One of the central challenges of designing and implementing a performance pay program is developing an approach for determining which schools, teachers, and administrators have performed well enough to have earned a bonus. The U.S. Department of Education’s Teacher Incentive Fund (TIF) program provides grantees substantial latitude to create incentive pay systems that fit their local needs. This paper reviews the methods proposed by TIF grantees for measuring the performance of schools, teachers, and administrators with respect to student achievement. One of the major objectives of this paper is to evaluate the different performance measurement approaches in terms of a specific statistical standard – a value-added model. To simplify this analysis, authors focus primarily on value-added models of grade-level performance. Most, if not all, of the papers’ conclusions also apply to value-added models of classroom/teacher performance.

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