Purpose

Establishes standard requirements for all performance based compensation systems adopted by school districts in the State.

Background

School districts implement various types of teacher compensation structures, some being framed around a skill-based or performance-based system, with an intent to provide incentives and awards to teachers for meeting or exceeding achievement goals determined by the school district. Awards are generally provided in the form of monetary bonuses granted based on performance, described as “merit pay” or “career ladder” approaches.

The State currently implements two performance-based systems for teachers; the Career Ladder Program was established in 1985 and the Optional Performance Incentive Program was established in 1994. Individual school districts are authorized to implement performance based compensation systems locally. Additionally, Proposition 301, as passed by the general electorate in November of 2000, requires each school district or charter school to allocate 40 percent of the classroom site fund monies for teacher compensation increases that are based upon performance.

The strike everything amendment to H.B. 2700 establishes standard requirements for all performance based compensation systems adopted by school districts in the State. This strike everything amendment is similar, but not identical to S.B. 1426 as adopted by the Senate. The provision that allows the State Superintendent to contract with the Auditor General for the evaluation of all performance based compensation systems and the reporting requirement of the State Superintendent to submit the evaluation to the Governor and Legislature are not included in this strike everything amendment.

There is no discernible fiscal impact to the state general fund associated with this bill.

Provisions

Performance Evaluation System

1. Adds to required elements contained in the governing board’s procedures for the teacher performance evaluation system to include an assessment of the competencies of teachers as measured by the State Board of Education’s (SBE) professional teacher standards.

Performance Based Compensation System Requirements

2. Establishes a definitions section for performance based compensation systems.

3. Stipulates requirements to be included in all performance based compensation systems adopted by a school district.

4. Provides that the performance based compensation system includes a phase-in for periodic review and input from all parties developing the system.

5. Allows a school district’s performance based compensation system to include: (a) participation by parents, business and community members as appropriate, (b) performance incentives based on stipulated individual student progress, except that no system shall be based on a single measure of student progress and (c) any other reasonable terms and conditions to implement the system.

6. Requires each performance based compensation system to include a stipulated evaluation process for participants. Requires the appeals process to provide for a review of the evaluation by teachers and administrators.

7. Requires each school district to provide for a district performance based compensation steering committee and establishes the composition of the committee membership.

8. Requires the committee to adopt procedures necessary to allow regular input from participants, administrators, parents and community members and make recommendations for the continued refinement of the system. Establishes voting requirements for the adoption of a recommendation to refine the system.

9. Allows the school district to designate the district steering committee as the entity responsible for developing the system or the entity responsible for the appeal of participant evaluations, or both, if applicable.

10. Requires the school district to provide adequate program management for stipulated purposes.

11. Requires each school district to provide for an annual evaluation of its performance based compensation system.

12. Requires the evaluation to measure the impact of teacher professional development; participant job satisfaction; individual student progress and achievement; achievement of school district and school site goals; and retention of system participants.

13. Requires the evaluation to make specific recommendations relating to the continued implementation of the program, including measures to improve participation, administration and achievement of prescribed goals. The evaluation shall be submitted for the preceding year to the State Superintendent, the school district governing board and the district steering committee by November 1^st of each year.

14. Requires the State Superintendent to conduct random evaluations of performance based compensation systems, beginning in 2006.

15. Exempts charter schools from the new provisions for the performance based compensation systems established in the act, except that charter schools must provide a description of any system they develop to their sponsoring entity or agency.

16. Requires a charter school to include an annual evaluation similar to that required of school districts under this act and submit a copy to the State Superintendent by a specified date.

Career Ladder Program

17. Makes changes to the Career Ladder Program including the following:

a) Stipulates the Career Ladder Program uses a performance based system that meets the performance based compensation requirements established in this act.

b) Requires all evaluations of pupil progress to be aligned with Arizona’s academic standards adopted by the SBE.

c) Requires the school district performance based compensation steering committee to serve as the Career Ladder Program steering committee.

d) Requires the Career Ladder Program’s periodic review and evaluation procedures to be substantially similar to the procedures for the performance based compensation system.

e) Allows a school district to combine the requirements of the Career Ladder Program with the general requirements of the performance based compensation system if the combination results in consolidation of duplicative requirements, and stipulates exceptions.

Optional Performance Incentive Program

18. Allows school districts participating in the Optional Performance Incentive Program (OPIP) to combine its general requirements with the performance based compensation system if the combination results in consolidation of duplicative requirements, and stipulates exceptions.

19. Stipulates the OPIP program uses a performance based compensation system that meets the performance based compensation requirements established in this act.

Classroom Site Fund

20. Establishes the definition “compensation increases based on performance” in the classroom site fund statutory section to mean a program that includes a performance based compensation system that meets the requirements established in this act.

21. Makes technical and conforming changes.

22. Provides a delayed effective date of July 1, 2003 to the section of the bill requiring the governing board to prescribe a new component to the procedures for the performance evaluation system.

23. Provides for a general effective date, except as otherwise noted.

Amendments Adopted by Committee

· Adopted the strike everything amendment.

House Action Senate Action

APPROP 3/25/02 DPA 10-4-0-2-0 APPROP 4/23/02 DPA/SE 6-2-4

3^rd Read 4/09/02 41-12-7-0

KY/ac