In 2005, the Minnesota Legislature enacted the Quality Compensation program, or Q Comp, a teacher performance pay program. Q Comp provides state funds to districts who voluntarily design performance-based pay systems that are approved by the Minnesota Department of Education (MDE). During the 2005-06 school year, 9 school districts and 3 charter schools applied for and were approved to participate in Q Comp. The following year, the program grew to include 14 school districts and 2 charter schools, with additional pending applications. Today, 52 school districts and 56 charter schools have either implemented Q Comp programs or have been approved to participate in Q Comp for the 2011-12 school year. According to MDE, Q Comp has been implemented in 470 school sites, involving over 16,000 educators and over 245,000 students.
Q Comp is funded as part of the general education revenue program, equalization aid, and local property tax levies. In fiscal year 2012, Minnesota appropriated $68.8 million to the alternative compensation revenue, the line item for Q Comp. This is an increase from original pilot appropriation of $3.6 million and a slight increase from the $64.3 million in 2005. The general education funding formula Districts can receive $260 per enrolled student, comprised of $169 from the general education revenue program and the remaining $91 from equalization aid and local levies. The Q Comp levy is equal to $70 per enrolled student multiplied by either the adjusted net tax capacity (ANTC) of the jurisdiction or one, whichever is less. The Q Comp equalization aid is the difference between the aid calculated from the general formula and the levy.
There are several noteworthy elements of this expenditure structure. First, Q Comp requires a local contribution. This both relieves the state’s financial obligation in implementing a new program, but also requires a district-level investment in implementing Q Comp and its objectives. Second, the equalization aid and local levy tied to the ANTC attempt to “neutralize the effect of different assessment practices among the taxing jurisdictions of the state.”Because districts vary in the amount they are able to levy from local residents, equalization revenue ensures there is a more equitable distribution of Q Comp expenditures. Finally, charter and independent schools are given $243 per enrolled student in state aid, as these types of schools do not have taxing or levy authority.
Little has been done to analyze the impact of Q Comp on student academic achievement in Minnesota. In 2009, the Minnesota Office of the Legislative Auditor issued a report analyzing MDE’s administration and oversight of the Q Comp program. However, the report did not measure the effect of teacher performance pay on student outcomes. At the time of the report, Q Comp had only been in place for three full school years and as such, “Q Comp’s effect on student achievement [could not] be adequately measured using existing data.” The program’s effectiveness on improving student performance has not been reevaluated since 2009 report. Further, academic literature on whether teacher performance pay impacts student growth has produced inconclusive empirical results.