The plan discussed above involves a bonus to the single-salary schedule, rather than a replacement of that schedule. A brief discussion of why will help illuminate the issues faced in the design and implementation of any future merit-pay plan in Michigan.

To begin with, note that even in Denver, where the ProComp schedule has superseded the single-salary schedule, ProComp’s rewards for such items as higher degrees — a key element of the single-salary schedule — overshadow pay incentives based on student achievement gains. This is no surprise: Teachers unions, having championed uniform pay for decades based on college degrees and experience, will generally resist genuine departures from that paradigm. Ill-conceived past experiments have probably reinforced that tendency among unions and the teachers themselves.

As a result, a merit-pay initiative is more likely to be accepted as a bonus to the existing single-salary schedule than as a replacement of it. Such bonuses reassure teachers legitimately concerned about changes to the terms of their contract that a merit-pay system will not entail any immediate loss in income — only a potential increase.

Moreover, replacing a conventional school district’s single-salary schedule with a comprehensive pay system that includes a merit-pay component would require changes to the state Teachers’ Tenure Act.[*],[44] The act states, "[D]ischarge or demotion of a teacher on continuing tenure may be made only for reasonable and just cause,"[45] and it defines demotion as "to reduce compensation for a particular school year by more than an amount equivalent to 3 days’ compensation or to transfer to a position carrying a lower salary."[46] Without amending the tenure act, a teacher could sue any conventional school district whose merit-pay schedule lowered the teacher’s compensation by even a few days’ pay compared to the prior school year.

Note, however, that this same language does not appear to prohibit a merit-pay bonus, even though a teacher’s bonus might decline substantially from one year to the next. The bonus is an award, not a salary, and a failure to earn an award in subsequent years could not properly be considered a "demotion" — especially in our model program, where the award would be supplied by a private foundation, not the public employer.

There is another possible advantage to running a bonus program. If a private entity were to provide the money for the program (thereby leaving the public funding for a single-salary schedule clearly untouched), there is a small chance a court might rule that the merit pay bonus was not a "wage" or "condition of employment" under the Michigan Public Employment Relations Act.[†],[47] In that event, the merit-pay bonus program would not be a mandatory subject of collective bargaining, and an uncooperative union might have a hard time blocking the program if faced with determined school district officials.

Alternatively, a district could try to argue that a merit-pay bonus program is a "pilot program" and therefore specifically exempt from mandatory collective bargaining under state law.[48] The success of this argument would depend, however, on the court’s interpretation of the phrase "pilot program" in a vaguely worded PERA provision. In this case, the district would probably have a better argument if the program involved only some, not all, of the schools in the district, and if a research consultant were engaged to monitor the ongoing results of the program.

Common sense and the provisions of Michigan law both suggest that any merit-pay pilot program would be easier to implement as a bonus, rather than as a replacement of the current salary schedule. Nevertheless, a bonus program is not an optimal endpoint for merit pay in Michigan schools, given the counterproductive tendencies of the single-salary schedule. A successful bonus program should be seen as a precursor to comprehensive teacher compensation reform. This reform should include an amendment of the tenure act to allow teacher pay to rise and fall to reflect teacher performance without triggering an illegal "demotion."

[*]Michigan’s Teachers’ Tenure Act applies to teachers in conventional school districts, but not to teachers in charter schools.

[†]The Florida Supreme Court once rejected a union challenge to Florida’s "Master Teacher Program," a merit-play plan (see United Teachers of Dade, FEA/United AFT, Local 1974, AFL-CIO v Dade County School Board, 500 So.2d 508 (Florida 1986)). Nevertheless, the Florida decision was heavily dependent on facts particular to that case.