Research News

Study: Tennessee teacher retention bonuses are paying off

Bonuses that keep highly effective teachers in low performing schools are cost effective for the state, and result in more productive students. (iStock)

Are cash incentives a possible solution to retaining highly effective teachers in low-performing schools? Yes, according to the results of a new Vanderbilt study that evaluated the state of Tennessee’s recent implementation of a $5,000 retention bonus program in low-performing schools.

In total, the state distributed more than $2.1 million in $5,000 retention bonuses to 361 highly effective teachers, who agreed to stay at a low-performing school during the 2013-14 school year.

Matthew Springer
Springer (Vanderbilt)

“To evaluate the program, we compared the retention rates of teachers who were just eligible for the bonus to those teachers who just missed being eligible for the bonus,” said Matthew Springer, assistant professor of public policy and education at Vanderbilt’s Peabody College of education and human development and director of the Tennessee Consortium on Research, Evaluation and Development at Peabody.

“We found that these performance incentives increase the likelihood of retention of top performing teachers by as much as 23 percent.”

Read Matthew Springer’s abstract.

Schools with high concentrations of poverty or racial minorities are less likely to retain highly effective teachers; and when these teachers move on, they are typically replaced with much less effective teachers. Ending that cycle could result in increased student achievement—and future earning potential, he said.

“We found that for every teacher that is retained as a result of the bonus, students taught by that teacher, rather than the likely replacement teacher, experience an increase in teacher effectiveness of 46 percentile points,” he said. “That is the equivalent of an average teacher elevating their performance to the 96th percentile.”

The bonus program is financially sustainable for the state, he added. “Along with savings from lowered turnover or replacement costs, we found that the bonus program could pay for itself in the long run when you consider the additional tax revenue from students’ predicted increased earnings if only 10 percent of bonus recipients continued teaching, and taught an average of 30 students for one year,” Springer said.

Retention of effective teachers has more benefits than selective firings, Springer said.

“In contrast to programs that try to improve teacher quality through termination of ineffective teachers, retention bonuses for effective teachers have the added benefit of creating greater stability, and leadership within a struggling school,” he said.