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Two competing pressures鈥攄ecreased finances and rising policy interest鈥攈ave left the future of performance-based teacher compensation uncertain.

A dicey fiscal climate and research that has shown limited impact have led some states and districts to scale back, abandon, or change their fledgling merit-pay programs, causing observers to wonder what the next few years will hold for compensation systems that link teacher pay to student achievement.

Just this summer, Texas officials squelched funding for the country鈥檚 largest merit-pay program, from $392 million to $40 million, blaming the state鈥檚 deficit. And New York City wiped out its $56 million schoolwide program, citing disappointing research results.

Yet new examples are also springing up, largely because of increased federal funding for performance pay and state and federal legislation encouraging, and in some cases requiring, alternative-compensation schemes.

Still, there may not be a 鈥渢rend鈥� to predict the future of such programs, said Matthew Springer, the director of Vanderbilt University鈥檚 , in Nashville, Tenn., and an assistant professor of public policy and education.

鈥淭he next couple of years will be very telling [because of] local/state revenue shortfalls as well as the possibility of the federal funding well running dry, and the research evidence, to date, hasn鈥檛 been overwhelmingly positive,鈥� Mr. Springer said in an email. 鈥淎t the same time, it is critical districts/states do not lose sight of the fact that current compensation practices are incredibly inefficient.鈥�

Abandoning Programs

While increasing attention has gravitated toward the evaluation and compensation practices for teachers, specifically in shifting from traditional salary models tied to experience and education levels to merit-pay systems that factor in a teacher鈥檚 impact on student achievement, some say the interest in performance pay could be faddish and short-lived.

The journal Education Next this spring that only 500 out of 14,000 districts had merit-pay programs. Two of the largest programs in the country were also dismantled this summer.

The 90 percent reduction of Texas鈥檚 program, which provided one-time bonuses linked to performance reviews, will mean the number of teachers receiving bonuses could decline from 180,000 this year to 18,000 within the next two.

The program is a victim of the state鈥檚 budget deficit that led to some $4 billion in cuts to school funding overall, state officials say, and not lack of support for merit pay.

A Texas Education Agency official says the program was thought to be successful, based on research conducted by the National Center on Performance Incentives in 2010. Nevertheless, the agency said it doesn鈥檛 expect teacher performance to suffer from the significant decline in bonuses.

Some Texas districts have had more favorable results than others, however. In Houston, criticism emerged that the district let too many teachers qualify for bonuses, yielding minimum impact on teacher performance. The state reduced Houston鈥檚 share for teacher bonuses this year by $13.9 million. Now it will use that as an opportunity to rework its program, said Jason Spencer, a spokesman for the district, tightening the eligibility criteria, but making the overall bonuses high.

But both state and district teachers鈥� union members worry that the merit-pay programs themselves are a waste of money and do little to improve teacher performance.

鈥淩ight now, our teachers can鈥檛 work any harder or do any more. Our teachers are already working longer hours with bigger classes and are still expected to perform at a higher level,鈥� said Rita Haecker, the president of the . 鈥淲e tend to disagree that people perform better with a reward. We think people perform better when they feel supported in their job and are paid a living salary.鈥�

Other states are also abandoning performance pay. According to the Denver-based Alaska鈥檚 three-year program recently ended, mainly because of friction with local unions. Iowa鈥檚 program was also eliminated.

And money isn鈥檛 the only reason some places have backed off performance pay.

In July, the Santa Monica, Calif.-based RAND Corp. released a of New York City鈥檚 merit pay program that found no substantial impact on teacher, student, or school performance. The district later announced it would discontinue the three-year program.

The RAND study adds to a growing body of research that has found limited effects of merit pay, such as one conducted on Nashville teachers last year.

The research is not abating, either. has been commissioned by the U.S. Department of Education to assess the 2010 round of grantees over the course of their grant cycle. It is unknown whether the first round of grantees, awarded in 2006, will continue their merit-pay programs after their five-year grants expire at the end of this year. TIF requires districts to institute performance pay based on student achievement.

Coming on Board

A number of states and districts are still moving forward with plans or pilots for new merit-pay systems, and others have maintained them through innovative or hybrid models even though they face limited finances and have yet to prove significant statistical impact.

Some of those efforts stem from increased federal support for merit pay. A provision in the Race to the Top program requires states and districts to change their teacher-evaluation practices and encourages them to be tied to salary. In addition, funding for the Teacher Incentive Fund has been increased from $99 million to about $400 million within four years, giving states and districts the opportunity to try new ways of paying teachers.

Indiana, Michigan, Utah, and Idaho, for example, have all looked at implementing or expanding performance pay in their states within the past year alone. And some places that even have a prior history of ineffective merit-pay models are still trying to put new systems in place.

According to Kathy Christie, the chief of staff at the ECS, many of the earlier state and district programs were unsuccessful because the incentives were too small or the models were untested. The new systems may have different effects, she said, because many have tried to increase incentives and strengthen criteria and evaluation practices.

鈥淲e could have seen the first generation of performance-pay systems, and perhaps we鈥檒l start seeing [a new generation of systems] that are more robust, more meaningful, and have an impact on recruiting people to the teaching profession,鈥� Ms. Christie said.

She pointed to Florida as one example.

Since the 1970s, Florida has tried a number of models with limited success. The voluntary nature of its last performance-pay effort found only 5 percent of the state鈥檚 districts participating. Still, Florida is trying again.

Its winning Race to the Top application in 2010 included a proposal to implement teacher salary increases linked to student performance, and this past year, the state legislature passed a law that will require districts to put new salary schedules in place for teachers by 2014-15, linked to recently revised state teacher-evaluation practices.

Under the new plan, 50 percent of a teacher鈥檚 summative evaluation will be tied to student performance, and, based on locally negotiated teacher contracts, teachers can earn increases if they are deemed effective or highly effective. Payouts to teachers will be determined by each district. The tighter a district鈥檚 budget squeeze, the more likely raises will be low, or nonexistent.

Kathy Hebda, Florida鈥檚 deputy chancellor for educator quality, said the state is optimistic the program will be more effective than Florida鈥檚 earlier merit-pay plans, given lessons learned from the past. The new system uses salary increases rather than one-time bonuses, which will provide more incentive to teachers Ms. Hebda said. The new evaluations will also provide all teachers, regardless of subject matter, the potential for performance-based salary increases. (In earlier models, the incentives focused more on teachers who were able to be evaluated through student assessments in core subjects.)

The Florida teachers union has already come out against these efforts and has threatened legal action.

Virginia is also moving in the direction of state-supported merit pay. Using a combination of state and federal funding, Virginia is implementing a pilot program this year. An incentive package was offered to 169 schools listed on a 鈥渉ard to staff鈥� list, that will provide bonuses to teachers in those schools that receive exemplary ratings on the state鈥檚 new evaluation system, which links 40 percent of the teacher鈥檚 evaluation to student growth on state tests, among other measures.

The state is also developing improved evaluation systems that link student performance to teachers, said Charles Pyle, the education department鈥檚 communications director, and it hopes the pilot program will encourage more districts to restructure their compensation practices. Twenty-five schools accepted the state鈥檚 offer this summer.

Ohio Gov. John R. Kasich, a Republican, has gotten behind a proposed merit-pay system for his state, too. While a number of the state鈥檚 Race to the Top districts are already implementing some form of performance pay, the governor鈥檚 proposal this past spring for a new state-supported teacher-compensation system would have all other districts implement some sort of performance-based pay for teachers by 2013-14, based on their respective collective bargaining agreements.

Even the new models are controversial.

鈥淭here has been a tendency to avoid some of the evidence of what works because it doesn鈥檛 fit the popular narrative,鈥� said Rob Weil, the director of field programs, for the American Federation of Teachers. 鈥淲e need to design systems that drive instructional improvement that lead to increased student achievement. Many of the recent attempts have shown that this is not happening.鈥�

Future of Merit Pay

Several large urban districts have adopted performance pay the past few years and have kept them going despite limited supportive research, disagreements with local teachers鈥� unions, and declining finances. The varied incentivized compensation models some districts have implemented, which take into account more than student test scores, and, in some cases, do not rely solely on state or district funding, may be the right direction, say some analysts.

顿别苍惫别谤鈥檚 , or ProComp, one of the oldest surviving merit-pay programs, is a joint effort between the teachers鈥� union and school district and uses local taxes for funding. ProComp factors teacher education level and skills, as well as evaluations and student achievement, into account in determining salary increases and bonuses.

In the District of Columbia鈥檚 , supported through private dollars, teachers can earn higher bonuses based on the school they work in and the subject matter they teach, in addition to their students鈥� test scores. And Baltimore鈥檚 teacher-contract system, adopted last year, allows teachers to earn annual salary increases tied to student performance, as well as such factors as professional development and teacher evaluations.

Mr. Springer of Vanderbilt鈥檚 performance-incentives center said that many of the existing programs add on incentives or bonuses rather than redesign compensation practices in ways that could potentially yield greater results and cost less. He estimates 80 percent of districts鈥� operational expenses go toward outdated educator compensation systems, that aren鈥檛 linked to student academic outcomes.

Whether districts and states test innovative compensation strategies given the available resources, he added, 鈥渨ill likely be dictated by interest group politics and if the system can amass adequate ... knowledge to design and operate them.鈥�