foreign language teacher bonus program and $2.5 million for a STEM teacher loan forgiveness program. In Virginia, $500,000 was allocated in 2013 to 100 teachers in 50 districts across the state and $708,000 in 2014 for a pilot program of STEM Teacher Recruitment 300 Summers St., Ste. 1240 • Charleston, WV 25301 • 1-855-355-ARCC (2722) • www.arccta.org