States and Districts Shift Teacher Pay Toward Performance as Seniority-Based Models Lose Ground

School systems across the country are moving away from pay scales based on tenure, citing evidence that merit-based compensation improves student outcomes and helps retain effective teachers.

By yourNEWS Media Newsroom

Public school systems in multiple states and hundreds of local districts are increasingly reconsidering traditional teacher pay structures that reward years of service, opting instead for merit- and performance-based compensation models as concerns mount over stagnant academic achievement and persistent teacher turnover.

The shift has been fueled in part by the results of the Dallas Independent School District’s Accelerating Campus Excellence program, launched in 2016, which tied teacher and principal pay to student performance measures. The program’s reported gains in math and reading scores have drawn national attention and prompted other districts and state education agencies to explore similar approaches, according to an in-depth report by The Epoch Times.

In Texas, the Houston Independent School District—taken over by the state after years of low student performance—plans to implement a system in the 2026–2027 academic year that evaluates and compensates teachers based on effectiveness rather than seniority. District officials told The Epoch Times the move will make Houston the largest school system in the nation to adopt such a model.

Under the new framework, Houston teacher salaries will range from $64,000 to $101,000. Teachers who receive unsatisfactory evaluations may be dismissed, and compensation can be reduced if performance declines year over year, according to district guidelines released last year. District leaders say the policy is designed to improve student outcomes, attract and retain effective educators, and promote equity across campuses.

“It’s a very strong strategy,” Heather Peske, president of the National Council on Teacher Quality, told The Epoch Times, noting that her research indicates bonuses exceeding $5,000 are typically effective in motivating and retaining high-performing teachers.

Dallas’s experience has been closely studied. A 2025 analysis by Stanford University’s Hoover Institution found that the district not only outperformed comparable large urban districts in Texas academically but also reduced teacher turnover, with departures concentrated among those receiving low evaluations. The report concluded that the reforms were carefully structured to avoid inflated ratings, arbitrary treatment, or excessive teaching to standardized tests.

The Dallas model helped inspire the Texas Legislature to create the Teacher Incentive Allotment program in 2019. The initiative provides bonuses to high-performing teachers, with higher payments for those working in low-income or rural schools. According to the Texas Education Agency, 809 districts are currently participating, with another 190 submitting letters of intent to join in 2026. The program, detailed here, allows bonuses of up to $36,000 annually, supported by billions in additional education funding approved by lawmakers last year.

Other states have followed suit. Arkansas launched its Merit Teacher Incentive Fund ahead of the 2024–2025 school year, offering teachers up to $10,000 in annual bonuses under its program. Utah began a five-year pilot known as the Excellence in Education and Leadership Supplement, authorized by legislation, which provides performance bonuses ranging from $2,000 to $10,000 based on teacher rankings.

Tennessee lawmakers passed bipartisan legislation last year allowing districts to differentiate teacher pay based on merit and demand in certain subject areas, such as chemistry and special education. State Sen. Adam Lowe, a Republican sponsor of the bill, said the goal is to retain strong teachers who might otherwise leave for higher-paying positions elsewhere.

“We crafted the plan intentionally to be flexible at the local level,” Lowe told The Epoch Times. “But it’ll require some bravery from school boards.”

Washington, D.C., has used a performance-based evaluation system since 2009. Under its IMPACT program, detailed by the district, teachers are evaluated on student achievement, classroom observations, surveys, and contributions beyond core duties. Highly rated teachers can earn up to $25,000 annually in bonuses and as much as $3.7 million over the course of their careers. District data show the system has retained 93 percent of its most effective teachers, while encouraging them to work in high-poverty schools.

Not all states have embraced the approach. Legislators in Connecticut, Florida, Indiana, South Dakota, and Oregon considered but ultimately declined to enact pay-for-performance measures, according to the National Council of State Legislatures.

Collective bargaining rules remain a major factor. In districts with strong union contracts, pay is typically determined by seniority and credentials once a teacher completes a probationary period, regardless of student outcomes. Maxford Nelsen, research and government affairs director of the Freedom Foundation, told The Epoch Times that states without mandatory collective bargaining, such as Texas and South Carolina, face fewer obstacles in implementing merit-based systems. The Freedom Foundation’s work is outlined here.

“The union interest is in the maximum number of employees and pay, and minimizing accountability on the job,” Nelsen said. “They consistently oppose any kind of pay-for-performance or merit systems.”

Teachers’ unions have long resisted merit pay. The American Federation of Teachers lists numerous resolutions opposing performance-based compensation, including a 2000 resolution arguing that many public employees lack sufficient control over outcomes to be evaluated fairly. The National Education Association’s 2025 handbook similarly states that compensation tied to performance evaluations is inappropriate. The NEA’s most recent nationwide salary data show average teacher pay ranging from $55,086 in Mississippi to $103,379 in California.

Research has also questioned the emphasis on credentials. The National Council on Teacher Quality found that 90 percent of large U.S. districts pay teachers more for holding a master’s degree, despite limited evidence that the credential improves classroom effectiveness, according to its findings.

Peske said redirecting funds away from automatic degree-based pay increases toward rewarding effective teaching could better serve students.

“Too many states and districts rely on a salary structure that rewards seniority and degrees instead of effectiveness and outcomes for kids,” she said.