The 2011 reforms prohibited a school district from negotiating over the “method of compensation for its teachers.”[16] Michigan school districts traditionally agreed to use a “single-salary schedule” to determine teacher salaries. Unions demand this policy, which sets pay based only on a teacher’s level of education and years of experience. Neither a teacher’s ability to drive student learning gains, nor any other factors may be used to determine compensation under this system.
The Mackinac Center highlighted some of the shortcomings of single-salary schedules in 2008:
Without the possibility of earning more money for high-quality performance, teachers may be indirectly encouraged to meet only minimum performance levels, such as maintaining order in the classroom or keeping peace with parents. This outcome is even more likely when teachers are observed only a few times per year by supervisors, and their individual performance is not measured by student test score performance gains. Single-salary-schedule compensation policies have ensured that teachers are paid the same amount whether their students improve or not, and across-the-board pay increases are often guaranteed simply for showing up each year. Unfortunately … student achievement in Michigan is not high, and it has not improved compared to the national average despite high and rising state spending. In this context, alternative pay structures make sense. They reward the key people — effective teachers — who can improve public education in the state.[17]
The following year, the Michigan Legislature and Gov. Jennifer Granholm passed a law requiring a school district “to maintain a method of compensation for its teachers and school administrators that includes job performance and job accomplishments as a significant factor in determining compensation and additional compensation.”[18] The Legislature further strengthened this requirement as part of the 2011 reforms, explicitly forbidding school districts and unions from negotiating over performance-based compensation.[19]
In adopting these changes, the Legislature made clear that while teacher compensation was to be based on performance, the exact method of performance-based compensation was to be left to a school district’s discretion. Unfortunately, few school districts complied with this law. There were no ramifications for violating it. Districts continued using a single-salary schedule to determine teacher pay and did not make job performance “a significant factor” in determining teacher salaries.
Some districts did create performance-based awards for teachers, but these were small stipends and fell well short of the statutory requirements. The stipends rarely amounted to any more than a small percentage of a teacher’s salary, with the remaining portion still determined by nonperformance factors. Some districts arguably made a mockery of the statute, agreeing to give highly rated teachers performance bonuses of just $1.[20] While those gimmicks have largely been abandoned, some districts carry on offering paltry performance-based pay. Western School District in Jackson County, for instance, currently offers a one-time payment of $50 for teachers who are rated effective or highly effective. Of those districts offering performance bonuses, few exceeded $500.
Even districts that offer merit-based pay often undermine it. Many contracts use teachers’ effectiveness ratings from their formal evaluations to determine which teachers qualify for performance pay. This might be reasonable, but districts tend to give all teachers ratings that would qualify them for the stipend. In 2018, for example, an absurd 98% of teachers in Michigan were rated “effective” or “highly effective,” likely qualifying them for any merit-based award offered in their respective districts.[21]
In our review, about 22% of contracts contained terms that discussed the prohibited subject of merit pay. Another 2% contained terms that were questionably related to the topic or could be interpreted as limiting a district’s discretion on this matter. Just over 75% were compliant with the law by either not discussing the prohibited subject, carving out employees subject to the Teacher Tenure Act, or expressly acknowledging that merit pay was to be left to the district’s complete discretion. Overall, 6% of contracts contained language that either automatically revived terms that had been removed due to the 2011 reforms or could easily be adapted to do so.
But nearly all districts still use a single-salary schedule. This seems to violate both the spirit and the letter of the 2009 law. It requires districts to use performance as “a significant factor” in determining teacher compensation. A district using a single-salary schedule is choosing to make educational attainment and years on the job the significant factors that determine teacher pay. The 2009 merit pay law was also repealed in 2023, effective July 1, 2024.[22]
School boards should, nevertheless, consider the importance of prioritizing teacher performance over seniority. Performance-based pay can be highly flexible and tailored to include not just student proficiency scores but also learning growth, supervisor and peer evaluations, and overall group performance. A holistic approach to evaluating teachers, incorporating more than one of these elements, allows districts to identify and reward high-performing teachers.