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Differentiated pay system aims at rewarding, retaining great teachers

CASTLE ROCK-- This week the Douglas County Board of Education approved employee compensation increases for FY 2014. This is the first year that raises will be differentiated as part of the district's new Pay for Performance system, which aims at attracting and retaining the best employees, by paying professional salaries and rewarding those that are great at what they do.

Douglas County School District (DCSD) is differentiating pay increases to employees based on two factors, performance and the market.

In the plan, the highest performing employees, who are low in the market are eligible to receive an increase of up to 9.2%.  The average increase is 5.2%.  All employees will receive an increase to their total compensation package. 

The increase was the focus of Superintendent Dr. Liz Fagen's weekly radio show, "Let's Talk Education." Chief Human Resources Officer Brian Cesare and his staff joined the superintendent to discuss how pay is differentiated, etc.

The differentiated pay is a revolutionary change. In order to understand how it all works, let’s begin by discussing a little history.

No more Step-and-Lane

The step-and-lane salary scale that many districts rely on began in the early 1900s, when there was a historical reason to design transparent compensation systems. At that time, teacher salaries were susceptible to bias because of gender and race. It was important to value teachers on an objective basis — years of experience*. 
 
The problem however, is that this system rewards the time served and degrees earned, not the hard work a teacher puts in to helping their students succeed. Outstanding teachers get paid the same, or in some cases less, than peers who do little to impact their student’s learning. This creates a disincentive for teachers to go above and beyond, instead rewarding mediocrity. 
 
Secondly, it values graduate credits that may be unrelated to improving teaching. Research shows little or no correlation between attaining an advanced degree and classroom effectiveness. 
 
A step-and-lane system is also incredibly rigid, making it difficult for school districts to stay in step with the market. If demand for chemistry teachers, for instance, is extremely high the increased pay that they can receive at another district becomes a more and more attractive incentive to leave their current position.
 
The problem was that everyone was treated equally—a teacher, was a teacher, was a teacher. The system doesn’t take into consideration the more than 70 different types of positions we have in DCSD.
 
It didn’t matter if you were a classroom teacher or someone with highly specialized skills, like a nurse, a psychologist or a middle school math teacher. Originally, everyone was paid the same.
 
In order to make it all work districts manipulated the system in order to try and make it fit market forces. For instance, DCSD and other districts were forced to create “Hard to Fill” categories, so they would have the flexibility to candidates in short supply.
 
DCSD is doing things differently
 
Douglas County Schools believes this process should be more transparent and should focus on student success. Instead of trying to bend an unyielding system, we’ve built a new system that allows us to really meet the needs of the District and our staff.

 
Factor one: Market Value

In DCSD’s new Pay for Performance system, we have evaluated the market value for each and every position. This is an understanding of the impact of supply and demand on the position, not the importance to the position to the District. Every position is necessary for it to function well.
 
When we advertise some positions, we have a lot of qualified candidates. If we, however, are interviewing for a position that only has a few applicants, there is more demand for those employees, so we generally have to pay more to bring them to Douglas County and to keep them here.
 
Taking that into account, we have differentiated positions into five “pay bands.” 

Last year, DCSD’s Human Resources (HR) Department worked to evaluate and place every teaching position within these five Salary Pay Bands. Initially they were placed based on historical data and experience, but as the hiring season progressed, HR was able to shift the positions based on the actual supply and demand experienced. Every hiring season, the placement of positions will be reexamined, to ensure that they are still in the proper pay band based on market forces.
 
The Range

At the bottom of each pay band are four numbers, or “the range” of each pay band.
 
The left hand figure listed represents the amount generally given to candidates with no experience. The middle range is where DCSD hires most of our experienced applicants. Finally, the District provides a little headroom, so that we have the flexibility to provide our internal employees more base pay opportunities.
 
Finally, at the very bottom of this document is a row labeled "@ Market." These figures are the middle-third of the overall pay band range and are considered to be "at market." Employees whose base salary is less than this amount are below market and if they make more they are above market.
 
It is important to note that an employee’s base pay will not decrease. The impact of the Pay for Performance system is only on the increases an employee may receive. For instance, if an employee’s position is shifted to a lower pay band due to a change in the market, their base pay will remain the same and they’ll still have the opportunity to receive an increase based on their performance. The only thing that would change is whether the employee is qualified for the market-based portion of the increase.
 
Even employees whose current salary is higher than their current pay band are still eligible for performance pay. Their performance pay, however, will be provided in a one-time lump sum, rather than an increase to their annual salary. In the old step-and-lane system, the employees would hit the end of their range and would not be able to get a raise, regardless of how hard they worked.

Douglas County does it different, because we do not want to disincentive performance.

Factor two: Performance

We know that the single biggest factor in a student’s success is an effective teacher in the classroom. That is why we’ve also rebuilt the evaluation system so that great educators are rewarded for the effort they make in helping their students succeed. As part of the Continuous Improvement of Teacher Effectiveness system, (which is known as CITE), teachers are rated on a four scale system. Teachers that are highly effective will receive the biggest raise, plus they’ll have the opportunity to receive additional bonuses for reaching World-Class Targets.
 
The same is true for all other DCSD employees. Efforts have been made to create differentiated evaluations, which provide the District with an opportunity to reward staff members that do a great job.
 
Our goal is to help all employees continually improve. The new Pay for Performance proves professional development opportunities, as well as professional pathways, to help everyone to continue to grow—in addition to the financial incentives provided by the system.
 
The Revenue Stream

As has always been the case, the actual amount of the raise is determined by a few factors; chiefly how much money the District gets from the state. The more money the state provides, the more ongoing money we have in the revenue stream to offer our teachers.
 
In some cases the District has savings from the previous year that it can add—at least in one-time money. Once that money is spent it is gone. It cannot be used for a recurring raise.
 
As you will notice, DCSD is extremely careful as it communicates the difference between ongoing and one-time resources. Employees that receive an ongoing raise will see an upward adjustment to their base pay. When one-time money is used, the employee will be paid in a one-time stipend.
 
Differentiating Pay

Now that we’ve determined the amount we have available to give, we work to differentiate the increase, based on the two factors we’ve discussed: performance and the market. 

DCSD has created a 12 Block System. There are four rankings for performance as determined by CITE: highly effective, effective, partially effective and ineffective. Then there are three categories for market placement, based on where an employee falls within their designated pay band: below market, at market, and above market.
 
Those employees who are effective, at market will receive the average raise. Those that are more effective or lower in the market receive higher percent increases.
 
Naturally, highly effective employees that are low in the marketplace will receive the highest percent raise.
 
While there may seem to be big differences in increase, the dollar amounts are less drastic. For instance, if we assume some percent increases in highly effective, a below market individual eligible for a 6% increase, making $40,000 would earn an additional $2,400. Meanwhile, a highly effective teacher that is above market and is making $60,000 may be eligible for a 4% increase, which would also be $2,400.
 
The system provides an opportunity for DCSD to keep our salaries competitive against other school districts and to rectify inequities that may have been caused over time.
 
For instance, we know that four years of pay freezes have caused some unfortunate disparities. In some situations, teachers hired five years ago, may actually be making less than a new teacher hired last year. While no school district has the resources to fix these problems at a snap, this new system will allow DCSD to remedy these inequities relatively quickly, compared to the old system.
 
Pay For Performance is about supporting our employees

DCSD has built an entire integrated system, created to benefit and support our employees.
 
In addition to providing opportunities for financial reward, we want to make sure everyone has the opportunity to look forward at which career pathways they would like to pursue and what professional development they’ll need to accomplish these dreams.
 
Our goal in the Douglas County School District is to ensure our student have what they need to compete on a world stage, by helping our employees become more effective and rewarding them when they are.

*Step-and-lane history courtesy the Virginia Department of Education.  

October 14, 2013 | By Anonymous | Category:

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