[Federal Register Volume 75, Number 38 (Friday, February 26, 2010)]
[Proposed Rules]
[Pages 8854-8871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-3963]


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DEPARTMENT OF EDUCATION

34 CFR Subtitle B, Chapter II

[Docket ID ED-2010-OESE-0001]
RIN 1810-AB08


Teacher Incentive Fund Program

AGENCY: Office of Elementary and Secondary Education, Department of 
Education.

[[Page 8855]]


ACTION: Proposed priorities, requirements, definitions, and selection 
criteria.

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    Catalog of Federal Domestic Assistance (CFDA) Numbers: 84.385 and 
84.374.

SUMMARY: The Secretary of Education (Secretary) proposes priorities, 
requirements, definitions, and selection criteria under the Teacher 
Incentive Fund (TIF) program. These proposed priorities, requirements, 
definitions, and selection criteria are designed to be used in two 
separate and distinct TIF grant competitions: The Main TIF competition, 
which will provide TIF funding to eligible entities to support their 
implementation of performance-based compensation systems (PBCSs) in 
accordance with the priorities, the Main TIF requirements, the 
definitions, and the selection criteria proposed in this document, and 
the TIF Evaluation competition, which will provide, in accordance with 
the priorities, the Main TIF requirements, the definitions, and the 
selection criteria as well as the Evaluation requirements proposed in 
this document, TIF funding to help pay for the costs of implementing 
these eligible entities' PBCS in exchange for an agreement to 
participate in the national evaluation. The Secretary may use these 
proposed TIF priorities, requirements, definitions, and selection 
criteria in fiscal year (FY) 2010 and subsequent years. We intend the 
proposed priorities, requirements, definitions, and selection criteria 
to improve student achievement in high-need schools by creating 
incentives for effective teachers and principals in these schools.

DATES: We must receive your comments on or before March 29, 2010.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments by fax or e-mail. Please submit your comments only one 
time in order to ensure that we do not receive duplicate copies. In 
addition, please include the Docket ID and the term ``Teacher Incentive 
Fund'' at the top of your comments.
     Federal eRulemaking Portal: Go to http://www.regulations.gov to submit your comments electronically. Information 
on using Regulations.gov, including instructions for accessing agency 
documents, submitting comments, and viewing the docket, is available on 
the site under ``How To Use This Site.'' A direct link to the docket 
page is also available at http://www.ed.gov/programs/teacherincentive.
     Postal Mail, Commercial Delivery, or Hand Delivery: If you 
mail or deliver your comments about these proposed priorities, 
requirements, definitions, and selection criteria, address them to: 
Office of Elementary and Secondary Education (Attention: Teacher 
Incentive Fund Comments), U.S. Department of Education, 400 Maryland 
Avenue, SW., Room 3E120, Washington, DC 20202.

    Privacy Note: The Department's policy for comments received from 
members of the public (including those comments submitted by mail, 
commercial delivery, or hand delivery) is to make these submissions 
available for public viewing in their entirety on the Federal 
eRulemaking Portal at http://www.regulations.gov. Therefore, 
commenters should be careful to include in their comments only 
information that they wish to make publicly available on the 
Internet.


FOR FURTHER INFORMATION CONTACT: April Lee. Telephone: (202) 205-5224, 
or by e-mail: [email protected]. Note that we will not accept comments by e-
mail.
    If you use a telecommunications device for the deaf (TDD), call the 
Federal Relay Service (FRS), toll free, at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: 
    Invitation to Comment: We invite you to submit comments regarding 
this notice. To ensure that your comments have maximum effect in 
developing the notice of final priorities, requirements, definitions, 
and selection criteria, we urge you to identify clearly the specific 
proposed priority, requirement, definition, or selection criterion that 
each comment addresses.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from the proposed 
priorities, requirements, definitions, and selection criteria. Please 
let us know of any further ways we could reduce potential costs or 
increase potential benefits while preserving the effective and 
efficient administration of the program.
    During and after the comment period, you may inspect all public 
comments about this notice by accessing Regulations.gov. You may also 
inspect the comments in person, in Room 3E120, 400 Maryland Avenue, 
SW., Washington, DC, between the hours of 8:30 a.m. and 4 p.m., 
Washington, DC time, Monday through Friday of each week except Federal 
holidays.
    Assistance to Individuals with Disabilities in Reviewing the 
Rulemaking Record: On request we will provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for this notice. If you want to schedule an 
appointment for this type of accommodation or auxiliary aid, please 
contact the person listed under FOR FURTHER INFORMATION CONTACT.
    Purpose of Program: The purpose of the TIF program is to support 
projects that develop and implement PBCSs for teachers and principals 
in order to increase educator effectiveness and student achievement in 
high-need schools.

    Program Authority: The Departments of Labor, Health and Human 
Services, and Education, and Related Agencies Appropriations Act, 
2008, Division G, Title III, Pub. L. 110-161; Departments of Labor, 
Health and Human Services, and Education, and Related Agencies 
Appropriations Act, 2010, Division D, Title III, Pub. L. 111-117; 
and the American Recovery and Reinvestment Act of 2009, Division A, 
Title VIII, Pub. L. 111-5 (the ARRA).

Background

The Statutory Requirements

    Statutory provisions that govern the use of TIF funds are contained 
in the Department's annual congressional appropriations and in the 
ARRA. In this regard, Public Law 111-117, which contains the 
Department's fiscal year (FY) 2010 appropriation, authorizes the 
Department to use TIF funds to make competitive grants to eligible 
entities to develop and implement PBCSs in high-need schools. Eligible 
entities for these funds are:
    (a) Local educational agencies (LEAs), including charter schools 
that are LEAs.
    (b) States.
    (c) Partnerships of--
    (1) An LEA, a State, or both; and
    (2) At least one non-profit organization.
    Under Public Law 111-117, eligible entities must use TIF funds to 
develop and implement in high-need schools PBCSs that--
    (a) Consider gains in student academic achievement as well as 
classroom evaluations conducted multiple times during each school year 
among other factors, and
    (b) Provide educators with incentives to take on additional 
responsibilities and leadership roles.
    Public Law 111-117 further provides that grant recipients (1) must 
demonstrate that their PBCSs are developed with the input of teachers 
and school leaders in the schools and LEAs the grants will serve, and 
(2) may use TIF funds to develop or improve systems and tools (which 
may be developed and used either for the entire LEA or only for schools 
served under

[[Page 8856]]

the grant) that would enhance the quality and success of the PBCS, such 
as high-quality teacher evaluations and tools to measure growth in 
student achievement. In addition, Public Law 111-117 provides that 
applications for TIF grants must include a plan for the financial 
sustainability of the activities conducted and systems developed under 
the grant once the grant period has expired.
    Funds for this program, including funds for a required national 
evaluation, were also appropriated as part of the ARRA. Recipients of 
awards made with ARRA funds must meet specific reporting requirements 
established by the ARRA. The following link provides guidance on these 
reporting requirements: http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09-21.pdf.

    Note: Provisions of the ARRA that govern use of TIF funds 
require use of funds consistent with substantive requirements in the 
Department's FY 2008 appropriations act, Public Law 110-161. The 
Department's FY 2009 and FY 2010 appropriations acts contain 
comparable provisions governing eligible grantees and the need to 
use TIF funds to develop and implement PBCSs in high-need schools. 
Although Public Law 110-161 and Public Law 111-115 provide that 
Federal TIF funds may support PBCSs only for teachers and 
principals, grantees may extend their PBCSs to all school personnel 
by using non-TIF funds to pay for additional compensation for non-
instructional personnel.

    Under the program, grantees may only use TIF funds for expenses 
related to the development and implementation of their PBCS in high-
need schools identified in the applicant's proposal. However, in 
addition to the financial incentives given to teachers and principals 
based on their effectiveness and their assumption of additional 
responsibilities or leadership roles (as defined in this notice), TIF 
funds also may be used to support a variety of activities either for 
the entire LEA or only for high-need schools served under the grant, 
that are related to the PCBS. These activities include professional 
development activities, evaluation and research analysis, costs of 
developing or improving systems and tools that would enhance the 
quality and success of the PBCS, such as high-quality teacher 
evaluations and tools to measure growth in student achievement, 
reasonable travel expenses related to the TIF program, data system 
enhancement or development, and other reasonable and necessary costs.
    With regard to payments for financial incentives, while the 
Department is not proposing to establish a minimum percentage that 
grantees would need to expend, it would expect that as an LEA's PBCS 
becomes institutionalized, the percentage of its budget that is used 
for incentive payments would increase throughout the five-year grant 
period. In addition, while the salaries of certain staff outside of the 
PBCS (such as salaries of a school's master, mentor or lead teacher) 
could conceivably be legitimate costs of a TIF project, given the 
purpose of the program the Department expects to continue to limit its 
approval of the number of such staff whose salaries may be paid with 
TIF funds. Grantees, however, would be able to use TIF funds towards 
the costs of bonuses paid to any number of these staff if they assume 
additional responsibilities under the PBCS.
    Background: Signed into law by President Obama on February 17, 
2009, the ARRA constitutes an unprecedented effort to revive the 
Nation's economy, create or save millions of jobs, and address long-
neglected challenges so the Nation can thrive in the 21st century.
    In addition to measures that modernize the Nation's infrastructure, 
enhance energy independence, preserve and improve affordable health 
care, provide tax relief, and protect those in greatest need, the ARRA 
provides an unprecedented sum--approximately $100 billion dollars--to 
fundamentally transform our public education system. Section 14005(d) 
of the ARRA requires that this funding be used to promote effective 
school reform in four assurance areas: (1) Adopting internationally 
benchmarked standards and assessments that prepare students for success 
in college and the workplace; (2) Building data systems that measure 
student success and inform teachers and principals in how they can 
improve their practices; (3) Increasing teacher effectiveness and 
achieving equity in teacher distribution; and (4) Turning around our 
lowest achieving schools.
    The ARRA's second and third assurances are based upon evidence that 
teachers are the single most critical factor in improving student 
achievement. However, too many students, particularly those attending 
high-need schools, are provided instruction by ineffective teachers. 
Accordingly, the ARRA requires the Department to promote efforts that 
ensure equitable distribution of effective teachers between high and 
low poverty schools so that economically disadvantaged students have 
the same access to effective teachers as other students.
    TIF is one such effort. By requiring its grantees to draw 
distinctions in how teachers are retained, promoted and rewarded, TIF, 
as implemented by the Department, advances the ARRA's third assurance 
of recruiting, developing and retaining effective teachers. To 
accomplish these goals, the ARRA provides TIF with an additional $200 
million dollars of funding.
    The Department proposes, to the extent feasible and appropriate, to 
align TIF with the requirements contained in the other ARRA programs, 
including the State Fiscal Stabilization Fund, Race to the Top, and the 
Title I School Improvement Grants. The Department's intention in doing 
so is to encourage applicants to develop plans for evaluating educator 
effectiveness and for providing educators the professional development 
needed to improve classroom practice and student achievement that 
complement, and are consistent with, plans developed across these other 
ARRA programs.
    Along with authorizing TIF funds to be used to support projects 
that implement PBCSs, the ARRA also requires the Department to use the 
appropriated funds to conduct a ``rigorous national evaluation * * * 
utilizing randomized controlled methodology to the extent feasible, 
that assess the impact of performance-based teacher and principal 
compensation systems supported by the funds provided in this Act on 
teacher and principal recruitment and retention in high-need schools 
and subjects.'' The ARRA thus requires the Department to award funds in 
a way that will ensure adequate participation of both a treatment group 
and control group in the national evaluation. Our proposal for the TIF 
Evaluation Competition, and the questions on which we specifically 
request public comment, are designed to permit the Department to meet 
this responsibility, and at the same time to seek answers to research 
questions about the effect of PBCSs on student achievement in high-need 
schools that are of great importance to those who would implement such 
systems.

Proposed Priorities

    This notice contains five proposed priorities. The Secretary 
intends to use all five proposed priorities for the Main TIF 
competition and the TIF Evaluation competition.

Types of Priorities

    The Secretary proposes five priorities for the Main TIF competition 
and the TIF Evaluation competition. Proposed Priority 1 through 3 are 
absolute priorities. Proposed Priorities 4 and 5 are proposed as 
competitive preference priorities and are aligned with other key 
education reform goals of the Department.

[[Page 8857]]

    We may choose, in the notice of final priorities, requirements, 
definitions, and selection criteria, to change the designation of any 
of these priorities to absolute, competitive preference, or 
invitational priorities, or to include the substance of these 
priorities in the requirements or the selection criteria. We may also 
decide to include the substance of the requirements or the selection 
criteria in the priorities.
    With an invitational priority, we would signal our interest in 
receiving applications that meet the priority; however, consistent with 
34 CFR 75.105(c)(1), we would not give an application that meets an 
invitational priority preference over other applications.
    Under an absolute priority, as specified by 34 CFR 75.105(c)(3), we 
would consider only applications that meet the priority. Under a 
competitive preference priority, we would give competitive preference 
to an application by (1) awarding additional points, depending on the 
extent to which the application meets the priority (34 CFR 
75.105(c)(2)(i)); or (2) selecting an application that meets the 
priority over an application of comparable merit that does not meet the 
priority (34 CFR 75.105(c)(2)(ii)).

Proposed Priority 1 (Absolute)--Differentiated Levels of Compensation 
for Effective Teachers and Principals

Background

    The quality of classroom teachers is the most important factor 
under a school's control that affects student achievement.\1\ Studies 
using value-added assessments indicate that individual teachers make a 
significant difference in student achievement and that teacher 
effectiveness varies considerably, even after adjusting for student 
characteristics such as prior performance, race or income.\2\
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    \1\ Goldhaber, D. (2007). Thoughts on Teacher Pay Reform. 
Washington, DC: National Comprehensive Center on Teacher Quality.
    \2\ Sanders, W. (2006, November). Cumulative and Residual 
Effects of Teachers on Future Student Academic Achievement. 
Knoxville, TN: University of Tennessee; and Rivkin, S., Hanushek, 
E., and Kain, J. (2005, March). ``Teachers, Schools, and Academic 
Achievement.'' Econometrica, 73, 417-458.
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    Yet one of the greatest obstacles to achieving the President's 
ambitious goal of providing a high-quality education for all children 
is that too few students, particularly low-income, minority, and low-
achieving students, are provided instruction by effective teachers. And 
because LEAs typically do not pay teachers and principals based on 
their effectiveness, but instead on a single salary schedule that pays 
all teachers and principals the same based on experience and level of 
education, LEAs rarely provide highly effective teachers and principals 
in public school systems compensation that differs from what they 
provide to less effective teachers and principals.
    Moreover, LEAs typically provide no additional incentive for the 
most effective teachers or principals to enter or remain in high-need 
schools. On the contrary, by providing the same amount of compensation 
based on credential and years of experience, and offering more 
experienced educators a priority in transfer options, LEA personnel 
systems often create at least implicit incentives for teachers and 
principals to move into schools and classrooms that present the fewest 
challenges. The failure to reward good performance by teachers and 
principals and to encourage effective teachers and principals to work 
in the most challenging schools makes it difficult to create a culture 
in high-need schools that focuses on continued excellence and results.
    The Secretary believes that LEAs with high-need schools that 
implement a PBCS that (1) rewards teachers and principals who 
demonstrate their effectiveness by improving student achievement and 
(2) provides opportunities for highly effective teachers to take on 
additional roles and responsibilities, will increase overall teacher 
and principal quality and will attract outstanding educators to these 
schools. The Secretary also believes that these PBCSs will foster the 
creation of schools that use evidence of student achievement and of 
effective teacher practice to continuously improve teaching and 
learning.
    Assuming that all funded projects are of sufficient quality, the 
Department intends to fund a variety of approaches to implement a PBCS 
including individual-based, school- or group-based awards, and a 
combination of the two. Each applicant should propose a method or 
methods that best meet the needs of its principals, teachers and 
students in its high-need schools.

Proposed Absolute Priority

    To meet this proposed absolute priority, an applicant must 
demonstrate, in its application, that it will develop and implement a 
PBCS that rewards, at differentiated levels, teachers and principals 
who demonstrate their effectiveness by improving student achievement 
(as defined in this notice) as part of the LEA's coherent and 
integrated approach to strengthening the educator workforce.
    In determining teacher and principal effectiveness as part of the 
PBCS, the LEA--
    (a) Must give significant weight to student growth (as defined in 
this notice) based on objective data on student performance;
    (b) Must include observation-based assessments of teacher 
performance at multiple points in the year, carried out by evaluators 
trained in using objective evidence-based rubrics for observation, 
aligned with professional teaching standards; and, if applicable, as 
part of the LEA's coherent and integrated approach to strengthening the 
educator workforce; and
    (c) May include other measures such as evidence of leadership roles 
that increase the effectiveness of other teachers in the school or LEA.
    In determining principal effectiveness as part of a PBCS, the LEA 
must give significant weight to student growth and may include 
supplemental measures such as high school graduation and college 
enrollment rates.
    In addition, the applicant must demonstrate that the differentiated 
effectiveness incentive payments will provide incentive amounts that 
are substantial and provide justification for the level of incentive 
amounts chosen. While the Department does not propose a minimum 
incentive amount, the Department encourages applicants to be thorough 
in their explanation of why the selected incentive amounts are likely 
high enough to create change in the behavior of current and prospective 
teachers and principals.

Proposed Priority 2 (Absolute)--Fiscal Sustainability of the 
Performance-Based Compensation System (PBCS)

Background

    One of the most important steps that LEAs and States must take when 
developing and implementing a PBCS is to accurately project program 
costs and to plan for fiscal sustainability.\3\
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    \3\ Guthrie, J.W., and Prince, C.D. (2008). Paying for and 
Sustaining a Performance-based Compensation System. Washington, DC: 
Center for Educator Compensation Reform. U.S. Department of 
Education, Office of Elementary and Secondary Education.
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    Accurate cost projections at the development stage of a PBCS are 
critical, especially if an LEA or State plans to expand a PBCS from 
just a few schools to all schools in the LEA or to all LEAs in the 
State.\4\ Ample evidence suggests that States and LEAs frequently 
underestimate both the overall costs of

[[Page 8858]]

PBCSs for teachers and principals and the number of teachers and 
principals that will qualify for awards under the chosen PBCS.\5\
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    \4\ Hassel, B. (2002, May). Better pay for better teaching: 
Making teacher compensation pay off in the age of accountability. 
Washington, DC: Progressive Policy Institute.
    \5\ Odden, A., and Wallace, M. (2007, February). Rewarding 
Teacher Excellence: A Teacher Compensation Handbook for State and 
Local Policy Makers. Madison, WI: Wisconsin Center for Education 
Research, University of Wisconsin-Madison.
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    Public Law 111-117 requires that applicants must ``include a plan 
to sustain financially the activities conducted and systems developed 
under the grant once the grant period has expired.'' This absolute 
priority is intended to ensure that applicants effectively estimate the 
future costs of the particular PBCS they plan to implement, and that 
they are prepared to pay financial awards to everyone who earns them 
under the system. In addition to the direct costs of performance-based 
payments made as part of the PBCS that applicants should expect, there 
can be extra costs associated with administering a PBCS. These costs 
include both (1) employee benefits, such as premiums toward employee 
retirement, State taxes, and Federal withholdings, and (2) the costs of 
measuring employee effectiveness, such as costs associated with 
developing measures of teacher effectiveness, effective teacher and 
principal evaluation systems, incentives for career development, and 
longitudinal data systems capable of linking individual educators with 
student outcomes.
    The Secretary seeks to promote the fiscal sustainability of 
effective PBCSs by focusing applicants on the need to find additional 
and alternative sources of funding in order to provide an increasing 
share of matching funds (non-TIF funds) in those project years when 
differentiated compensation is paid to teachers and principals. The 
various strategies that States and LEAs might consider for securing 
sustainable funding for their PBCSs include:
    (a) Redeploying current State, LEA, or school resources, including 
resources that currently contribute to salary increments based on the 
accumulation of graduate credits and degrees.
    (b) Redirecting expected future resources.
    (c) Redirecting State and Federal categorical program assistance so 
State or Federal program funds, where authorized, are used to assist in 
paying for the expenses of the chosen PBCS.
    (d) Seeking additional public funding.
    (e) Seeking philanthropic or corporate support.

    In this proposed priority, we are asking that applicants (1) 
demonstrate that they have projected costs associated with the 
development and implementation of the PBCS, and (2) provide evidence 
that they will be able to sustain a financial commitment to their PBCS 
through the commitment of funds other than those provided under the TIF 
grant, during and beyond the life of the TIF project.

Proposed Absolute Priority

    To meet this proposed absolute priority, the applicant must 
provide, in its application, evidence that:
    (a) The applicant has projected costs associated with the 
development and implementation of the PBCS, during the project period 
and beyond, and the LEA has accepted responsibilities to provide such 
performance-based compensation to teachers and principals who earn them 
under the system; and
    (b) The applicant will provide from non-TIF funds over the course 
of the five-year project period an increasing share of performance-
based compensation paid to teachers and principals in those project 
years in which the LEA provides such payments as part of its PBCS.

Proposed Priority 3 (Absolute)--Programmatic Sustainability of the 
Performance-Based Compensation System (PBCS)

Background

    The Secretary seeks to focus applicants on the need to plan for the 
programmatic sustainability of the chosen PBCS. Evidence suggests that 
programmatic sustainability can best be accomplished when the PBCS is 
aligned with the LEA's or State's strategies for increasing teachers' 
and principals' effectiveness in high-need schools. Ideally, a PBCS 
supports and reinforces a coherent and integrated approach to 
strengthening the educator workforce, including teacher and principal 
recruitment, induction, professional development, evaluation, 
retention, and advancement into instructional leadership roles. When 
the PBCS's implementation becomes embedded into the core of a LEA's 
larger improvement strategy and operations, it will have a much greater 
likelihood of financial sustainability over the long term.\6\
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    \6\ Guthrie, J.W., & Prince, C.D. (2008). Paying for and 
sustaining a performance-based compensation system. Washington, DC: 
Center for Educator Compensation Reform. U.S. Department of 
Education, Office of Elementary and Secondary Education.
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    Thus, through this proposed priority, we are asking that applicants 
demonstrate that the proposed PBCS is aligned with a coherent strategy 
for strengthening the educator workforce in the LEA(s) participating in 
the project.

Proposed Absolute Priority

    To meet this proposed absolute priority, the applicant must 
provide, in its application, evidence that the proposed PBCS is aligned 
with a coherent and integrated strategy, including the use of data and 
evaluations for professional development, retention and tenure 
decisions, for continuing to strengthen the educator workforce in the 
LEA(s) participating in the project after the end of the TIF project 
period.

Proposed Priority 4 (Competitive Preference)--Use of Value-Added 
Measures of Student Achievement

Background

    The Secretary supports the use of ``value-added'' measures of 
teacher and principal effectiveness for purposes of determining 
differentiated levels of compensation in a PBCS. Value-added measures 
seek to statistically isolate the contribution of teachers and 
principals to growth in student achievement between two or more points 
in time from other factors contributing to student achievement growth, 
including prior student achievement and student and family 
characteristics. Research indicates that value-added measures are a 
promising means of assessing the contributions of a school, teacher, or 
principal, while filtering out the non-school factors that may also 
contribute to growth in student achievement.\7\
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    \7\ Goe, L. (May 2008). Key issue: Using value-added models to 
identify and support highly effective teachers. National 
Comprehensive Center for Teacher Quality.
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    Through this priority, the Secretary seeks to promote the use of 
value-added measures in PBCSs for teachers and principals. Value-added 
measures of educational performance can provide a useful, objective 
measure of teacher and principal effectiveness. The use of a value-
added measure under this priority would need to be implemented 
consistent with the requirements in Proposed Absolute Priority 1 
(Differentiated Levels of Compensation for Effective Teachers and 
Principals), which would require observation-based assessments of 
teacher performance at least twice a year.
    Given the complexity of models that use value-added measures, the 
Secretary seeks to ensure that applicants have a plan for (1) ensuring 
that they have the capacity to implement the value-added model 
effectively (e.g., that they have appropriate data systems and measures

[[Page 8859]]

to ensure data quality), and (2) clearly explaining the chosen value-
added model to teachers to enable them to use the data generated 
through the models to improve classroom practices.

Proposed Competitive Preference Priority

    To meet this proposed competitive preference priority, the 
applicant must demonstrate, in its application, that the proposed PBCS 
for teachers and principals will use a value-added measure of the 
impact on student growth as a significant factor in calculating 
differentiated levels of compensation provided to teachers and 
principals.
    Under this proposed priority, the applicant must also demonstrate 
that it has a plan to ensure that, as part of the PBCS, it has the 
capacity to (1) implement the proposed value-added model (e.g., through 
robust data systems that collect the necessary data and ensure data 
quality), and (2) educate teachers and principals on the chosen value-
added model and how it would be implemented.

Proposed Priority 5 (Competitive Preference)--Increased Recruitment and 
Retention of Teachers in Hard-to-Staff Subjects and Specialty Areas in 
High-Need Schools

Background

    This proposed competitive preference priority is intended to ensure 
that LEAs focus on recruiting and retaining effective teachers of hard-
to-staff subjects and specialty areas in high-need schools. High-need 
schools are likely to have a higher proportion of vacancies, novice 
teachers, out-of-field teachers, and ineffective teachers than other 
schools in the LEA or State educational agency.\8\ In many LEAs, 
recruiting and retaining effective secondary mathematics and science 
teachers and teachers with the knowledge and skills to effectively 
accelerate the learning of English language learners and students with 
disabilities is particularly challenging. Providing incentives to hire 
and retain teachers who are effective, or likely to be effective, in 
teaching hard-to-staff subjects and specialty areas in high-need 
schools can be a valuable tool for ensuring that students in those 
schools are taught by effective teachers.
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    \8\ Imazeki, J. and Goe, L. (2009). The Distribution of Highly 
Qualified, Experienced Teachers: Challenges and Opportunities. 
Washington, DC: National Comprehensive Center on Teacher Quality.
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    The availability of such incentives should be communicated broadly 
to current teachers in the LEA, as well as to potential recruits, to 
increase the likelihood that effective teachers within the LEA, as well 
as new teachers with relevant backgrounds, will apply for hard-to-staff 
subjects and specialty areas in high-need schools.

Proposed Competitive Preference Priority

    To meet this proposed competitive preference priority, the 
applicant must demonstrate in its application that its proposed PBCS is 
designed to assist high-need schools to (1) Serve high-need students 
(as defined in this notice), (2) retain effective teachers in teaching 
positions in hard-to-staff subjects and specialty areas, such as 
mathematics, science, special education, and English language 
acquisition, and (3) fill vacancies with teachers of those subjects or 
specialty areas who are effective or likely to be effective. Applicants 
would be required to provide an explanation for how they will determine 
a teacher filling a vacancy is effective or likely to be effective. In 
addition, applicants would be required to demonstrate, in their 
applications, the extent to which the subject areas or specialty areas 
they propose to target are hard-to-staff. Lastly, applicants would need 
to demonstrate, in their applications, that they will implement a 
process for effectively communicating to teachers which of the LEA's 
schools are high-need and which subjects and specialty areas are 
considered hard-to-staff.

Requirements

    The following sections provide requirements for both the Main TIF 
and Evaluation TIF competitions.

Proposed Requirements for the Main TIF Competition

Background

    In order to promote successful projects that meet the objectives 
Congress has established for the TIF program, the Secretary proposes to 
establish the following requirements for the Main TIF competition:
    (a) A requirement that an applicant may submit an application for 
the Main TIF competition or the Evaluation competition. Applicants not 
funded under the Evaluation competition are automatically eligible 
under the Main TIF competition, and thus need not apply to both.
    (b) A requirement that each applicant describe in its application 
how its proposed PBCS will provide educators with incentives to take on 
additional responsibilities and leadership roles, as defined in this 
notice.
    (c) A requirement that every applicant have five core elements (as 
described below) of its PBCS in place or it must implement a planning 
period.
    (d) A requirement that the proposed PBCS provide participating 
teachers and principals high quality professional development which is 
targeted to needs identified through the evaluation process and shown 
to be effective.
    (e) A requirement that the applicant document that all 
participating schools are high-need schools.
    (f) A requirement that limits eligibility for both competitions to 
applicants that propose to serve schools not already served (or to be 
served) by current TIF grants.
    The following describes the Department's rationale for proposing 
these requirements:
    Selection of Competition. To ensure that there is a sufficient 
sample for the national evaluation, we propose to select applicants 
from the Evaluation competition before selecting applicants from the 
Main TIF competition. In order to not disadvantage the Evaluation 
competition applicants, we further propose that any Evaluation 
competition applicants not funded in the Evaluation competition would 
be automatically eligible for the Main TIF competition.
    Application Requirement. Public Law 111-8 requires that any PBCS 
funded under the TIF program provide educators with incentives to take 
on additional responsibilities and leadership roles.
    The Secretary views this requirement as a critical component for 
successful PBCSs and wants to ensure that each applicant has a plan in 
place that details how its proposed PBCS will provide these incentives.
    Core Elements of a PBCS and a Potential Planning Period. The 
Secretary has identified five core elements that he believes are 
essential to the success of any effective PBCS. We, therefore, propose 
to require each TIF grantee to have:
    (a) A plan for effectively communicating to teachers, 
administrators, other school personnel, and the community at-large 
about the components of the PBCS.
    (b) The involvement and support of teachers, principals, and other 
certified personnel (including input from teachers and principals in 
the schools and LEAs to be served by the grant) and the involvement and 
support of unions in participating LEAs where they are the designated 
exclusive representatives for the purpose of collective bargaining that 
is needed to carry out the grant.

[[Page 8860]]

    (c) Rigorous, transparent, and fair evaluation systems for teachers 
and principals that differentiate effectiveness using multiple rating 
categories that take into account student achievement growth as a 
significant factor, as well as classroom observations conducted at 
least twice during the school year. The classroom observation process 
must: (1) Use an objective, evidence-based rubric aligned with 
professional teaching standards and the LEA'S coherent and integrated 
approach to strengthening the educator workforce; (2) provide for 
observations of each teacher or principal multiple times during the 
school year by individuals (who may include peer reviewers), who are 
provided specialized training; (3) incorporate the collection and 
evaluation of additional forms of evidence; and (4) ensure a high 
degree of inter-rater reliability (i.e., agreement among two or more 
raters who score approximately the same) across the evaluators.
    (d) A data-management system, consistent with the LEA's proposed 
PBCS, that can link student achievement data to teacher and principal 
payroll and human resources systems.
    (e) A plan for ensuring that teachers and principals understand the 
specific measures of teacher and principal effectiveness included in 
the PBCS, and receive professional development that enables them to use 
data generated by these measures to improve their practice.
    The Secretary recognizes that not every applicant will be able to 
demonstrate in its application that it has in place all five core 
elements necessary to ensure effective implementation of its PBCS. 
Based on the Department's experience with current TIF grantees, 
however, we believe that having these required core elements in place 
before beginning to build a PBCS leads to a much more efficient and 
successful implementation of that system. Therefore, the Secretary 
proposes to require any applicant that cannot demonstrate in its 
application that it has in place each of these five core elements to 
agree, as part of its application, to implement a planning period of up 
to one year, during which it would use its TIF funds to develop the 
core element or elements it lacks. Because of the importance of the 
core elements, a grantee would be prohibited from using TIF program 
funds to provide incentive payments to teachers or principals until the 
Secretary is satisfied that it has implemented all five elements (as 
demonstrated in the grantee's reports to the Department during the 
project period).
    Professional Development. The Secretary believes that high-quality 
professional development, tied to the evaluation systems described 
above, is a key component of any successful and enduring PBCS for 
teachers and principals. Among other things, professional development 
enables all teachers and principals in high-need schools to learn how 
to generate, examine, and use student growth data to improve their 
practices in the classroom and in their schools, and thereby raise 
student achievement. For this reason, the Secretary proposes to require 
each applicant to demonstrate, in its application, that it has a system 
in place, or a specific plan for developing one, to (1) provide high-
quality professional development that is aligned with the PBCS for 
teachers and principals consistent with the definition of the term 
professional development in section 9101(34) of the Elementary and 
Secondary Education Act of 1965, as amended (ESEA) and targeted to 
needs identified in the evaluation process; and (2) regularly assess 
the effectiveness of this professional development in improving teacher 
practice and student achievement and make modifications necessary to 
improve its effectiveness.
    High-Need Schools Documentation. Consistent with the requirement 
that all schools served through the TIF program be ``high-need,'' the 
Secretary proposes to require that each applicant demonstrate, in its 
application, that it will implement the proposed PBCS in high-need 
schools (as defined in this notice). The Secretary proposes this 
requirement to enable the Department to ensure that all applicants are 
eligible to receive funding under this program. This requirement would 
specify that applicants must identify the schools in which the PBCS 
would be implemented, and provide school-level data that demonstrate 
that each school to be served is a high-need school. We would require 
school-level data as opposed to LEA or State-level data because the TIF 
authorizing statute requires poverty data be identified at the school 
level.
    Additional Eligibility Requirement. Finally, the Secretary proposes 
to limit eligibility for the Main TIF competition and the Evaluation 
competition to applicants that are serving schools not already served 
(or to be served) by current TIF grants. We propose to establish this 
eligibility requirement (1) in order to expand the number of LEAs and 
schools that are able to take advantage of PBCSs funded under the TIF 
program; and (2) because we believe that the projects currently funded 
under the TIF program should successfully complete the activities 
described in their approved application before seeking additional TIF 
funds to enhance their current projects in schools already served. 
Nothing in this proposed eligibility requirement would preclude current 
TIF grantees from applying for a new award to expand their TIF-
supported PBCS into other high-need schools in the participating LEA.

Proposed Requirements for Main TIF Competition

    For the reasons outlined in the preceding Background section, the 
Secretary proposes the following requirements for the Main TIF 
competition.
    Selection of Competition. An applicant may submit an application 
for either the Main TIF competition or the Evaluation competition. Each 
applicant must identify in its application the competition for which it 
is applying. The Evaluation competition will be funded prior to the 
Main TIF competition. Any Evaluation applicants not funded in the 
Evaluation competition will be automatically eligible for the Main TIF 
competition.
    Application Requirement. Each applicant must describe in its 
application how its proposed PBCS will provide educators with 
incentives to take on additional responsibilities and leadership roles, 
as defined in this notice.
    Core Elements of a PBCS and a Potential Planning Period. Each 
applicant must either--
    (a) Demonstrate in its application that it has in place each of the 
following five core elements; or
    (b) If the applicant cannot demonstrate in its application that it 
has in place each of these five core elements--
    (1) Agree, as part of its application, to implement a planning 
period of up to one year, during which it will use its TIF funds to 
develop the core element or elements it lacks; and
    (2) Include a plan for how it will implement the core element or 
elements it lacks during the planning period.
    Core Elements.
    (a) A plan for effectively communicating to teachers, 
administrators, other school personnel, and the community at-large the 
components of the PBCS;
    (b) The involvement and support of teachers, principals, and other 
certified personnel (including input from teachers and principals in 
the schools and LEAs to be served by the grant) and the involvement and 
support of unions in participating LEAs where they are the

[[Page 8861]]

designated exclusive representatives for the purpose of collective 
bargaining that is needed to carry out the grant;
    (c) Rigorous, transparent, and fair evaluation systems for teachers 
and principals that differentiate effectiveness using multiple rating 
categories that take into account student achievement growth as a 
significant factor, as well as classroom observations conducted at 
least twice during the school year. The evaluation process must: (1) 
Use an objective, evidence-based rubric aligned with professional 
teaching standards and the LEA's coherent and integrated approach to 
strengthening the educator workforce; (2) provide for observations of 
each teacher or principal multiple times during the school year by 
individuals (who may include peer reviewers), who are provided 
specialized training; (3) incorporate the collection and evaluation of 
additional forms of evidence; and (4) ensure a high degree of inter-
rater reliability (i.e., agreement among two or more raters who score 
approximately the same);
    (d) A data-management system that can link student achievement data 
to teacher and principal payroll and human resources systems; and
    (e) A plan for ensuring that teachers and principals understand the 
specific measures of teacher and principal effectiveness included in 
the PBCS, and receive professional development that enables them to use 
data generated by these measures to improve their practice.
    Planning Period Requirements. Each grantee that implements a 
planning period to develop the core element or elements it lacks, would 
be--
    (a) Required to demonstrate in its annual performance report or 
other interim performance report that it has implemented any of the 
five core elements it had lacked; and
    (b) Prohibited from using TIF program funds to provide incentive 
payments to teachers or principals until it has implemented a PBCS 
that, to the Secretary's satisfaction, has all five core elements.
    Professional Development. Each applicant must demonstrate, in its 
application, that its proposed PBCS will include a high-quality 
professional development component for teachers and principals 
consistent with the definition of the term professional development in 
section 9101(34) of the ESEA.
    The applicant must demonstrate that its PBCS has a professional 
development component in place, or a specific plan for developing one 
that is directly linked to the specific measures of teacher and 
principal effectiveness included in the PBCS. The professional 
development component of the PBCS must--
    (1) Be based on needs assessed either at the high-need schools 
participating in the applicant's proposed PBCS or LEA-wide;
    (2) Be targeted to individual teachers' and principals' needs as 
identified in the evaluation process;
    (3) Provide--
    (a) Those teachers and principals who do not receive differentiated 
compensation based on effectiveness under the PBCS with the tools and 
skills they need to improve their effectiveness in the classroom or 
school and be able to raise student achievement; and
    (b) Those teachers and principals who are deemed to be effective 
and who, therefore, receive differentiated compensation under the PBCS, 
with the tools and skills they need to (1) continue effective practices 
in the classroom or school and raise student achievement, and (2) 
successfully assume additional responsibilities and leadership roles; 
and
    (4) Include helping teachers and principals to better understand 
and use the measures of effectiveness in the PBCS to improve practice 
and student achievement.
    (5) Include a process for regularly assessing the effectiveness of 
this professional development in improving teacher practice and student 
achievement and making modifications necessary to improve its 
effectiveness.
    High-Need Schools Documentation. Each applicant must demonstrate, 
in its application, that the schools to be served by the proposed PBCS 
are high-need schools, as defined in this notice. Each applicant must 
provide, in its application, a list of schools in which the proposed 
PBCS will be implemented as well as the most current data on the 
percentage of each identified school's students who are eligible for 
free or reduced-price lunch subsidies under the Richard B. Russell 
National School Lunch Act, or other poverty measures that the LEA uses 
(see section 1113(a)(5) of the ESEA (20 U.S.C. 6313(a)(5))). Data 
provided to demonstrate eligibility as a high-need school must be 
school-level data; the Department will not accept LEA- or State-level 
data for purposes of documenting whether a school is a high-need 
school.
    Additional Eligibility Requirement. An applicant must demonstrate, 
in its application, that it will implement the proposed PBCS only in 
schools that are not being served (or are not to be served) by current 
TIF grants.

Proposed Requirements for the TIF Evaluation Competition

Background

    The ARRA requires the Department's Institute of Education Sciences 
(IES) to conduct a rigorous national evaluation, utilizing randomized 
controlled methodology to the extent feasible, to assess the impact 
that PBCSs for teachers and principals that are supported by program 
funds have on teacher and principal recruitment and retention in high-
need schools and subjects. IES intends to implement this requirement, 
as well as to conduct related research on important issues that concern 
the effect of PBCSs on increased student achievement, by conducting a 
national random-assignment impact evaluation of TIF grantees (the 
Evaluation) that will provide researchers, policy-makers, school 
administrators, and teachers with important information about the 
teacher and principal differentiated effectiveness incentives component 
of the PBCS. Moreover, to meet its statutory responsibility to conduct 
this evaluation, the Department needs to be able to ensure it is able 
to assess the impact of differentiated effectiveness incentives 
component PBCSs using a sufficient number of high-need schools in 
comparison to high-need schools in which differentiated effectiveness 
incentives component PCBSs are not being implemented.
    In order to select both appropriate grantees (consistent with the 
objectives of the evaluation) and a sufficient number of participating 
LEAs and schools for the evaluation, the Department proposes to hold a 
separate competition under the TIF program--the TIF Evaluation 
competition--and to select applicants for an award under the Evaluation 
competition prior to selecting any applicants for an award under the 
Main competition. Under the TIF Evaluation competition, applicants must 
address all of the requirements and absolute priorities in the Main TIF 
competition, as well as additional requirements that are specific to 
the TIF Evaluation competition. The following describes the Evaluation 
that IES would conduct as well as the competition the Secretary would 
hold to select participants in the Evaluation.

Description of the Evaluation

    Through the Evaluation, IES would study a select group of PBCSs 
implemented in one or more LEAs, in which the PBCS--
    (a) Determines the amount of teacher incentives for differentiated

[[Page 8862]]

effectiveness using one of the following two models:
    (1) An individual-based incentive pay model, defined as a PBCS that 
uses individual performance criteria for determining differentiated 
effectiveness incentive payments.
    (2) A mixed-group incentive model, defined as a PBCS that 
determines differentiated effectiveness incentive payments using 
performance criteria to evaluate a group, such as a grade-level team of 
teachers or an entire school group, or using a mixture of individual 
and group performance criteria;
    (b) Determines the amount of principal differentiated effectiveness 
incentive payments using any incentive model determined appropriate by 
the applicant and proposed in the applicant's application; and
    (c) Requires an LEA to make substantial and differentiated 
effectiveness incentive payments at the following levels--
    (1) For differentiated effectiveness incentive payments provided to 
principals, (i) the average principal payout (defined as the total 
amount of principal payments divided by the total number of principals 
in the schools participating in the differentiated effectiveness 
incentive payment component of the PBCS) is substantial (e.g., 5% of 
the average principal salary), (ii) the criteria for determining 
whether a principal is eligible for payment are challenging (e.g., 
payments are only made to those who perform significantly better than 
the current average performance among study schools within the 
district), and (iii) there is an expectation of meaningful differences 
in resulting principal pay (e.g., at least some principals could 
reasonably expect to receive an incentive payment of three times the 
average principal payout) and the applicant's documentation of cost 
projections is consistent with this expectation; and
    (2) For differentiated effectiveness incentive payments provided to 
teachers, (i) The average teacher payout (defined as the total amount 
of teacher payments divided by the total number of teachers in the 
schools participating in the differentiated effectiveness incentive 
payment component of the PBCS) is substantial (e.g., 5% of the average 
teacher salary), (ii) the criteria for determining whether a teacher is 
eligible for payment are challenging (e.g., payments are only made to 
those who perform significantly better than the current average 
performance among study schools within the district), and (iii) there 
is an expectation of meaningful differences in resulting teacher pay 
(e.g., at least some teachers could reasonably expect to receive an 
incentive payment of three times the average teacher payout) and the 
applicant's documentation of cost projections is consistent with this 
expectation.
    The Department intends to assess the performance component of a 
PBCS described in paragraph (c) in relation to a comparison group. This 
notice describes two possible options for a comparison group. A 
decision about whether to use either of these comparison designs, or a 
different approach, will be made after review of public comment on this 
notice. Accordingly, we specifically request comment on these proposed 
designs as well as alternatives.
    The two comparison designs are as follows:
    (a) Comparison design 1: The differentiated effectiveness incentive 
component of the PBCS would be compared to a PBCS with no 
differentiated effectiveness incentive component. Thus, under this 
design, all non-performance pay components of the PBCS (e.g., the 
professional development component, incentives for leadership roles 
component, and incentives for taking on additional responsibilities) 
would be implemented in all schools participating in the evaluation and 
the performance pay component of the PBCS would be implemented only in 
those schools designated by the evaluation contractor;
    (b) Comparison design 2: The differentiated effectiveness incentive 
component of the PBCS would be compared to a PBCS with an across-the-
board salary increase of an amount equivalent to the expected average 
payout in the differentiated effectiveness incentive payment (e.g., if 
the expected average teacher payout is 5% of the average teacher 
salary, then one-half of the schools participating in the evaluation, 
as designated by the evaluation contractor, would implement the 
applicant's proposed performance component of the PBCS while the other 
half of the schools participating in the evaluation would implement an 
across-the-board salary increase equivalent to the proposed applicant's 
expected average payout, 5% in this example).
    In evaluating the selected PBCSs, the Evaluation would address the 
following research questions:
    (a) Under comparison design 1: What is the effect on student 
achievement of an LEA's PBCS that includes a performance component of a 
PBCS that includes differentiated pay and in which the incentive has a 
substantive average payout (e.g., 5% of the average teacher salary for 
teachers)? What is the effect of such a PBCS component on the 
composition and effectiveness of teachers and principals eligible for 
the incentive payments? What is the effect on recruitment and retention 
of eligible teachers and principals?
    (b) Under comparison design 2: What is the effect on student 
achievement of a performance based increase in wages compared to an 
across-the-board increase in teacher and principal salary in which the 
expected payouts are equivalent? Are there differences in the 
composition and effectiveness of teachers and principals between these 
two methods of increasing wages? Are there any differential effects on 
recruitment and retention of teachers and principals?
    (c) What is the relationship between the effect on student 
achievement of individual-based and mixed-group incentive pay models 
(i.e., is the differentiated effectiveness incentive of an individual-
based incentive pay model more likely to be associated with an effect 
on student achievement)?
    (d) What features of PBCSs (e.g., relative emphasis on student 
achievement or teacher/principal observations incentives based on 
absolute versus relative standards; and the extent of staff 
eligibility) are associated with improved teacher and principal 
effectiveness and student achievement?
    (e) What are the implementation challenges associated with PBCSs, 
and what strategies do grantees use to overcome them?

TIF Evaluation Competition

    Grantees funded under the TIF Evaluation competition would be 
awarded at least an additional $1 million over the 5-year grant period 
(above the amount of funding awarded to them to implement the PBCS 
proposed in its application) to help pay for any additional costs of 
implementing activities associated with their TIF project. These costs 
might include those associated with developing value-added measures of 
student achievement, and professional development and expenses related 
to release time for teachers to attend professional development that is 
designed to support or complement the PBCS, and available to staff 
working on the grant or district-wide. In addition, while under the 
Main TIF competition the Department would continue its practice of 
permitting TIF funding to be used to pay the salary of only one Master, 
Mentor, or Lead Teacher or academic coach per school, recipients of 
awards under the Evaluation competition would be permitted to use

[[Page 8863]]

the additional $1 million for salaries of other academic coaches such 
as math and reading coaches, and of other Master, Mentor, or Lead 
Teachers. Finally, TIF Evaluation grantees could also use the 
additional $1 million award to pay for costs of securing data, 
including data linked to student achievement, needed by the evaluation 
contractor.
    In order to be eligible to receive this additional funding, 
applicants seeking awards under the TIF Evaluation competition must 
agree to certain additional requirements. The following describes the 
Department's rationale for proposing these additional requirements for 
applicants under the TIF Evaluation competition:
    Budget Information. The Secretary proposes to require each 
applicant under the TIF Evaluation competition to include the 
additional $1 million funds available in its proposed budget 
accompanying the application for funding, and indicate the activities 
it plans to implement using these additional funds. This application 
requirement would assist the Department in conducting the necessary 
budget analysis before grant funding is awarded and ensure the 
Department has adequate budget information to fiscally manage the grant 
throughout the five-year project period.
    Two Incentive Models for Determining Teacher Incentive Payments. 
Each TIF Evaluation competition grantee would be required to implement, 
in at least one LEA, a PBCS that determines teacher differentiated 
effectiveness incentive payments using either an individual-based 
incentive pay model or a mixed-group incentive pay model.
    The two proposed models would allow the Evaluation to separately 
test two prominent models of incentive pay and allow for analyses that 
will provide information about core aspects of differentiated 
effectiveness incentive pay to inform policy. An individual-based 
incentive pay model, which we would define as a PBCS that uses 
individual performance criteria for determining incentive payments, 
would provide the most direct incentive to teachers to improve their 
own effectiveness, and thus the student achievement of the students 
they teach. Under this model, the amount of a teacher's incentive 
payment would be directly linked to the teacher's individual 
performance, as measured against the criteria established for the PBCS. 
One possible downside of using an individual-based incentive model is 
that, given its focus on the individual, it may undermine collaboration 
among teachers.
    A mixed-group incentive pay model, which we would define as a PBCS 
that determines differentiated effectiveness incentive payments using 
performance criteria to evaluate a group, such as a grade-level team of 
teachers or an entire school group, or using a mixture of individual 
and group performance criteria, acknowledges the importance of 
collaboration but may weaken the incentive for individual teachers to 
perform better, because the performance criteria are, at least in part, 
based on the performance of others. The use of individual teacher 
performance criteria in addition to group performance criteria in a 
mixed-group incentive pay model allows the grantee to use individual 
performance criteria, which could lead to individual teacher 
differentiated effectiveness incentive payments that differ by 
individuals within the group. (If the PBCS only used group performance 
criteria, then teachers within a group meeting the group performance 
criteria all receive the same incentive payments. If, on the other 
hand, the PBCS uses a mix of group and individual performance criteria, 
then incentive payments for individual teachers within the group can 
differ from teacher to teacher.)
    Including in the Evaluation some LEAs with PBCSs that use an 
individual-based incentive pay model and some LEAs with PBCSs that use 
a mixed-group incentive pay model to determine teacher differentiated 
effectiveness incentive payments would allow IES to analyze separately 
each model. It also would allow the Evaluation to focus on the 
relationship between various PBCS features (e.g., relative emphasis on 
student achievement or teacher/principal observations as a performance 
criterion; incentives based on absolute versus relative performance 
criteria standards; and the extent of staff eligibility) and their 
effect on teacher and student outcomes.
    There is no analogous proposed choice of models for the principal 
differentiated effectiveness incentive pay because, by its nature, 
principal performance is a group performance measure related to the 
performance of each principal's school.
    Incentive Amounts. Evaluation grantees would be required to 
implement a PBCS through which an LEA makes substantial incentive 
awards at the following levels:
    (a) For differentiated effectiveness incentive payments provided to 
principals, (i) the average principal payout (defined as the total 
amount of principal payments divided by the total number of principals 
in the schools participating in the differentiated effectiveness 
incentive payment component of the PBCS) is substantial (e.g., 5% of 
the average principal salary), (ii) the criteria for determining 
whether a principal is eligible for payment are challenging (e.g., 
payments are only made to those who perform significantly better than 
the current average performance among study schools within the 
district), and (iii) there is an expectation of meaningful differences 
in resulting principal pay (e.g., at least some principals could 
reasonably expect to receive an incentive payment of three times the 
average principal payout) and the applicant's documentation of cost 
projections is consistent with this expectation); and
    (b) For differentiated effectiveness incentive payments provided to 
teachers, (i) the average teacher payout (defined as the total amount 
of teacher payments divided by the total number of teachers in the 
schools participating in the differentiated effectiveness incentive 
payment component of the PBCS) is substantial (e.g., 5% of the average 
teacher salary), (ii) the criteria for determining whether a teacher is 
eligible for payment are challenging (e.g., payments are only made to 
those who perform significantly better than the current average 
performance among study schools within the district), and (iii) there 
is an expectation of meaningful differences in resulting teacher pay 
(e.g., at least some teachers could reasonably expect to receive an 
incentive payment of three times the average teacher payout) and the 
applicant's documentation of cost projections is consistent with this 
expectation).
    Each Evaluation grantee would be required to agree to implement in 
at least one LEA a PBCS with these characteristics to ensure that the 
Evaluation can focus on the effectiveness of the differentiated 
effectiveness incentive component of the PBCS. In designing the 
Evaluation, IES determined that these differentiated effectiveness 
incentive amounts, based on current evidence in the research 
literature, are the minimal amounts needed to alter teacher and 
principal behavior and recruitment in high-need schools consistent with 
the effect the Evaluation is designed to detect.
    Implementation of Evaluation. Each applicant under the TIF 
Evaluation competition would be required to agree, in its application, 
to implement its differentiated effectiveness incentive component of 
the PBCS in at least one LEA in accordance with the implementation plan 
developed by the

[[Page 8864]]

IES evaluator, Mathematica Policy Research. The applicant also would be 
required to identify in its application the schools that would 
participate in the evaluation. For each LEA participating in the 
Evaluation, the IES evaluator would, by lottery, place eligible schools 
equally within one of two groups (i.e., ``Group 1'' or ``Group 2'').
    For each participating LEA, the grantee would be required to 
implement its PBCS in the LEA's Group 1 schools in either school year 
2010-2011 or school year 2011-2012, depending on whether the LEA has 
the 5 core elements of the PBCS in place at the time of award.
    The following describes implementation for each of the two 
comparison designs the Department is considering:
    (a) Comparison design 1: With the same timing as Group 1, Group 2 
would be required to implement all non-differentiated effectiveness 
incentive components of the PBCS. (Participating LEAs that have the 5 
core elements in place at the time of the grant award would be required 
to begin the first PBCS implementation in Group 1 schools and non-
differentiated effectiveness incentive components of the PBCS in Group 
2 schools at the beginning of the 2010-2011 school year. Participating 
LEAs that do not have in place the 5 core elements and that therefore 
would implement a planning period would be required to begin the first 
PBCS implementation in Group 1 schools and non-differentiated 
effectiveness incentive components of the PBCS in Group 2 schools at 
the beginning of the 2011-2012 school year.) All Group 2 schools would 
be prohibited from implementing a differentiated effectiveness 
incentive component for the duration of the TIF grant.
    (b) Comparison design 2: With the same timing as Group 1, Group 2 
would be required to implement all non-differentiated effectiveness 
incentive components of the PBCS and a salary increase for teachers and 
principals equivalent to the expected average payout in Group 1. 
(Participating LEAs that have the 5 core elements in place at the time 
of the grant award would be required to begin the PBCS implementation 
in Group 1 schools and non-differentiated effectiveness incentive 
components of the PBCS and the across the board salary increase in 
Group 2 schools at the beginning of the 2010-2011 school year. 
Participating LEAs that do not have in place the 5 core elements and 
that therefore would implement a planning period would be required to 
begin the PBCS implementation in Group 1 schools and non-differentiated 
effectiveness incentive components of the PBCS and the across the board 
salary increase in Group 2 schools at the beginning of the 2011-2012 
school year.) All Group 2 schools would be prohibited from implementing 
a differentiated effectiveness incentive component for the duration of 
the TIF grant.
    The selection and placement of the LEA's participating schools into 
Groups 1 and 2 by lottery would enable the IES evaluator to examine 
what happens to student, teacher, and principal outcomes in comparable 
schools: (i) With and without a differentiated effectiveness incentive 
component of the PBCS under comparison design 1; or (ii) with a 
differentiated effectiveness incentive component of the PBCS and with 
an across-the-board salary increase under comparison design 2. Both of 
these evaluation designs would enable IES to compare outcomes in these 
schools for up to 5 years after the PBCS is implemented. It is 
important for the Evaluation to include multiple years because 
principal and teacher behavior may take time to respond to the 
differentiated effectiveness incentive payments. For teachers and 
principals who transfer to the PBCS schools, it may also take time for 
them to be effective in their new setting.
    Under comparison design 2, in addition to the non-differentiated 
effectiveness incentive components of its PBCS, the Group 2 schools 
would also implement an across-the-board salary increase for teachers 
and principals equivalent to the respective expected average payouts 
for teachers and principals in Group 1. This requirement, in 
combination with the random assignment study design, would ensure that 
when the Evaluation compares schools in the study that have implemented 
the differentiated effectiveness incentive component of the PBCS with 
schools that have implemented an across-the-board salary increase, 
differences in outcomes can be attributed to the differentiated 
effectiveness incentive component of the PBCS.
    Matching Requirement Under Comparison Group 2. (Funds provided to 
meet this match requirement may address the element of Absolute 
Proposed Priority 2 in which applicants would be required to provide 
from non-TIF funds an increasing share of performance-based 
compensation paid to teachers and principals.)
    Each applicant under the TIF Evaluation competition would be 
required to provide from non-TIF funds 50% of the proposed across-the-
board salary increase to be implemented in half of the participating 
Evaluation schools. While an across-the-board salary increase for staff 
in high-need schools reflects what may be, for some, a seemingly 
attractive alternative to differentiated payments based on performance, 
funds used to pay these increases are not supporting a PBCS. TIF funds 
therefore could not support such an across-the-board salary increase 
except for the fact that ARRA and the Department's FY 2010 
appropriation permit the use of TIF funds for evaluation.
    We recognize that if comparison design 2 is adopted, IES will be 
able to secure important research results about the impact of PBCSs 
relative to an across-the-board salary increase. On the other hand, the 
teachers and principals in schools that benefit from such salary 
increases will obtain significant benefits from use of TIF funds. 
Balancing these competing factors, if comparative design 2 is adopted, 
we believe that it is reasonable to require that grantees pay 50 
percent of the costs of across-the-board salary increases for staff in 
the group of schools selected to be in Group 2. The Department will 
also consider alternative possibilities for design, including a hybrid 
of the two approaches above.
    Advance Notice. To ensure that teachers and principals are aware of 
the implementation of the PBCS in their schools, applicants would be 
required to agree to work with the IES evaluator to notify all eligible 
school staff in schools participating in the Evaluation at least two 
months prior to the assigned Group 1 implementation schedule. Advance 
notification and dissemination about the PBCS differentiated 
effectiveness incentive component features and performance criteria two 
months prior to the beginning of the school year in which it is 
implemented is important so that teachers and principals within and 
outside of the LEA would have time to learn about the differentiated 
effectiveness incentive component of the PBCS, and be informed enough 
about it to change their behavior in response. (e.g., for those in a 
PBCS school with a differentiated effectiveness incentive component, 
this might entail altering their teaching strategy to be more 
effective; for those not in a PBCS school with a differentiated 
effectiveness incentive component, this might entail transferring to a 
PBCS school with a differentiated effectiveness component.)
    Implementation of all Non-differentiated Effectiveness Incentive 
Components. In order to isolate the effects of the differentiated 
effectiveness

[[Page 8865]]

incentive component of the PBCS, the Department would require every 
applicant to agree to implement the non-differentiated effectiveness 
incentive components (e.g., the professional development component, the 
incentives for leadership roles component, and the incentives for 
taking on additional responsibilities) of its PBCS in all of an LEA's 
Group 1 and Group 2 schools at the same time the applicant implements 
the differentiated effectiveness incentive component of the PBCS in 
Group 1 schools. This requirement, in combination with the random 
assignment study design, would ensure that when the Evaluation compares 
schools in the study with and without the differentiated effectiveness 
incentive component of the PBCS, differences in outcomes can be 
attributed to the differentiated effectiveness incentive component of 
the PBCS. The LEA's schools in Group 2 would not be permitted to fully 
implement the differentiated effectiveness incentive component of the 
PBCS for the duration of the grant.
    Scope of Schools. In order that funds reserved for the TIF 
Evaluation competition are used as efficiently as possible, each 
applicant would be required to demonstrate, in its application, that, 
for each LEA in which it implements the PBCS, it will implement the 
differentiated effectiveness incentive component of the PBCS--
    (a) In eight or more high-need schools, within that LEA, that have 
students in tested subjects (i.e., students in grades three through 
eight); and
    (b) In at least two schools among those eight or more high-need 
schools that are of the same grade configuration (e.g., in at least two 
elementary schools or at least two middle schools).
    It would be important that each applicant provide the IES evaluator 
with at least two schools with the same grade configuration among the 
LEA's schools proposed to participate in the Evaluation so that the IES 
evaluator's group assignments made by lottery can result with at least 
one school of the same grade configuration in each of the two Groups 
(i.e., at least one elementary school in Group 1 and at least one in 
Group 2). It would also be important for the eight schools to be within 
the same LEA so that the random assignment can be conducted within the 
same local context (e.g., the schools have in common the same labor 
market issues, the same union issues, the same LEA policies etc.).
    Commitment to Evaluation. Because each participating LEA and school 
will need to work with the IES evaluator, it is critical that both the 
LEA and principals of the schools participating in the Evaluation are 
aware of, and agree to, the requirements of the Evaluation (i.e., 
adhering to the implementation plan and cooperating with data-
collection efforts, such as providing math and reading State assessment 
student test scores). Therefore, we propose to require applicants to 
demonstrate, in their applications, that each participating LEA and 
school is willing and able to participate in the Evaluation. To 
demonstrate this willingness and ability to participate, each applicant 
would be required to include, in its application, a letter from the 
superintendent of each participating LEA, and a letter from the LEA's 
research office or board, and principals of the participating schools 
stating that these officials agree to comply with the Evaluation 
requirements.

Proposed Requirements for the TIF Evaluation Competition

    In addition to the requirements and priorities for the Main 
competition, which applicants for the TIF Evaluation competition would 
also be required to address, the Secretary proposes the following 
requirements for the TIF Evaluation competition only:
    Budget Information. An applicant for the TIF Evaluation competition 
must provide, in its application, a proposed budget that indicates how 
it plans to use the additional $1 million in funding received for 
participating in the Evaluation. The following activities are the only 
permissible uses for these additional funds: costs associated with 
developing value-added measures of student achievement; professional 
development and expenses related to release time for teachers to attend 
professional development; and salaries of academic coaches such as math 
and reading coaches, and Master, Mentor, or Lead Teacher salaries.
    Two Incentive Models for Determining Teacher Incentive Payments. An 
applicant for the TIF Evaluation competition must demonstrate, in its 
application, that it will implement a PBCS that provides incentive 
payments to both teachers and principals:
    (a) Teacher Incentive Payments. To be eligible to receive a grant 
under the TIF Evaluation competition, an applicant's teacher 
differentiated effectiveness incentive component of the PBCS must use 
one of the following two models:
    (1) An individual-based incentive pay model, which awards 
differentiated effectiveness incentive payments to teachers based on 
individual teachers' performance (e.g., student achievement results, 
teacher observations, etc.) based on criteria proposed by the applicant 
in its application.
    (2) A mixed-group incentive pay model which awards differentiated 
effectiveness incentive payments to teachers using group performance 
criteria at the grade, team, or school level, or using a mixture of 
group and individual teacher performance criteria.

    Note: Under the mixed-group incentive pay model, how much 
emphasis is placed on individual performance relative to group 
performance is up to the applicant to specify; however, in order to 
be a mixed-group model, the PBCS must use group performance criteria 
to determine the differentiated effectiveness incentive component of 
the incentive amounts and may, but is not required to, use 
individual performance criteria.

    Each applicant must specify, in its application, which of these two 
incentive models it will use for the teacher compensation component of 
its PBCS.
    (b) Principal Incentive Payments. To be eligible to receive a grant 
under the TIF Evaluation competition, the applicant must describe, in 
its application, the incentive model it will use for the principal 
differentiated effectiveness incentive component of its PBCS. (There 
are no specific model requirements for an applicant's principal 
compensation component of the PBCS.)
    Incentive Amounts. An applicant for the TIF Evaluation competition 
must demonstrate, in its application, that it will implement a PBCS 
that uses: (1) principal differentiated effectiveness incentive 
payments in which (i) the average principal payout (defined as the 
total amount of principal payments divided by the total number of 
principals in the schools participating in the differentiated 
effectiveness incentive payment component of the PBCS) is substantial 
(e.g., 5% of the average principal salary), (ii) the criteria for 
determining whether a principal is eligible for payment are challenging 
(e.g., payments are only made to those who perform significantly better 
than the current average performance among study schools within the 
district), and (iii) there is an expectation of meaningful differences 
in resulting principal pay (e.g., at least some principals could 
reasonably expect to receive an incentive payment of three times the 
average principal payout) and the applicant's documentation of cost 
projections is consistent with this expectation); and
    (2) Teacher differentiated effectiveness incentive payments in 
which (i) the average teacher payout (defined as the total amount of 
teacher

[[Page 8866]]

payments divided by the total number of teachers in the schools 
participating in the differentiated effectiveness incentive payment 
component of the PBCS) is substantial (e.g., 5% of the average teacher 
salary), (ii) the criteria for determining whether a teacher is 
eligible for payment are challenging (e.g., payments are only made to 
those who perform significantly better than the current average 
performance among study schools within the district), and (iii) there 
is an expectation of meaningful differences in resulting teacher pay 
(e.g., at least some teachers could reasonably expect to receive an 
incentive payment of three times the average teacher payout) and the 
applicant's documentation of cost projections is consistent with this 
expectation).
    Implementation of Evaluation. Each applicant under the TIF 
Evaluation competition must agree, in its application, to implement its 
differentiated effectiveness incentive component of the PBCS in at 
least one LEA in accordance with the implementation plan developed by 
the IES evaluator. The applicant would be required to identify in its 
application the schools that would participate in the evaluation.
    In its application, an applicant also must acknowledge that the IES 
evaluator will select, by lottery, from among the schools participating 
in the evaluation, those schools that will implement the differentiated 
effectiveness incentive component of the PBCS and must agree to 
implement the Evaluation design and its implementation plan within at 
least one LEA.
    In participating LEAs that have the five core elements in place at 
the time of grant award, the first group of schools in that LEA (Group 
1 schools) must begin implementation of all components of the PBCS at 
the beginning of the 2010-2011 school year. In a participating LEA that 
does not yet have in place the 5 core elements necessary to implement a 
successful PBCS at the time of award, the first group of schools in 
that LEA (Group 1 schools) must begin implementation of all components 
of the PBCS no later than the 2011-2012 school year.
    The following table illustrates the Evaluation random assignment 
plan, depending on the amount of planning time an applicant would need:

------------------------------------------------------------------------
                                Random assignment  Pay component of PBCS
                                       \a\                  \b\
------------------------------------------------------------------------
                                Design 1
------------------------------------------------------------------------
LEAs Ready for 2010-11          Group 1..........  Differentiated pay
 Implementation.                                    implemented starting
                                                    in 2010-11.
                                Group 2..........  No differentiated pay
                                                    component until 2015-
                                                    16.
------------------------------------------------------------------------
LEAs Ready for 2011-12          Group 1..........  Differentiated pay
 Implementation.                                    implemented starting
                                                    in 2011-12.
                                Group 2..........  No differentiated pay
                                                    component until 2015-
                                                    16.
------------------------------------------------------------------------
                                Design 2
------------------------------------------------------------------------
LEAs Ready for 2010-11          Group 1..........  Differentiated pay
 Implementation.                                    implemented starting
                                                    in 2010-11.
                                Group 2..........  Across the board pay
                                                    increase implemented
                                                    starting in 2010-11
                                                    through 2014-15.
                               -----------------------------------------
LEAs Ready for 2011-12          Group 1..........  Differentiated pay
 Implementation.                                    implemented starting
                                                    in 2011-12.
                                Group 2..........  Across the board pay
                                                    increase implemented
                                                    starting in 2011-12
                                                    through 2014-15.
------------------------------------------------------------------------
\a\ For each LEA, the IES evaluator will randomly assign the schools
  participating in the Evaluation into 2 groups (Groups 1 and 2).
\b\ The school year listed is the first year in which the differentiated
  effectiveness incentive component of the PBCS will be implemented in
  the LEA's schools participating in the designated group.

    Matching Requirement. (Funds provided to meet this match 
requirement may address the element of Proposed Absolute Priority 2 in 
which applicants are required to provide from non-TIF funds an 
increasing share of performance-based compensation paid to teachers and 
principals.) If Comparison Design 2 is selected, an applicant for the 
TIF Evaluation competition must provide from non-TIF funds 50% of the 
proposed across-the-board salary increase to be implemented in Group 2 
schools.
    Advance Notice. Each applicant must agree, in its application to 
work with the IES evaluator to notify all eligible schools 
participating in the Evaluation at least 2 months prior to the assigned 
Group 1 implementation schedule.
    Implementation of all Non-differentiated Effectiveness Incentive 
Components. Each applicant must agree, in its application, to implement 
the non-differentiated effectiveness incentive components of its PBCS 
in all of the LEA's participating schools (those in Groups 1 and 2) 
starting at the same time as the differentiated effectiveness incentive 
component of its PBCS is implemented in the Group 1 schools. The 
schools in Group 2 must not implement the differentiated effectiveness 
incentive component of its PBCS for the duration of the TIF grant.
    Scope of Schools. An applicant for the TIF Evaluation competition 
must demonstrate, in its application, that it will implement a PBCS in 
eight or more high-need schools, within an LEA, that have students in 
tested subjects (i.e., students in grades three through eight), from 
which there are at least two schools proposed to participate in the 
Evaluation within the same LEA within each grade configuration (i.e., 
if elementary schools are proposed there are at least two elementary 
schools among the minimum of eight schools all within the same LEA; if 
middle schools are proposed there are at least two middle schools among 
the minimum of eight schools all within the same LEA). Applicants that 
include multiple LEAs must meet the scope of schools requirement in at 
least one LEA.
    Commitment to Evaluation. An applicant for the TIF Evaluation 
competition must provide, in its application, documentation that 
demonstrates the willingness of each participating LEA and school to

[[Page 8867]]

participate in the Evaluation. Such documentation must include for each 
participating LEA:
    (a) A letter from the LEA superintendent and the principals of the 
participating schools stating that those officials agree to meet the 
TIF Evaluation competition requirements, including adhering to the 
implementation plan of the IES evaluator which involves selection 
through a lottery of those schools to implement the differentiated 
effectiveness component among the schools participating in the 
evaluation.
    (b) A letter from the research office or research board of the 
participating LEA that expresses an agreement to comply with the 
Evaluation requirements (if such research office approval is needed).

Proposed Definitions

Background

    The Department proposes definitions for five terms not defined in 
the authorizing legislation for TIF that the Department has determined 
are necessary for the proper implementation of the TIF program: High-
need school, student achievement, student growth, high-need students, 
and additional responsibilities and leadership roles.

High-Need School

    Public Law 110-161 and Public Law 111-117 require an eligible 
entity to use TIF funds to develop and implement a PBCS in a high-need 
school, but they does not define the term ``high-need school.'' Because 
the meaning of this term is critical to implementing the purpose of the 
TIF program, we propose to define it. Specifically, we propose to 
define a high-need school as a school with 50 percent or more of its 
enrollment from low-income families, based on eligibility for free or 
reduced-price lunch subsidies under the Richard B. Russell National 
School Lunch Act, or other poverty measures that LEAs use (see section 
1113(a)(5) of the ESEA (20 U.S.C. 6313(a)(5))). Because it is widely 
known that students attending middle and high schools submit 
applications for free or reduced-price lunch subsidies much less 
frequently than do students enrolled in elementary schools, we propose 
to clarify in the definition that LEAs may establish eligibility of a 
middle school or a high school as a high-need school based on 
comparable data from its feeder schools. We are proposing to define the 
term high-need school in terms of 50 percent eligibility for free- and 
reduced-lunch subsidies because the Administration is focusing on 
turning around struggling schools in high-poverty areas. We are 
targeting our efforts to help the schools and students most in need.

Student Achievement and Student Growth

    The Department believes that there is sufficient research 
demonstrating that teacher effectiveness is a critical contributor to 
student learning, where student learning is measured by student growth 
over time--that is, the change in student achievement between two or 
more points in time. We believe that student achievement should be 
measured, in significant part, by a student's standardized test scores.
    On the other hand, we recognize that teacher effectiveness should 
not be determined solely on the basis of standardized test scores, 
which is why we are proposing, consistent with the Race to the Top 
program, that the use of student growth as a significant factor in 
teacher evaluations must include multiple measures.
    The Department believes that student achievement and student growth 
data are meaningful predictive measures of teacher and principal 
effectiveness, and, therefore, should be considered as a part of a 
rigorous, transparent, and fair evaluation system.

High-Need Students

    Through the Proposed Priority 5, the Department is encouraging 
applicants to develop and implement a PBCS that serves the needs of 
high-need students. The Department would like to take this opportunity 
to define this term for the purpose of each applicant's understanding 
of the competitive priority. It was important to the Department for 
this definition to be consistent with the definition of high-need 
students in the Race to the Top final notice of priorities. Thus, the 
Department has used the same definition (identified below).

Additional Responsibilities and Leadership Roles

    Public Law-161 and Public Law 111-117 require an eligible entity to 
use TIF funds to develop and implement a PBCS in a high-need school 
that provides educators incentives to take on additional 
responsibilities and leadership roles, but it does not define the terms 
``additional responsibilities and leadership roles.'' Because the 
meaning of these terms is critical to implementing the purpose of the 
TIF program, we propose to define it. Specifically, we propose to 
define additional responsibilities and leadership roles as duties 
teachers may voluntarily accept such as roles as master or mentor 
teachers who are chosen through a performance-based selection process 
including assessment of their teaching effectiveness and the ability to 
work effectively with other adults and students, with responsibilities 
to assess and improve the teaching effectiveness of other teachers in 
the school; roles in induction and mentoring of novice teachers or 
high-need students; roles in tutoring students; or in establishing and 
developing learning communities designed to continually improve the 
capacity of all teachers in a school to advance student learning, using 
a shared set of practices, instructional principles or teaching 
strategies. This list is not exhaustive and the Department would 
encourage applicants to come up with other additional responsibility 
and leadership role opportunities for its teachers and principals that 
best meets the needs of its high-need schools.

Proposed Definitions

    The Secretary proposes the following definitions of the terms high-
need school, student achievement and student growth, high-need 
students, and additional responsibilities and leadership roles for use 
in the TIF program. We would apply these definitions for any Main TIF 
competition or TIF Evaluation competition in any year in which TIF is 
funded.
    High-need school means a school with 50 percent or more of its 
enrollment from low-income families, based on eligibility for free or 
reduced-price lunch subsidies under the Richard B. Russell National 
School Lunch Act, or other poverty measures that LEAs use (see section 
1113(a)(5) of the ESEA (20 U.S.C. 6313(a)(5)). For middle and high 
schools, eligibility may be calculated on the basis of comparable data 
from feeder schools. Eligibility as a high-need school under this 
definition is determined on the basis of the most currently available 
data.
    Student achievement means--
    (a) For tested grades and subjects--
    (1) A student's score on the State's assessments under the ESEA; 
and
    (2) As appropriate, other measures of student learning, such as 
those described in paragraph (b) of this definition, provided that they 
are rigorous and comparable across schools.
    (b) For non-tested grades and subjects, alternative measures of 
student learning and performance such as student scores on pre-tests 
and end-of-course tests; student performance on English language 
proficiency assessments, and other measures of student achievement

[[Page 8868]]

that are rigorous and comparable across schools.
    Student growth means the change in student achievement (as defined 
in this notice) for an individual student between two or more points in 
time. A State or LEA may also include other measures that are rigorous 
and comparable across schools.
    High-need students means students at risk of educational failure or 
otherwise in need of special assistance and support, such as students 
who are living in poverty, who attend high-minority schools, who are 
far below grade level, who have left school before receiving a regular 
high school diploma, who are at risk of not graduating with a diploma 
on time, who are homeless, who are in foster care, who have been 
incarcerated, who have disabilities, or who are English language 
learners.
    Additional responsibilities and leadership roles means duties 
teachers may voluntarily accept such as roles as master or mentor 
teachers who are chosen through a performance-based selection process 
including assessment of their teaching effectiveness and the ability to 
work effectively with other adults and students, with responsibilities 
to assess and improve the teaching effectiveness of other teachers in 
the school; roles in induction and mentoring of novice teachers or 
high-need students; roles in tutoring students; or in establishing and 
developing learning communities designed to continually improve the 
capacity of all teachers in a school to advance student learning, using 
a shared set of practices, instructional principles or teaching 
strategies.

Proposed Selection Criteria

    The following selection criteria apply to both the Main competition 
and the TIF Evaluation competition.

Background

    The Secretary proposes these selection criteria to be used to 
review an applicant's proposal for funding under either the Main TIF 
competition or the TIF Evaluation competition. The Department believes 
that these proposed selection criteria are needed to ensure that each 
applicant demonstrates, in its application, that it: (1) Proposes to 
implement a PBCS that will address a significant need of the LEA(s) to 
be served by the project, through the types of awards to be given to 
teachers and principals based on student achievement and other required 
factors; (2) has or will have a personnel and management structure 
capable of overseeing the development and implementation of the 
proposed PBCS; and (3) commits to sustaining the proposed PBCS after 
TIF funding has ended.

Proposed Selection Criteria

    The Secretary proposes the following selection criteria for 
evaluating an application under this program. We may apply one or more 
of these criteria in any year in which there is a Main TIF competition 
or TIF Evaluation competition for this program. In the notice inviting 
applications, or the application package, or both we will announce the 
maximum possible points assigned to each criterion.
    (a) Need for the project. In determining the need for the proposed 
project, the Secretary will consider the extent to which the applicant 
establishes that--
    (1) The high-need schools whose educators would be part of the PBCS 
have difficulty--
    (i) Recruiting highly qualified or effective teachers, particularly 
in hard-to-staff subject areas or specialty areas, such as mathematics, 
science, English Language Acquisition, and special education; and
    (ii) Retaining highly qualified or effective teachers and 
principals; and
    (2) Student achievement in each of the schools whose educators 
would be part of the PBCS is lower than in what the applicant 
determines are comparable schools of the LEA, or another LEA within its 
State, in terms of key factors such as size, grade levels, and poverty 
levels.
    (3) A definition of what it considers a ``comparable'' school for 
the purposes of paragraph (2) of this selection criterion.
    (b) Project design. The Secretary considers the quality of the 
design of the proposed project. In determining the quality of the 
design of the proposed project, the Secretary considers the extent to 
which the proposed PBCS--
    (1) Is part of a proposed LEA or Statewide strategy, as 
appropriate, for improving the process by which each participating LEA 
rewards teachers and principals in high-need schools based upon their 
effectiveness as determined in significant part by student growth. With 
regard to teacher and principal effectiveness, the Secretary considers 
whether--
    (i) The methodology the LEA or SEA proposes to use in its PBCS to 
determine the effectiveness of a school's teachers and principals 
includes valid and reliable measures of student achievement, including 
norm- and criterion-referenced State-wide assessment scores, as 
appropriate; and
    (ii) The participating LEA would use the proposed PBCS to provide 
performance awards to teachers and principals that are of sufficient 
size to affect teacher and administrator behaviors, and their decision 
whether to go to, or remain working in, the high-need school;
    (2) Has the involvement and support of teachers, principals, and 
other certified personnel (including input from teachers and principals 
in the schools and LEAs to be served by the grant) and the involvement 
and support of unions in participating LEAs where they are the 
designated exclusive representatives for the purpose of collective 
bargaining that is needed to carry out the grant;
    (3) Includes rigorous, transparent, and fair evaluation systems for 
teachers and principals that differentiate effectiveness using multiple 
rating categories that take into account data on student growth as a 
significant factor, as well as classroom observations conducted at 
least twice during the school year;
    (4) Includes a data-management system, consistent with the LEA's 
proposed PBCS, that can link student achievement data to teacher and 
principal payroll and human resources systems; and
    (5) Incorporates high-quality professional development activities 
that increase the capacity of teachers and principals to raise student 
achievement, and are directly linked to the specific measures of 
teacher and principal effectiveness included in the PBCS.
    (c) Adequacy of Support for the Proposed Project. In determining 
the adequacy of the support for the proposed project, the Secretary 
considers the extent to which--
    (1) The management plan is likely to achieve the objectives of the 
proposed project on time and within budget, and includes clearly 
defined responsibilities and detailed timelines and milestones for 
accomplishing project tasks;
    (2) The project director and other key personnel are qualified to 
carry out their responsibilities, and their time commitments are 
appropriate and adequate to implement the project effectively;
    (3) The applicant will support the proposed project with funds 
provided under other Federal or State programs and local financial or 
in-kind resources; and
    (4) The requested grant amount and project costs are sufficient to 
attain project goals and reasonable in relation to the objectives and 
design of the project.

[[Page 8869]]

    (d) Quality of Evaluation. In determining the quality of the 
project evaluation, the Secretary considers the extent to which the 
applicant's evaluation plan--
    (1) Includes the use of strong and measurable performance 
objectives (that are clearly related to the goals of the project) for 
raising student achievement, increasing teacher and principal 
effectiveness, and retaining and recruiting effective teachers and 
principals;
    (2) Will produce evaluation data that are quantitative and 
qualitative; and
    (3) Includes adequate evaluation procedures for ensuring feedback 
and continuous improvement in the operation of the proposed project.

Final Priorities, Requirements, Definition, and Selection Criteria

    We will announce the final priorities, requirements, definition, 
and selection criteria in a notice in the Federal Register. We will 
determine the final priorities, requirements, definition, and selection 
criteria after considering responses to this notice and other 
information available to the Department. This notice does not preclude 
us from proposing additional priorities, requirements, definitions, or 
selection criteria, subject to meeting applicable rulemaking 
requirements.

    Note: This notice does not solicit applications. In any year in 
which we choose to use these proposed priorities, requirements, 
definition, and selection criteria, we invite applications through a 
notice in the Federal Register.

    Executive Order 12866: Under Executive Order 12866, the Secretary 
must determine whether this regulatory action is ``significant'' and 
therefore subject to the requirements of the Executive Order and 
subject to review by Office of Management and Budget (OMB). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action likely to result in a rule that may (1) Have an 
annual effect on the economy of $100 million or more, or adversely 
affect a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local or Tribal 
governments, or communities in a material way (also referred to as an 
``economically significant'' rule); (2) create serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order. Pursuant to the Executive Order, it has been 
determined that this regulatory action will have an annual effect on 
the economy of more than $100 million because the amount of government 
transfers provided through the TIF program will exceed that amount. 
Therefore, this action is ``economically significant'' and subject to 
OMB review under section 3(f)(1) of the Executive Order.
    The potential costs associated with this proposed regulatory action 
are those resulting from statutory requirements and those we have 
determined as necessary for administering this program effectively and 
efficiently.
    In assessing the potential costs and benefits of this proposed 
regulatory action, we have determined that the benefits of the proposed 
priorities, requirements, definition, and selection criteria justify 
the costs.
    We have determined, also, that this proposed regulatory action does 
not unduly interfere with State, local, and Tribal governments in the 
exercise of their governmental functions.

Need for Federal Regulatory Action

    The proposed priorities, requirements, definition, and selection 
criteria are needed to implement the TIF program. The Secretary does 
not believe that the statute, by itself, provides a sufficient level of 
detail to ensure that the program achieves the greatest national impact 
in promoting the development and implementation of teacher and school 
leader PBCSs. The authorizing and appropriations language is very brief 
and provides only broad parameters to govern the program. The 
priorities, requirements, definition, and selection criteria proposed 
in this notice would clarify the types of activities the Department 
seeks to fund, and permit the Department to evaluate proposed projects 
using selection criteria that are based on the purpose of the program 
and are closely aligned with the Secretary's priorities.
    In the absence of specific selection criteria for the TIF program, 
the Department would use the general selection criteria in 34 CFR 
75.210 of the Education Department General Administrative Regulations 
in selecting grant recipients. However, the Secretary does not believe 
the use of those general criteria would be appropriate for the Main TIF 
grant or TIF Evaluation competitions, because they do not focus on the 
development of PBCSs or activities most likely to increase the quality 
of teaching and school administration and improve educational outcomes 
for students.

Regulatory Alternatives Considered

    The Department considered a variety of possible priorities, 
requirements, definitions, and selection criteria before deciding to 
propose those included in this notice. For example, the Department 
considered--
    (1) Allowing applicants to propose to serve schools already served 
(or to be served) by current TIF grants, but chose to limit eligibility 
in order to expand the program to new schools.
    (2) A variety of definitions for the term ``high-need school'' 
before proposing to define this term based on 50 percent eligibility 
for free- and reduced-lunch subsidies as the best means of focusing the 
program on turning around struggling schools in high-poverty areas. We 
are targeting our efforts to help the schools and students most in 
need.
    (3) Restricting the range of approaches to implementing a PBCS that 
this competition would support, to individual-based, school-based, or 
group-based awards. However, we recognize that a combination of these 
approaches may best meet the needs of an applicant's high-need school 
or schools.
    The proposed priorities, requirements, definitions, and selection 
criteria are those that the Secretary believes best capture the purpose 
of the TIF program while clarifying what he expects the program to 
accomplish and ensuring that program activities are aligned with other 
Presidential and Departmental priorities. The proposals also would 
provide eligible applicants with some flexibility in selecting 
activities to carry out the purposes of program. The Secretary believes 
that the proposals reflected in this notice appropriately balance the 
need to flesh out TIF programmatic requirements and provide the 
Department with the necessary tools to evaluate applications for TIF 
funding with the goal of providing applicants with sufficient 
flexibility to implement innovative approaches to PBCSs. We seek public 
comment on whether we have achieved an acceptable balance.

Summary of Costs and Benefits

    The Secretary believes that the proposed priorities, requirements, 
definitions, and selection criteria would not impose significant costs 
on eligible States, LEAs, or nonprofit organizations that would receive 
assistance through the TIF program. The Secretary also believes that 
the benefits of implementing the proposals contained

[[Page 8870]]

in this notice outweigh any associated costs.
    The Secretary believes that the proposed priorities, requirements, 
definitions, and selection criteria would result in selection of high-
quality applications to implement activities that are most likely to 
improve the quality of teaching and educational administration. Through 
the regulatory action proposed in this notice, the Secretary seeks to 
provide clarity as to the scope of activities he expects to support 
with program funds and the expected burden of work involved in 
preparing an application and implementing a project under the program. 
A potential applicant would need to consider carefully the effort that 
would be required to prepare a strong application and its capacity to 
implement a project successfully.
    The Secretary believes that the costs imposed on an applicant by 
the proposed priorities, requirements, definitions, and selection 
criteria would be largely limited to paperwork burden related to 
preparing an application and that the benefits of implementing these 
proposals would outweigh any costs incurred by the applicant. This is 
because, during the project period, the costs of actually carrying out 
activities under a TIF grant would be paid for with program funds and 
any matching funds. Thus, the costs of implementing a TIF project or 
evaluation using these proposed priorities, requirements, definition, 
and selection criteria would not be a burden for any eligible 
applicants, including small entities.

Accounting Statement

    As required by OMB Circular A-4 (available at http://www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf), in the following table, 
we have prepared an accounting statement showing the classification of 
the expenditures associated with the provisions of this proposed 
regulatory action. This table provides our best estimate of the Federal 
payments to be made to States, LEAs, and nonprofit organizations under 
this program as a result of this proposed regulatory action. This table 
is based on funds available for new awards under this program from the 
ARRA supplemental appropriation and the fiscal year 2010 appropriation. 
Expenditures are classified as transfers to those entities.

Accounting Statement Classification of Estimated Expenditures

------------------------------------------------------------------------
                 Category                      Transfers (in millions)
------------------------------------------------------------------------
Annual Monetized Transfers................  $439.0.
From Whom to Whom.........................  Federal Government to
                                             States, LEAs, and
                                             nonprofits.
------------------------------------------------------------------------

Paperwork Reduction Act of 1995

    The requirements and selection criteria proposed in this notice 
would require the collection of information that is subject to review 
by the Office of Management and Budget (OMB) under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3520).
    We estimate that each applicant would spend approximately 248 hours 
of staff time to address the requirements and selection criteria, 
prepare the application, and obtain necessary clearances. Based on the 
number of applications the Department received in the first competition 
it held (in FY 2006), we expect to receive approximately 120 
applications for these funds. The total number of hours for all 
expected applicants is an estimated 29,760 hours. We estimate the total 
cost per hour of the applicant-level staff who carry out this work to 
be $30 per hour. The total estimated cost for all applicants would be 
$892,800.

Regulatory Flexibility Act Certification

    The Secretary certifies that this proposed regulatory action will 
not have a significant economic impact on a substantial number of small 
entities. The small entities that this proposed regulatory action may 
affect are (1) small LEAs, and (2) nonprofit organizations applying for 
and receiving funds under this program in partnership with an LEA or 
SEA. The Secretary believes that the costs imposed on an applicant by 
the proposed priorities, requirements, definition, and selection 
criteria would be limited to paperwork burden related to preparing an 
application and that the benefits of implementing these proposals would 
outweigh any costs incurred by the applicant.
    Participation in the TIF program is voluntary. For this reason, the 
proposed priorities, requirements, definitions, and selection criteria 
would impose no burden on small entities unless they applied for 
funding under a TIF program using the priorities, requirements, 
definition and selection criteria proposed in this notice. We expect 
that in determining whether to apply for TIF funds, an eligible entity 
would evaluate the requirements of preparing an application and 
implementing a TIF project, and any associated costs, and weigh them 
against the benefits likely to be achieved by implementing the TIF 
project. An eligible entity would probably apply only if it determines 
that the likely benefits exceed the costs of preparing an application 
and implementing a project. The likely benefits of applying for a TIF 
program grant include the potential receipt of a grant as well as other 
benefits that may accrue to an entity through its development of an 
application, such as the use of its TIF application to spur development 
and implementation of PBCSs without Federal funding through the TIF 
program.
    The U.S. Small Business Administration (SBA) Size Standards define 
``small entities'' as for-profit or nonprofit institutions with total 
annual revenue below $7,000,000 or, if they are institutions controlled 
by small governmental jurisdictions (that are comprised of cities, 
counties, towns, townships, villages, school districts, or special 
districts), with a population of less than 50,000. The Urban 
Institute's National Center for Charitable Statistics reported that of 
203,635 nonprofit organizations that had an educational mission and 
reported revenue to the Internal Revenue Service (IRS) by July 2009, 
200,342 (over 98 percent) had revenues of less than $5 million. In 
addition, there are 12,484 LEAs in the country that meet the SBA's 
definition of small entity. While these entities are eligible to apply 
for funding under the TIF program, the Secretary believes that only a 
small number of them will be interested in applying, thus reducing the 
likelihood that the priorities, requirements, definitions and selection 
criteria proposed in this notice would have a significant economic 
impact on small entities. In the first TIF competition that the 
Department held in FY 2006, approximately 21 nonprofit organizations 
applied for funding in partnership with an LEA or SEA, and few of these 
organizations appeared to be a small entity. The Secretary has no 
reason to believe that a future competition under this program would be 
different. To the contrary, we expect that the competitions run under 
Public Law 111-8 and ARRA will be similar to the FY 2006 competition 
because only a limited number of nonprofit organizations are working 
actively on the development of teacher and school leader PBCSs and many 
of these organizations are larger organizations.
    In addition, the Secretary believes that the priorities, 
requirements,

[[Page 8871]]

definitions, and selection criteria proposed in this notice do not 
impose any additional burden on a small entity applying for a grant 
than the entity would face in the absence of the proposed action. That 
is, the length of the applications those entities would submit in the 
absence of the proposed regulatory action and the time needed to 
prepare an application would likely be the same.
    Further, this proposed regulatory action may help a small entity 
determine whether it has the interest, need, or capacity to implement 
activities under the program and, thus, prevent a small entity that 
does not have such an interest, need, or capacity from absorbing the 
burden of applying.
    This proposed regulatory action would not have a significant 
economic impact on a small entity once it receives a grant because it 
would be able to meet the costs of compliance using the funds provided 
under this program and with any matching funds provided by private-
sector partners.
    The Secretary invites comments from small nonprofit organizations 
and small LEAs as to whether they believe this proposed regulatory 
action would have a significant economic impact on them and, if so, 
requests evidence to support that belief.

Intergovernmental Review

    This program is subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR part 79. One of the objectives of 
the Executive order is to foster an intergovernmental partnership and a 
strengthened federalism. The Executive order relies on processes 
developed by State and local governments for coordination and review of 
proposed Federal financial assistance.
    This document provides early notification of our specific plans and 
actions for this program.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or computer diskette) on request to the program contact 
person listed under For Further Information Contact.
    Electronic Access to This Document: You can view this document, as 
well as all other documents of this Department published in the Federal 
Register, in text or Adobe Portable Document Format (PDF) on the 
Internet at the following site: http://www.ed.gov/news/fedregister. To 
use PDF you must have Adobe Acrobat Reader, which is available free at 
this site.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.gpoaccess.gov/nara/index.html.


    Dated: February 22, 2010.
Thelma Mel[eacute]ndez de Santa Ana,
Assistant Secretary for Elementary and Secondary Education.
[FR Doc. 2010-3963 Filed 2-25-10; 8:45 am]
BILLING CODE 4000-01-P