[Federal Register Volume 77, Number 40 (Wednesday, February 29, 2012)]
[Notices]
[Pages 12257-12273]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4832]


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DEPARTMENT OF EDUCATION

[Docket ID ED-2012-OESE-0001]
RIN 1810-AB12


Proposed Priorities, Requirements, Definitions, And Selection 
Criteria; Teacher Incentive Fund (TIF) Program; CFDA Number: 84.374A

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

ACTION: Notice.

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SUMMARY: The Assistant Secretary for Elementary and Secondary Education 
proposes priorities, requirements, definitions, and selection criteria 
under the TIF program. We may use one or more of these priorities, 
requirements, definitions, and selection criteria for competitions in 
fiscal year (FY) 2012 and later years. We are taking this action so 
that TIF-funded performance-based compensation systems (PBCSs) will be 
successful and sustained mechanisms that contribute to continual 
improvement of instruction, to increases in teacher and principal 
effectiveness and, ultimately, to improvements in student achievement 
in high-need schools. To accomplish these goals, we propose priorities, 
requirements, definitions, and selection criteria that are designed to 
ensure that TIF grantees use high-quality LEA-wide evaluation and 
support systems that identify effective educators in order to improve 
instruction by informing performance-based compensation and other key 
human capital decisions.

DATES: We must receive your comments on or before March 30, 2012.

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 by email. To ensure that we do not receive 
duplicate copies, please submit your comments only one time. 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 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 3E235, Washington, DC 20202.
    Privacy Note: The Department's policy is to make all comments 
received from members of the public 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: Kristen Harper. Telephone: (202) 453-
6712, or by email: [email protected].
    If you use a telecommunications device for the deaf (TDD), or a 
text telephone (TTY), 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

[[Page 12258]]

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 Orders 12866 and 13563 and their 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, by appointment, in person, at 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. Please contact the person listed under FOR FURTHER 
INFORMATION CONTACT.
    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 provide 
financial support to develop and implement sustainable PBCSs for 
teachers, principals, and other personnel in high-need schools in order 
to increase educator effectiveness and student achievement in those 
schools.

    Program Authority: The Department of Education Appropriations 
Act, 2012 (Division F, Title III of Pub. L. 112-74).

The Statutory Requirements

    The Department's FY 2012 appropriation provides TIF funds for 
competitive grants to eligible entities to develop and implement PBCSs 
for teachers, principals, and other personnel 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.
    Eligible entities must use TIF funds to develop and implement, in 
high-need schools, a PBCS that--
    (a) Considers gains in student academic achievement, as well as 
classroom evaluations conducted multiple times during each school year, 
among other factors; and
    (b) Provides educators with incentives to take on additional 
responsibilities and leadership roles.
    A grantee (1) must demonstrate that its PBCS is developed with the 
input of teachers and school leaders in the schools and LEAs that the 
grant will serve, and (2) may use TIF funds to develop or improve 
systems and tools that would enhance the quality and success of the 
PBCS, such as high-quality teacher evaluations and tools that measure 
growth in student achievement. In addition, an applicant must include a 
plan to sustain financially the activities conducted and the systems 
developed under the grant once the grant period has expired.

Background

    The TIF program is based on the premise, supported by abundant 
research, that teachers are the single most critical in-school factor 
in improving student achievement.\1\ Principals are often cited as the 
second most influential in-school factor.\2\ The TIF program is 
intended to support the development and identification of effective 
educators in order to ensure that the most effective teachers and 
principals are serving where they are needed most, and, ultimately, to 
improve teaching and learning in the classroom.
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    \1\ Wright, S.P., Horn, S.P., Sanders, W.L. (1997). Teacher and 
classroom context effects on student achievement: Implications for 
teacher evaluation. Journal of Personnel Evaluation in Education 
11:57-67; Rivkin, S.G., Hanushek, E.A., Kain, J.F. (2005). Teachers, 
schools, and academic achievement. Economerica, 73(2):417-458.
    \2\ Leithwood, K., Louis, K.S., Anderson, S., and Wahlstrom, K. 
(2004). Review of research: How leadership influences student 
learning. University of Minnesota, Center for Applied Research and 
Educational Improvement. Found at http://www.cehd.umn.edu/carei/Leadership/ReviewofResearch.pdf.
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    With the priorities, requirements, definitions, and selection 
criteria proposed in this notice, we seek to build on the efforts we 
began with the FY 2010 TIF competition to align this program, to the 
extent feasible, with the Department's other programs and initiatives 
that also recognize that effective teaching and leading are critical 
factors in improving student achievement. These programs and 
initiatives--including the State Fiscal Stabilization Fund, the Race to 
the Top Fund, the School Improvement Grants program, and the 
Department's recent Elementary and Secondary Education Act of 1965, as 
amended (ESEA) Flexibility initiative--all focus, to some extent, on 
the development of systems that measure and support educator 
effectiveness.
    We believe that, to be successful and sustainable, any PBCS (as 
defined in this notice) must be an integral part of a human capital 
management system (HCMS) (as defined in this notice) that is well-
designed and implemented LEA-wide.
    In this notice, we define an HCMS as the system an LEA uses to make 
decisions affecting its workforce, such as decisions regarding educator 
(as defined in this notice) recruitment, hiring, placement, retention, 
dismissal, compensation, professional development, tenure, and 
promotion. While all LEAs have such systems, not all LEAs refer to such 
systems as ``human capital management systems'' or view their human 
capital decisions as part of a comprehensive and cohesive system. 
Further, some HCMSs are not designed or implemented to contribute to 
improving instruction and are, therefore, limited in their ability to 
positively affect student achievement.
    We believe that, in order to have a positive effect on student 
achievement, an LEA's HCMS must be aligned with the LEA's vision of 
instructional improvement. As defined in this notice, a vision of 
instructional improvement is a summary of the key competencies and 
behaviors of effective teaching that an LEA views as necessary to 
produce high levels of student achievement, as well as how educators 
acquire or improve these competencies and behaviors. In a well-designed 
HCMS, an LEA's vision of instructional improvement is reflected in the 
systems used to evaluate educators and in the criteria used to hire and 
promote them. The vision is also reflected in communications from LEA 
leadership to school-based personnel, and in the professional 
development provided to educators.
    For example, an LEA with a vision of instructional improvement that 
includes using student achievement data to inform instruction might 
integrate into its HCMS evaluations that assess whether teachers (as 
defined in this notice) conduct formative assessments on a regular 
basis and differentiate instruction based on the assessment results. 
Principal (as defined in this notice) evaluations, in turn, might

[[Page 12259]]

assess the extent to which principals demonstrate instructional 
leadership in modeling how teachers can use student achievement data to 
drive instruction. Similarly, professional development aligned with 
this vision might include helping teachers develop the analytical 
skills needed to use student achievement data to make instructional 
decisions.
    We believe that integrating a PBCS within an LEA's larger HCMS will 
help ensure that the PBCS is a successful mechanism for improving 
classroom instruction and educator effectiveness. Under these proposed 
priorities, requirements, definitions, and selection criteria, 
therefore, an LEA would, as part of its HCMS, use valid and reliable 
educator evaluations, based significantly on student growth (as defined 
in this notice), to inform human capital decisions, such as decisions 
concerning recruitment, hiring, placement, retention, dismissal, 
compensation, professional development, tenure, and promotion. In this 
way, educator evaluation systems would be an integral component of an 
LEA's HCMS. Through the use of the data generated by these educator 
evaluation systems, the LEA would be able to identify strengths and 
areas for improvement for individual educators and use this information 
to award performance-based compensation to effective educators.
    We believe the coherent approach proposed in this notice, in which 
educator evaluation systems and a PBCS are integral components of a 
comprehensive HCMS, will sustain the TIF-supported reforms well beyond 
the short duration of a TIF grant period. This approach will avoid the 
sustainability challenges associated with some existing performance-
based compensation programs that provide awards using a system that is 
disconnected from or ancillary to the official evaluation systems an 
LEA uses to assign educator evaluation ratings. In such instances, 
using an evaluation for the PBCS that is different from the evaluation 
used for the educator evaluation systems creates a burdensome 
duplication of effort that does not advance the coherence and 
sustainability of the TIF-funded reforms as fully as a comprehensive 
HCMS would.
    Furthermore, we believe that integrating a PBCS within an LEA's 
HCMS will improve the LEA's ability to attract, retain, and promote 
effective educators in high-need schools (as defined in this notice) 
and hard-to-staff subjects in these schools. To achieve this goal, we 
propose that a TIF grantee develop and implement performance-based 
compensation within its comprehensive, district-wide HCMS to help 
ensure high-need schools are staffed with effective teachers. To meet 
the proposed definition of a PBCS in this notice, the PBCS must (in 
addition to meeting other definitional requirements described elsewhere 
in this notice) provide additional compensation based on one of two 
basic PBCS design options: (1) Additional compensation for teachers and 
principals who have been deemed effective or, as an alternate approach, 
(2) additional compensation for teachers who have been deemed effective 
and agree to take on career ladder positions (as defined in this 
notice) while also compensating effective principals. The first option 
would compensate educators based solely on a determination of their 
effectiveness, while the second option would reward effective teachers 
who agree to serve as school-based instructional leaders in, for 
example, master teacher or coach positions. Although both options 
require additional components to conform with the PBCS definition 
included in this notice, we propose to give each applicant a choice on 
the basic design of the PBCS it chooses to develop and implement. 
Whichever approach an applicant proposes to implement, the PBCS must 
use the information generated by the educator evaluation systems to 
recognize and reward the important contribution of effective educators 
in high-need schools. We believe this recognition and reward, 
especially when combined with other reforms, such as those that improve 
working conditions, will assist LEAs in attracting and retaining 
effective educators in high-need schools.

Proposed Priorities

    This notice contains five proposed priorities.

Types of Priorities

    We may choose, in the notice of final priorities, requirements, 
definitions, and selection criteria, to designate any of these 
priorities as 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.
    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)).
    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.

Proposed Priority 1--An LEA-Wide Human Capital Management System (HCMS) 
With Educator Evaluation Systems at the Center

Background

    The purpose of this priority is to support State and LEA efforts to 
strengthen LEAs' HCMSs, of which the PBCS is a part, by using rigorous 
evaluation systems to inform various human capital decisions. For 
several reasons, we believe that a PBCS is more likely to be successful 
and improve teaching and learning when it is integrated within an LEA's 
HCMS. First, a comprehensive HCMS provides a mechanism through which an 
LEA can broadly communicate the competencies of effective teaching. By 
evaluating a teacher based on these competencies, the LEA is able to 
signal their importance. Second, a comprehensive HCMS provides a 
mechanism through which an LEA can marshal the resources and expertise 
needed to improve educator effectiveness, the primary objective of a 
PBCS. For example, evaluation results that are used to identify 
educators for a performance-based award could also reveal the need for 
a particular type of professional development to support struggling 
educators. As part of its HCMS, the LEA could ensure that its 
professional development office is informed about the identified need 
so that the appropriate professional development is delivered. 
Likewise, a comprehensive HCMS could provide an LEA with information 
about educator effectiveness that the LEA uses in recruiting new talent 
to its high-need schools. Thus, so long as the LEA staff who are 
responsible for implementing the HCMS have the authority and resources 
required to respond to needs identified by the HCMS, the HCMS will do 
more than simply provide the important evaluation information that is 
necessary to determine which educators

[[Page 12260]]

are eligible for performance-based compensation.
    Further, we believe that an LEA is more likely to sustain a PBCS 
that is embedded within a comprehensive HCMS. Development and 
implementation of high-quality evaluation systems within an LEA-wide 
HCMS, as proposed in this notice, would require the involvement of a 
variety of LEA stakeholders and the commitment of LEA leadership. We 
believe that these educator evaluation systems, and their expanded use 
for human capital decisions, will produce far-reaching change 
throughout the LEA. The high-level and system-wide investment required 
to develop an evaluation-driven HCMS, and the fundamental improvements 
it will generate, will help ensure that the HCMS, including its PBCS 
component, is likely to last far beyond the short duration of a TIF 
grant.
    To advance its vision of instructional improvement, an LEA must 
adopt carefully designed human capital strategies. As one example of a 
human capital strategy, an LEA might develop a professional development 
program that addresses a particular high-priority competency, and the 
LEA might implement that program in schools in which the teacher 
evaluations reveal the highest need. As another example, an LEA might 
develop an aggressive program of financial incentives to encourage 
effective teachers of hard-to-staff subjects to accept teaching 
positions in high-need schools. As a third example, an LEA might elect 
to provide teachers in high-need schools with extra resources, such as 
specially trained para-educators who help provide routine intervention 
services for struggling students.
    For these reasons, through proposed Priority 1, we would require 
each applicant for a TIF grant to include in its application a 
description of how the HCMS of each participating LEA--as it exists 
currently and with any modifications that may be needed--would (1) 
align with the LEA's vision of instructional improvement; (2) use 
evaluation information to inform human capital decisions, such as 
recruitment, hiring, placement, retention, dismissal, compensation, 
professional development, tenure, and promotion; and (3) include human 
capital strategies, such as extra compensation, opportunities for 
instructional leadership, extra resources, improved working conditions, 
and quality professional development, to ensure that high-need schools 
are able to attract and retain effective educators. To the extent that 
an applicant needs to modify its current HCMS to incorporate these 
features, the applicant must describe its planned modifications and 
provide a timeline for implementing them.

Proposed Priority 1

    To meet this priority, the applicant must include, in its 
application, a description of its LEA-wide HCMS, as it exists currently 
and with any modifications proposed for implementation during the 
project period of the grant. The application must describe--
    (1) How the HCMS is or will be aligned with the LEA's vision of 
instructional improvement;
    (2) How the LEA uses or will use the information generated by the 
evaluation systems it describes in its application to inform key human 
capital decisions, such as decisions on recruitment, hiring, placement, 
retention, dismissal, compensation, professional development, tenure, 
and promotion;
    (3) The human capital strategies the LEA uses or will use to ensure 
that high-need schools are able to attract and retain effective 
educators; and
    (4) To the extent modifications are needed to an existing HCMS to 
ensure that it includes the features described in response to 
paragraphs (1), (2), and (3) of this priority, a timeline for making 
the modifications, provided that the use of evaluation information to 
inform the design and delivery of professional development and the 
award of performance-based compensation under the applicant's proposed 
PBCS in high-need schools begins no later than the third year of the 
grant's project period.

Proposed Priority 2: LEA-Wide Educator Evaluation Systems Based, in 
Significant Part, on Student Growth

Background

    In proposed Priority 2, we seek to build on our prior efforts to 
support educator evaluation systems as critical components of an LEA's 
implementation of effective PBCSs. As we did in the FY 2010 TIF 
competition, we propose to require applicants to establish evaluation 
systems for both teachers and principals that are based on student 
growth, observations, and other factors selected by the applicant. 
Consistent with the authorizing statute, these evaluations would be 
used to assess the performance of educators throughout the LEA and, in 
high-need schools, would serve as the basis for their eligibility for 
performance-based compensation under a TIF-funded PBCS.
    For the reasons outlined in the following paragraphs, we believe 
that PBCSs in high-need schools will be more successful if educator 
evaluation systems are implemented on an LEA-wide basis and generate an 
overall effectiveness rating for each educator employed by the LEA. The 
LEA can then use an educator's overall evaluation rating to make 
performance-based compensation determinations in high-need schools 
under its TIF-funded PBCS.
    Implementing Educator Evaluation Systems LEA-wide. We believe that 
reforms of educator evaluation systems are more likely to receive the 
broad LEA commitment that is crucial to their success and 
sustainability if the same systems are used to evaluate every educator 
within an LEA. In proposing an LEA-wide approach, we seek to prevent 
situations in which a TIF project conducts evaluations of staff 
employed in a subset of an LEA's schools that are separate from the 
official educator evaluation systems the LEA uses to provide overall 
evaluation ratings. With such ancillary evaluations, a teacher in a 
high-need school might be evaluated once to determine eligibility for a 
TIF-funded performance-based award and then be evaluated again under 
separate criteria that the LEA uses for purposes of the teacher's 
overall performance rating. Consequently, when TIF funding ends, the 
ancillary evaluations that had been supported by a TIF-funded project 
are also likely to end.
    Similarly, when a TIF project operates in isolation from an LEA's 
official evaluation system, the needs of teachers, principals, or 
schools identified through the TIF-funded evaluation process are less 
likely to be factored into the LEA-wide support systems operated by the 
LEA's central office, such as school improvement plans and related 
professional development programs. In such a situation, the TIF-funded 
PBCS would not benefit from the economies of scale and resources that 
LEA-wide evaluation systems can offer.
    Additionally, the educator evaluation systems described in proposed 
Priority 2 are, in themselves, extremely valuable tools for 
professional development and improvement.\3\ When the evaluation 
rubrics of these systems are aligned with the key competencies the LEA 
has identified in its vision of instructional improvement, the feedback 
and professional learning inherent in the

[[Page 12261]]

evaluation process will give all educators a clearer understanding of 
what the LEA has identified as the key competencies needed to be 
effective educators.
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    \3\ Taylor, Eric S., John H. Tyler. (2011). ``The Effect of 
Evaluation on Performance: Evidence from Longitudinal Student 
Achievement Data of Mid-career Teachers,'' NBER Working paper 
w16877. Retrieved November 7, 2011: http://www.nber.org/papers/w16877.
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    For these reasons, we believe that LEA-wide educator evaluation 
systems will strengthen the sustainability of TIF-funded efforts to 
improve the practice of educators across the LEA, including those in 
high-need schools, and increase the pool of effective educators 
available to serve in high-need schools.
    Overall Evaluation Rating. In this priority, we propose to require 
that an LEA's evaluation systems aggregate the ratings on measures 
included in its evaluation to generate, at least annually for each 
educator, an overall evaluation rating (or overall rating), such as 
highly effective, effective, or not effective. For both teachers and 
principals, this overall rating would be based, in significant part, on 
student growth. For the vast majority of teachers, it would be based, 
in significant part, on student growth at the classroom level. By 
classroom-level student growth, we mean the academic growth of the 
students in the teacher's own classroom. LEAs would also have 
discretion to use student growth at the grade or school-wide level for 
teachers who do not have regular instructional responsibilities. For 
such teachers, which may include, for example, reading specialists or 
teachers in career ladder positions with no regular instructional 
responsibilities, student growth data at the classroom level may not be 
appropriate or available. Such teachers may be evaluated based on 
student growth in either the classrooms of the teachers they assist, or 
at the school level. We anticipate that LEAs will develop specialized 
evaluation rubrics that reflect the unique responsibilities required of 
teachers in these positions, as well as their unique contribution to 
improving growth in student achievement.
    We believe that an overall rating is necessary to facilitate a 
meaningful PBCS in the high-need schools identified for the TIF 
project. This proposed priority would be implemented in conjunction 
with Proposed Requirement 1--Performance-Based Compensation for 
Teachers, Principals, and Other Personnel, which is described later in 
this notice. Under Proposed Requirement 1, only educators who earn an 
overall rating of effective or higher would be eligible for a 
performance-based award under the LEA's PBCS. By proposing that the 
PBCS use this overall rating, we intend to ensure that educators 
eligible for performance-based compensation in high-need schools 
perform at minimum thresholds on all aspects of the evaluation rubric, 
including the student growth outcome measure. Thus, in evaluating and 
rewarding teachers receiving performance-based compensation under a TIF 
program, LEAs could not ignore extremely low student growth, and focus 
exclusively, for example, on a teacher's classroom practice measure. We 
believe that educator evaluations should consider both practice and 
student outcome data such that, as required by the TIF authorizing 
statute, student growth is a significant part of the overall rating.
    In addition, an overall rating provides the LEA with a single 
index--one for teachers and one for principals--with which to identify 
effective educators. The LEA can use this information to identify 
effective educators and recruit them to high-need schools. With data on 
the distribution of overall ratings, LEA leaders would also be able to 
examine the distribution of effective educators across its schools and 
ensure that effective educators are equitably distributed in high-
poverty and high-minority schools.
    Although we are proposing an overall rating that aggregates the 
various measures included in an LEA's educator evaluations, we also 
recognize that the individual, disaggregated measures offer invaluable 
information for an educator's professional growth. Educators value 
insightful feedback based on observations of their practice and gain 
perspective on their efforts from a review of their students' academic 
growth data. We expect TIF grantees to use the data generated from 
their evaluation systems to identify the professional development needs 
of their educators, using this information to guide focused and 
differentiated professional development as a strategy to improve 
instruction, thereby contributing to improved educator effectiveness 
and student achievement.
    Finally, we note that the requirement to provide an overall 
evaluation rating in this proposed priority is consistent with the 
requirements of the Race to the Top Fund program. Similar to Race to 
the Top applicants, TIF applicants must propose evaluation systems that 
differentiate effectiveness among educators. We anticipate that, in 
their proposed evaluation rubric, applicants would reserve overall 
ratings of effective or higher for educators whose students achieve an 
acceptable rate of student growth (e.g., at least one grade level in an 
academic year). Similarly, we would expect that an overall rating of 
highly effective would be reserved for an educator whose students 
achieve high rates of growth (e.g., at least one and one-half grade 
level in an academic year).

Proposed Priority 2

    To meet this proposed priority, an applicant must include, as part 
of its application, a plan describing how it will develop and implement 
its proposed LEA-wide educator evaluation systems. The plan must 
describe--
    (1) The frequency of evaluations, which must be at least annually;
    (2) The evaluation rubric for educators that includes at least 
three performance levels and the following--
    (i) Two or more observations during each evaluation period;
    (ii) Student growth, which for the evaluation of teachers with 
regular instructional responsibilities must include growth at the 
classroom level; and
    (iii) Additional factors determined by the LEA;
    (3) How the evaluation systems will generate an overall evaluation 
rating that is based, in significant part, on student growth; and
    (4) The applicant's timeline for implementing its proposed LEA-wide 
educator evaluation systems. Under the timeline, the applicant must 
implement these systems as the LEA's official evaluation systems for 
assigning overall evaluation ratings for at least a subset of educators 
or schools no later than the beginning of the second year of the 
grant's project period. The applicant may phase in the evaluation 
systems by applying them, over time, to additional schools or educators 
so long as the new evaluation systems are the official evaluation 
systems the LEA uses to assign overall evaluation ratings for all 
educators within the LEA no later than the beginning of the third year 
of the grant's project period.

Proposed Priority 3: Improving Student Achievement in Science, 
Technology, Engineering, and Mathematics (STEM)

Background

    We believe that a PBCS can be an important part of a coherent 
strategy that advances the national goal of increasing student 
achievement in the areas of science, technology, engineering, and 
mathematics in high-need schools. This priority, therefore, supports 
the creation of STEM-focused instructional leadership positions with 
the goal of helping LEAs build a ``corps'' of STEM master teachers in 
high-need schools.
    The development and support of a cadre of master STEM teachers has 
been recommended by many in the field of

[[Page 12262]]

STEM education, perhaps most prominently by the National Research 
Council (NRC) in its 2000 report, Educating Teachers of Science, 
Mathematics, and Technology: New Practices for the New Millennium. As 
NRC noted in its report, STEM master teachers can assume a variety of 
different roles to support improvements in instruction and promote 
higher levels of student achievement. They can serve as specialists in 
high-need schools; design and provide professional development to other 
teachers; coach struggling teachers or serve as mentors to novice 
teachers; develop curriculum and classroom materials to support 
instruction; and work with institution of higher education faculty to 
deliver pre-service or in-service professional learning.
    To meet this priority, an applicant must propose, at a minimum, to 
use its PBCS to compensate teachers who agree to take on career ladder 
positions to improve STEM instruction and achievement throughout the 
school. Although applicants will determine the process and factors they 
will use to select strong candidates for these career ladder positions, 
we propose that, to meet this priority, an applicant must restrict 
eligibility for STEM-focused career ladder positions to STEM teachers 
who receive an overall rating of effective or higher under the 
evaluation system described in the application, and select candidates 
based on criteria that are predictive of ability to lead other 
teachers. Further, an applicant may--in addition to rewarding effective 
STEM teachers who agree to take on STEM-focused career ladder 
positions--include other features in its plan, such as offering 
financial incentives to recruit teachers who receive an overall rating 
of effective or higher and agree to teach a STEM subject in high-need 
schools. An applicant must also describe how the HCMS will support a 
broad commitment to STEM education, including how it plans to provide 
challenging STEM coursework to students, support teachers in the 
delivery of that STEM coursework, and develop partnerships with local 
STEM experts.

Proposed Priority 3

    To meet this priority, an applicant must include a plan in its 
application that describes the applicant's strategies for improving 
instruction in STEM subjects through various components of the LEA's 
HCMS, including its professional development, evaluation systems, and 
PBCS. At a minimum, the plan must describe--
    (1) How the LEA will develop a corps of STEM master teachers, who 
are skilled at modeling for peer teachers pedagogical methods for 
teaching STEM skills and content at the appropriate grade level, by 
providing additional compensation to teachers who--
    (i) Receive an overall evaluation rating of effective or higher 
under the evaluation system described in the application;
    (ii) Are selected based on criteria that are predictive of the 
ability to lead other teachers;
    (iii) Demonstrate effectiveness in one or more STEM subjects; and
    (iv) Accept STEM-focused career ladder positions;
    (2) How the LEA will identify, evaluate, and develop the unique 
competencies that, based on evaluation information or other evidence, 
characterize effective STEM teachers;
    (3) How the LEA will identify hard-to-staff STEM subjects, and use 
the HCMS to attract effective teachers to positions providing 
instruction in those subjects;
    (4) How the LEA will leverage community support, resources, and 
expertise to inform the implementation of its plan; and
    (5) How the LEA will ensure that financial and non-financial 
incentives, including performance-based compensation, offered to reward 
or promote effective STEM teachers are adequate to attract and retain 
persons with strong STEM skills.
    (6) How the LEA will ensure that students have access to and 
participate in rigorous and engaging STEM coursework.

Priority 4: New Applicants to the Teacher Incentive Fund

Background

    Under proposed Priority 4, we seek to broaden the impact of the TIF 
program by giving priority to LEAs not previously served by a TIF 
project. This priority will help provide such LEAs with a greater 
opportunity to receive TIF funding to support their efforts to 
implement new strategies--sustainable performance-based compensation, 
in particular--for attracting and retaining effective teachers in their 
high-need schools.
    Elsewhere in this notice, we have proposed selection criteria to 
award points to applicants that have prior experience using evaluation 
information to inform human capital decisions. Together with this 
proposed priority, we hope to support and further the efforts of LEAs 
that, without the aid of prior TIF financial support, have already 
taken steps to develop and implement the evaluation systems necessary 
to support sustainable and successful PBCSs.

Proposed Priority 4

    To meet this priority, an applicant must provide an assurance, 
which the Department accepts, that each LEA to be served by the 
proposed project has not previously participated in a TIF-supported 
project.

Proposed Priority 5--An Educator Salary Structure Based on 
Effectiveness

Background

    As previously discussed, some existing performance-based 
compensation programs face sustainability challenges due to their 
reliance on performance evaluations that are disconnected from the 
official evaluation systems an LEA uses to assign educator evaluation 
ratings. Another challenge to a PBCS's sustainability occurs where 
educator incentives are an ancillary component (e.g., a one-time bonus) 
of an educator's compensation. In such cases, performance-based 
compensation can more easily be eliminated, particularly in difficult 
budget times. One way to ensure that a PBCS continues after the end of 
the grant period, and is sustained through periods of an LEA's budget 
fluctuations, is to award the additional compensation described under 
Proposed Requirement 1 (Performance-Based Compensation for Teachers, 
Principals, and Other Personnel) not as incentive awards or bonuses, 
but as part of an educator's salary. To do so, an applicant would 
develop a plan to modify its existing single salary schedule to create 
a new salary structure based on educator effectiveness and other 
factors. While advancement on the revised salary structure may be based 
on a number of factors, educator effectiveness would be a required 
component. We believe that grantees that are able to move to a new 
salary structure of this kind based on educator effectiveness will be 
most likely to continue to financially reward teachers and principals 
for their performance after the grant period ends.

Proposed Priority 5

    To meet this priority, an applicant must propose a comprehensive 
revision to each participating LEA's salary structure as part of its 
plan for implementing its proposed PBCS. At a minimum, the applicant 
must describe--
    (a) How each LEA will use overall evaluation ratings based, in 
significant

[[Page 12263]]

part, on student growth to determine educator salaries;
    (b) The salary increase that educators with an overall evaluation 
rating of effective or higher would receive in each LEA, as well as how 
TIF funds used for salary increases would be used only to support the 
additional cost of the revised salaries for educators in high-need 
schools; and
    (c) Each LEA's timeline for using the proposed salary structure to 
compensate educators in high-need schools, provided that the use of 
overall evaluation ratings for determining educator salaries begins no 
later than the third year of the project period.

Proposed Requirements

    In order to promote sustained and successful PBCSs in high-need 
schools, we propose to establish seven requirements. We may apply one 
or more of these requirements in any year in which we run a competition 
under the TIF program. These requirements are in addition to the 
statutory requirements that apply to the program and any priorities, 
definitions, and selection criteria we announce in the notice inviting 
applications for a TIF competition.

Proposed Requirement 1--Performance-Based Compensation for Teachers, 
Principals, and Other Personnel

    Background: Under the TIF authorizing legislation and 
appropriations language, to receive a TIF grant, eligible entities must 
develop and implement in high-needs schools a PBCS that considers gains 
in student academic achievement as well as classroom evaluations and 
provides educators with incentives to take on additional 
responsibilities and leadership roles. Consistent with this statutory 
mandate, we propose to require each applicant to describe, in its 
application, how its PBCS meets the definition of a PBCS set forth in 
this notice. Each applicant would thereby need to describe how it will 
provide, through its PBCS, performance-based compensation in one of the 
following ways: (1) Additional compensation for teachers and principals 
in high-need schools who earn an overall rating of effective or higher 
under the evaluation systems described in its application and 
additional compensation for effective teachers who take on additional 
responsibilities and leadership roles; or (2) additional compensation 
for teachers in high-need schools who both earn an overall rating of 
effective or higher under the evaluation system described in its 
application and take on career ladder positions. This second option 
must also include additional compensation for principals under at least 
one of the following conditions: additional compensation for principals 
who earn an overall rating of effective or higher under the evaluation 
system described in the application or additional compensation for 
effective principals who agree to take on additional responsibilities 
and leadership roles.
    The following examples illustrate how different PBCSs can meet the 
definition of performance-based compensation proposed in this notice:

    Example 1: An applicant might propose a PBCS that provides a 
stipend for all teachers and principals who are deemed effective or 
higher. This PBCS does not include compensation for career ladder 
positions, but it does offer compensation for teachers who take on 
additional responsibilities and leadership roles by providing 
special stipends for teachers who agree to observe their peers for 
evaluative purposes. By proposing to design its PBCS in this way, 
the applicant would demonstrate in its application that its PBCS 
meets the first option provided in the definition of performance-
based compensation, as described in the previous paragraphs.
    Example 2: An applicant might propose a PBCS that provides 
compensation to teachers who are deemed effective or higher only if 
they also take on a career ladder position, such as mentor teacher 
or instructional coach. In addition, the applicant's PBCS would 
provide compensation to principals who are deemed effective or 
higher. By proposing to design its PBCS in this way, the applicant 
would demonstrate in its application that its PBCS meets the second 
option under the definition of performance-based compensation, as 
described in the previous paragraph. In this PBCS, there likely 
would be fewer career ladder positions than effective teachers who 
are eligible to fill them, so only a subset of effective teachers 
would actually earn the additional compensation associated with this 
approach.

    Additionally, under this proposed requirement, an applicant that 
chooses to address either of the following areas as part of its PBCS 
also must describe in its application how it will provide performance-
based compensation to: (a) other personnel in high-need schools based, 
in significant part, on student growth, which may include whole-school 
level student growth; or (b) educators who have received an overall 
rating of effective or higher under the evaluation systems described in 
the application (or under a comparable evaluation system in another 
LEA) and who either: transfer from a school in the LEA that is not 
high-need to a high-need school, or, for educators who previously 
worked in another LEA, are hired to work in a high-need school.
    Through this requirement and its reference to the proposed 
definition of a PBCS, we are proposing that an applicant's PBCS meet 
several requirements. First, we propose to require that, for all 
components of an applicant's proposed PBCS relating to educators, 
additional compensation could only be provided if it were based on the 
educator's overall rating, as opposed to student growth alone or 
classroom observations alone. As discussed in the Background section 
for proposed Priority 2, meeting this requirement would ensure that 
student growth is a significant factor in determining who is eligible 
for additional compensation.
    Second, only teachers and principals who receive an overall rating 
of effective or higher under the evaluation systems described in the 
TIF application would be eligible to receive additional compensation, 
including compensation for taking on additional responsibilities and 
leadership roles. By building a measure of educator effectiveness into 
the ``additional responsibilities and leadership roles'' component of 
the PBCS, we believe that we can ensure that those taking on these 
responsibilities and roles through the TIF program have a record of 
effectiveness in the classroom.
    Third, through this proposed requirement and its reference to the 
proposed definition of a PBCS, grantees could use TIF-funded PBCSs as a 
recruitment tool. This option would be available, at an applicant's 
discretion, to supplement the PBCS components that are required. If a 
grantee elects to offer compensation as a recruitment tool, educators 
who receive an overall rating of effective or higher would be eligible 
to receive additional compensation under the PBCS if they transfer 
within the LEA from a non-high-need school to a high-need school, or, 
for educators who previously worked in another LEA, if they are hired 
to work in a high-need school. Before compensating effective educators 
who are recruited from another LEA, an LEA would have to establish that 
the other LEA uses an evaluation system that is comparable to the 
system described in the application. To be comparable, the evaluation 
system must, at a minimum, generate an overall rating that is based on 
two or more observations each year; student growth, in significant 
part; and other factors determined by the evaluating LEA.
    Finally, consistent with the TIF authorizing legislation and 
appropriations language, this requirement and its reference to the 
proposed definition of a PBCS would

[[Page 12264]]

provide that an applicant may also include in its PBCS a component that 
recognizes and rewards school-based staff who are neither teachers nor 
principals. These staff, referred to as ``other personnel'' in TIF's 
authorizing statute, might include, for example, school counselors, 
media specialists, or para-educators. Under this proposed requirement 
and its reference to the proposed definition of a PBCS, an applicant 
would have broad discretion in designing the criteria for performance-
based compensation for other personnel, but any such criteria would 
need to include, in significant part, student growth, which may be 
whole school-level growth. (Whole school-level growth may be one option 
for this purpose, as other personnel may not have instructional 
responsibilities for a specific group of students on an on-going basis. 
LEAs may also consider developing specialized rubrics to assist in 
evaluating other personnel.)
    The following charts illustrate how applicants can meet proposed 
requirement 1 by describing a PBCS that meets each of the statutorily 
prescribed elements of such a system. As discussed earlier in this 
notice, under the TIF authorizing legislation, a PBCS must, at a 
minimum--
     Provide performance-based compensation to both teachers 
and principals;
     Base the performance-based compensation on student growth, 
multiple observations, and other factors; and
     Provide incentives to educators to take on additional 
responsibilities and leadership roles.
    With these statutorily-required elements in mind, we defined the 
term PBCS so that it would give applicants flexibility in designing a 
PBCS that has features that meet the minimum statutory requirements 
(see Chart 1) and identifies additional features that could be (but are 
not required to be) implemented as part of a PBCS (see Chart 2).

       Chart 1--PBCS Design Options to Meet Statutory Requirements
------------------------------------------------------------------------
         Design model                      Mandatory elements
------------------------------------------------------------------------
1 *..........................  Proposed PBCS provides both of the
* Corresponds to paragraph      following:
 (a)(1) of the PBCS            (1) Additional compensation for teachers
 definition.                    and principals who receive an overall
                                rating of effective or higher under the
                                evaluation systems described in the
                                application.
                               (2) Of those teachers and principals
                                eligible for compensation under
                                paragraph (1), additional compensation
                                for teachers and, at the applicant's
                                discretion, for principals, who take on
                                additional responsibilities and
                                leadership roles (as defined in this
                                notice).
2 *..........................  Proposed PBCS provides both of the
* Corresponds to paragraph      following:
 (a)(2) of the PBCS            (1) Additional compensation for teachers
 definition.                    who receive an overall rating of
                                effective or higher under the evaluation
                                system described in the application and
                                who take on career ladder positions (as
                                defined in this notice).
                               (2) Additional compensation for one or
                                both of the following:
                               (A) Principals who receive an overall
                                rating of effective or higher under the
                                evaluation system described in the
                                application, or
                               (B) Principals who receive an overall
                                rating of effective or higher under the
                                evaluation system described in the
                                application and who take on additional
                                responsibilities and leadership roles
                                (as defined in this notice).
------------------------------------------------------------------------

    Regardless of whether an applicant chooses to design its PBCS under 
Model 1 or Model 2, as described in Chart 1, it may also include, as 
part of its PBCS the following:

                     Chart 2--PBCS Optional Features
------------------------------------------------------------------------
                                           Optional elements
------------------------------------------------------------------------
Compensation for Transfers to  Proposed PBCS provides compensation for
 High-Need Schools.             educators (which at the applicant's
                                option may be for teachers or principals
                                or both) who receive an overall rating
                                of effective or higher under the
                                evaluation systems described in the
                                application or under comparable
                                evaluation systems in another LEA, and
                                who either:
                               (1) Transfer to a high-need school from a
                                school of the LEA that is not high-need,
                                or
                               (2) For educators who previously worked
                                in another LEA, are hired to work in a
                                high-need school.
Compensation for Other         Proposed PBCS provides compensation for
 Personnel.                     other personnel, who are not teachers or
                                principals, based on performance
                                standards established by the LEA so long
                                as those standards, in significant part,
                                include student growth, which may be
                                school-level student growth.
------------------------------------------------------------------------

    Requirement: Each applicant must describe, in its application, how 
its proposed PBCS will meet the definition of a PBCS set forth in this 
notice.

    Note:  To ensure that the funded applications reflect a 
diversity of PBCSs, the Secretary reserves the right to fund a 
sufficient number of high-quality Design Model 1 and Design Model 2 
projects.

Proposed Requirement 2--Involvement and Support of Teachers and 
Principals

    Background: The TIF authorizing statute requires the input of 
teachers and principals in the schools and LEAs to be served by the 
grant in the development of the PBCS. Consistent with this statutory 
requirement, we propose to require each applicant to include in its 
application evidence of the involvement of educators in the 
participating LEAs in the design of the PBCS, as well as in the design 
of the underlying evaluation systems that inform the PBCS. Further, 
under this requirement, an applicant would need to include in its 
application evidence demonstrating how educators in the participating 
LEAs will be involved on an ongoing basis with the implementation of 
the PBCS and the evaluation systems.

[[Page 12265]]

    We propose this requirement because we believe that ongoing 
involvement by educators in the development and implementation of the 
PBCS and evaluation systems is critical to the success and 
sustainability of a PBCS and that educators are more likely to have 
confidence in these reforms, and embrace them, if they have had a role 
in developing and implementing them.
    As proposed, an applicant would have discretion in the evidence it 
submits to demonstrate that it has met this requirement. To demonstrate 
involvement by educators in the design of its PBCS, for example, an 
applicant might describe the design committee and how educators were 
represented on the committee. To demonstrate on-going involvement of 
educators in the proposed project, an applicant might describe the 
organizational structures that it will put in place to ensure that 
educators are routinely involved in decisions regarding the 
implementation of the PBCS and evaluation systems. Because expressions 
of educator support are another demonstration of educator involvement, 
we would encourage applicants to submit letters of support for their 
proposed PBCS from educators and educator organizations. To help us 
evaluate the quality of the evidence submitted, we are proposing that 
an applicant indicate in its application whether a union is the 
exclusive representative of either teachers or principals in each 
participating LEA.
    Requirement: In its application, the applicant must include--
    (a) Evidence that educators in each participating LEA have been 
involved, and will continue to be involved, in the development and 
implementation of the PBCS and evaluation systems described in the 
application;
    (b) A description of the extent to which the applicant has educator 
support for the proposed PBCS and educator evaluation systems; and
    (c) A statement indicating whether a union is the exclusive 
representative of either teachers or principals in each participating 
LEA.

Proposed Requirement 3--Documentation of High-Need Schools

    Background: Consistent with the statutory requirement that all 
staff participating in the PBCS work in schools that are high-need, we 
propose to require each applicant to demonstrate, in its application, 
that it will implement the proposed PBCS component of its HCMS in high-
need schools. This requirement would specify that an applicant must 
identify the schools in which the PBCS would be implemented. For any 
high-poverty school identified, the applicant must provide school-level 
data demonstrating that each school to be served by the PBCS is a high-
need school. We would require school-level data for high-poverty 
schools, as opposed to LEA-level data, because the TIF authorizing 
statute requires that the school--rather than the LEA--be high-need.
    In this notice, we propose to expand the definition of high-need 
school that was used in the previous TIF competitions to include 
schools identified as in need of improvement under other Department 
programs. With this change, it is our intent to help LEAs integrate 
their TIF project with other activities supported by other Department 
programs such as the School Improvement Fund, Race to the Top, and ESEA 
flexibility.
    Requirement: Each applicant must demonstrate, in its application, 
that the schools participating in the implementation of the TIF-funded 
PBCS are high-need schools (as defined in this notice), including high-
poverty schools (as defined in this notice), priority schools (as 
defined in this notice), or persistently lowest-achieving schools (as 
defined in this notice). Each applicant must provide, in its 
application--
    (a) A list of high-need schools in which the proposed PBCS would be 
implemented; and
    (b) For each high-poverty school listed, the most current data on 
the percentage of students who are eligible for free or reduced-price 
lunch subsidies under the Richard B. Russell National School Lunch Act 
or are considered students from low-income families based on another 
poverty measure 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-poverty 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-poverty school.
    (c) For any priority schools listed, documentation verifying that 
the State has received approval of a request for ESEA flexibility, and 
that the schools have been identified by the State as priority schools.

Proposed Requirement 4--SEA and Other Group Applications

    Background: We propose to require an SEA applicant to apply with 
one or more LEAs that would implement the PBCS, evaluation systems, and 
HCMS proposed in its application. This proposed requirement would 
ensure that any SEA applying for a TIF grant has obtained the full 
commitment of each LEA that will be responsible for developing and 
implementing the HCMS, including the educator evaluation systems and 
the PBCS, described in the application.
    Similarly, we propose to require any SEA or other applicant that 
proposes to work with one or more additional entities to implement the 
HCMS (including the educator evaluation systems and the PBCS) described 
in the application to submit, with the application, a memorandum of 
understanding (MOU) or other binding agreement that describes the 
activities each entity proposes to undertake and that conforms to 34 
CFR 75.128 and 75.129. In each of these ``group-application'' 
situations, each entity would be considered a grantee--with the 
application designating the lead applicant. This proposed requirement 
would clearly apply to a non-profit applicant that, by statute, must 
apply in partnership with one or more LEAs or SEAs, as well as to an 
SEA applicant that would need to apply with one or more LEAs, and in 
other circumstances where a project would involve multiple LEAs, SEAs, 
or non-profit organizations (e.g., an application from two or more 
LEAs). The MOU or other binding agreement would not only satisfy the 
group application requirements in 34 CFR 75.128 and 75.129, but it 
would also ensure that an applicant has consulted with the entities 
with which it proposes to collaborate, as appropriate, to clarify the 
entities' respective responsibilities.
    We expect to include, in the application package for the FY 2012 
TIF grant competition, a sample MOU. Although an applicant would not be 
required to use this sample MOU, and the sample may be modified as 
needed, the sample MOU would be one way to address this proposed 
requirement.

Requirement

    (a) Applications from the following are group applications:
    (1) Any application from two or more LEAs.
    (2) Any application that includes one or more SEAs.
    (3) Any application that includes a nonprofit organization.
    (b) An applicant that is a non-profit organization must apply in a 
partnership that includes one or more LEAs, and must identify in the 
application the LEA(s) and any SEA(s) with which the proposed project 
would be implemented.
    (c) An applicant that is an SEA must apply for a grant under this 
program as part of a group application that includes one or more LEAs 
in the same State as

[[Page 12266]]

the SEA, and must identify in the application the LEA(s) in which the 
project would be implemented.
    (d) All group applications must include a Memorandum of 
Understanding (MOU) or other binding agreement signed by all of the 
members of the group. At a minimum, the MOU or other agreement must 
include--
    (1) A commitment by each participating LEA to implement the HCMS, 
including the educator evaluation systems and the PBCS, described in 
the application;
    (2) An identification of the lead applicant;
    (3) A description of the responsibilities of the lead applicant in 
managing any grant funds and ensuring overall implementation of the 
proposed project as described in the application if approved by the 
Department;
    (4) A description of the activities that each member of the group 
will perform; and
    (5) A statement binding each member of the group to every statement 
and assurance made in the application.
    (e) In any group application identified in paragraph (a) of this 
Requirement, each entity in the group is considered a grantee.

Proposed Requirement 5--Submitting an Application for One Competition

    Background: If the Assistant Secretary designates proposed Priority 
3 as an absolute priority in a competition in fiscal year (FY) 2012 or 
later years, the Assistant Secretary may conduct a separate competition 
for TIF funds with additional selection criteria related to the plan 
described under Priority 3 relating to STEM (TIF Competition with a 
Focus on STEM). Under this proposed requirement, applicants could apply 
for either the TIF Competition with a Focus on STEM or a general 
competition (General TIF Competition), but not both. We propose this 
requirement to ensure that applicants develop proposals that are of 
high quality under the competition to which the applicant chooses to 
apply.
    Requirement: An applicant may submit an application for the General 
TIF Competition or the TIF Competition with a Focus on STEM, but may 
not submit an application for both.

Proposed Requirement 6--Use of TIF Funds To Support the PBCS

    Background: Through this requirement, we propose a very flexible 
approach to the use of TIF funds for building the basic infrastructure 
that is necessary to make a PBCS successful and sustainable. At the 
same time, we propose to restrict how TIF funds can be used to 
compensate educators. We believe this approach will effectively balance 
the need for flexibility, so that a grantee can make its PBCS 
successful, with the need to ensure that PBCSs achieve the program's 
purpose of attracting, retaining, and promoting effective educators in 
high-need schools.
    The TIF program's authorizing statute provides that TIF funds may 
be used to develop or improve systems and tools that will benefit the 
entire LEA. Thus, TIF funds may be used to support the costs of these 
systems and tools that are incurred by a participating LEA (or by an 
SEA or non-profit organization that has applied with one or more LEAs) 
so long as the costs are for systems and tools that will benefit the 
participating LEA's PBCS. Examples of these costs include the costs of 
developing or improving high-quality teacher evaluations and tools to 
measure growth in student achievement. TIF funds could also be used to 
enhance or develop the data systems that will be critical both for 
measuring student growth and for collating the educator evaluation 
information needed to identify school and educator needs.
    While TIF funds may support the costs of developing and improving 
systems and tools for the entire LEA in which the TIF-funded PBCS is 
implemented, they may not be used to implement the PBCS (e.g., to pay 
the costs of the performance-based compensation awards to teachers, 
principals, or other personnel) in schools that are not high-need 
schools. An LEA would have to use non-TIF funds to support any proposed 
performance-based compensation in its schools that are not high-need. 
Similarly, in high-need schools, TIF funds could support the costs of 
providing evaluation-driven professional development, but non-TIF funds 
would be needed to provide any such professional development in non-
high-need schools.
    Finally, under this proposed requirement, a grantee could use TIF 
funds to provide additional compensation for effective educators in 
high-need schools through its PBCS, but it could not use TIF funds to 
compensate educators for activities that have little or no connection 
to recognizing, rewarding, and supporting effective teaching and 
leading.
    Based on our experience with current TIF projects, we believe that 
it is appropriate to define the circumstances under which LEAs can use 
TIF funds to compensate educators. TIF funds would only be used to 
compensate educators based on the educator's demonstration of 
effectiveness under the evaluation systems included in the application. 
For example, we do not believe it is appropriate to use TIF funds to 
compensate teachers for their attendance or for their willingness to 
sponsor a student club. By themselves, these activities do not 
systemically support teacher effectiveness and are not, therefore, 
additional responsibilities and leadership roles as defined in this 
notice.
    For these reasons, we propose to clarify the circumstances under 
which TIF funds can be used to support compensation for educators in 
high-need schools. TIF funds can only be used to support compensation 
for educators in high-need schools as part of an LEA's PBCS, as 
described in the application.
    We also request public comment on whether this requirement should 
limit the amount of TIF funds that can be used to compensate effective 
teachers or principals who agree to take on additional responsibilities 
and leadership roles in high-need schools.
    As discussed under Proposed Requirement 1, we are proposing that a 
grantee must provide performance-based compensation to effective 
teachers who agree to take on additional responsibilities and 
leadership roles in high-need schools. These teachers could be school-
based instructional leaders in career ladder positions (such as master 
teacher or academic instructional coach positions) or they could be 
teachers who take on additional responsibilities and leadership roles, 
such as, for example, conducting peer evaluations. In addition, under 
proposed Requirement 1, a grantee may choose, at its discretion, to 
provide performance-based compensation to principals who take on 
additional responsibilities and leadership roles.
    Given the limited amount of TIF funding that will be available for 
new awards, we specifically request comment on what limitations, if 
any, the Department should establish on the amount of TIF funds that a 
grantee could use to support the costs of teachers and principals 
taking on these additional responsibilities and leadership roles 
including, career ladder positions. For example:
     Should a grantee be able to use TIF funds for the entire 
amount of salary for career ladder positions, or should TIF funds only 
pay for a salary augmentation (i.e., an additional amount of 
compensation over and above what the LEA would otherwise pay the 
effective teacher)?
     Should there be a limit on the number of effective 
teachers or

[[Page 12267]]

principals who take on additional responsibilities and leadership roles 
under the PBCS for whom TIF would support the salary or salary 
augmentation costs?
    When finalizing this requirement, we will take into consideration 
the public comments we receive regarding limitations on the use of TIF 
funds for the costs of salaries for those effective teachers and 
principals who take on additional responsibilities and leadership roles 
in high-need schools.
    Requirement: TIF funds may be used to develop and improve systems 
and tools that support the PBCS and benefit the entire LEA. TIF funds 
may also be used to provide performance-based compensation and 
professional development in high-need schools. TIF funds may not be 
used to provide performance-based compensation or professional 
development in schools that are not high-need schools.
    TIF funds may be used to compensate educators only when the 
compensation is provided as part of the LEA's PBCS, as described in the 
application.
    This requirement does not preclude the use of TIF funds to 
compensate educators who are hired by a grantee to administer or 
implement the TIF-supported PBCS, or to develop or improve systems and 
tools needed to support the PBCS.

Proposed Requirement 7--Limitation on Using TIF Funds in High-Need 
Schools Served by Existing TIF Grants

    Background: Through this proposed requirement, we would prohibit a 
grantee from using TIF funds for performance-based compensation and 
evaluation-linked professional development in high-need schools that, 
as of the beginning of the grant's project period, are already being 
served (or are to be served) by a TIF grant. We propose this 
requirement because we believe that the projects currently funded under 
the TIF program should successfully complete the activities described 
in their existing approved applications.
    Requirement: Each applicant must provide an assurance, in its 
application, that, if successful under this competition, it will use 
the grant award to implement the proposed PBCS and professional 
development only in high-need schools that are not served, as of the 
beginning of the grant's project period or as planned in the future, by 
an existing TIF grant.

Proposed Definitions

Background

    We propose the following definitions of the terms additional 
responsibilities and leadership roles, career ladder positions, 
educators, high-need school, human capital management system, other 
personnel, performance-based compensation system, principal, student 
growth, teacher, and vision of instructional improvement for use in the 
TIF program.
    Two of the terms proposed to be defined here--high-need school and 
student growth--are virtually the same as the definitions we adopted 
for these terms in the FY 2010 TIF notice of final priorities, 
requirements, definitions and selection criteria. The student growth 
definition is also substantively identical to the definition of that 
term used in the ESEA Flexibility initiative (see http://www.ed.gov/esea/flexibility). We are defining these terms as we did in other 
Department programs for consistency and to avoid confusion.
    We also are proposing to define some terms that were used but not 
defined in our FY 2010 TIF notice of final priorities, requirements, 
definitions and selection criteria, and some new terms used for the 
first time in this notice, because a clear definition for each of these 
terms will avoid confusion among applicants regarding the types of 
projects that we intend to fund under these proposed priorities, 
requirements, definitions, and selection criteria.
    The proposed definition of a performance-based compensation system 
(PBCS) clarifies that any performance-based compensation must be based 
on the evaluation systems described in the application, rather than on 
evaluation criteria established for the PBCS alone. This definition 
also clarifies that a PBCS must compensate educators who are deemed 
effective (while also compensating effective teachers who take on 
additional responsibilities and leadership roles) or it must compensate 
teachers who are deemed effective and take on career ladder positions 
(while also compensating principals who are deemed effective). Under 
the proposed definition, a grantee has discretion to award compensation 
in other specified circumstances.
    We define the term additional responsibilities and leadership roles 
differently for teachers, on the one hand, and principals, on the 
other. For teachers, we define the term to ensure that TIF funds are 
used to support activities that are likely to improve instruction or 
instructional leadership in a systemic way. While the term is broadly-
defined for principals, the related definition of PBCS clarifies that 
additional compensation for effective principals who take on additional 
responsibilities and leadership roles is an optional component of any 
PBCS. Similarly, the PBCS definition clarifies that educators who take 
on additional responsibilities and leadership roles (including career 
ladder positions) would first have to demonstrate their effectiveness 
under the evaluation systems described in the application.
    The definition of human capital management system (HCMS) recognizes 
that an HCMS is a system in which an LEA makes decisions regarding its 
workforce. This proposed definition is based on the premise that all 
LEAs have some sort of system they use to make human capital management 
decisions. While the characteristics or structure of an HCMS can vary 
dramatically across LEAs, we view human capital management decision-
making as part of a system.
    Similarly, we define vision of instructional improvement to mean an 
LEA's summary of the competencies and behaviors required for effective 
teaching, as well as how educators acquire or improve these 
competencies and behaviors. The proposed definition is intended to help 
applicants and grantees base their TIF-funded projects on a deep 
understanding of effective teaching.
    Finally, we propose to define the terms educators, other personnel, 
principal, and teacher in an effort to clarify the distinctions among 
these roles.

Definitions

    We propose the following definitions for this program. We may apply 
one or more of these definitions in any year in which this program is 
in effect.
    Additional responsibilities and leadership roles means:
    (a) In the case of teachers, meaningful school-based 
responsibilities that teachers may voluntarily accept to strengthen 
instruction or instructional leadership in a systemic way, such as 
additional responsibilities related to lesson study, professional 
development, and peer evaluation, and may also include career ladder 
positions.
    (b) In the case of principals, additional responsibilities and 
leadership roles that principals may voluntarily accept, such as a 
position in which an effective principal coaches a novice principal.
    Career ladder positions means school-based instructional leadership 
positions designed to improve instructional practice, which teachers 
may voluntarily accept, such as positions described as master teacher, 
mentor teacher, demonstration or model teacher, or instructional coach, 
and for which teachers are selected based on

[[Page 12268]]

criteria that are predictive of the ability to lead other teachers.
    Educators means teachers and principals.
    High-need school means:
    (a) A high-poverty school, or
    (b) A persistently lowest-achieving school, or
    (c) In the case of States that have received the Department's 
approval of a request for ESEA flexibility, a priority school.
    High-poverty 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-poverty school under this 
definition is determined on the basis of the most currently available 
data.
    A human capital management system (HCMS) is a system by which an 
LEA makes and implements human capital decisions, such as decisions on 
recruitment, hiring, placement, retention, dismissal, compensation, 
professional development, tenure, and promotion.
    Other personnel are school-based personnel who are not serving in a 
teacher or principal position. Other personnel may include, for 
example, school counselors, media specialists, or para-educators.
    Persistently lowest-achieving school means, as determined by the 
State:
    (i) Any Title I school in improvement, corrective action, or 
restructuring that--
    (a) Is among the lowest-achieving five percent of Title I schools 
in improvement, corrective action, or restructuring or the lowest-
achieving five Title I schools in improvement, corrective action, or 
restructuring in the State, whichever number of schools is greater; or
    (b) Is a high school that has had a graduation rate as defined in 
34 CFR 200.19(b) that is less than 60 percent over a number of years; 
and
    (ii) Any secondary school that is eligible for, but does not 
receive, Title I funds that--
    (a) Is among the lowest-achieving five percent of secondary schools 
or the lowest-achieving five secondary schools in the State that are 
eligible for, but do not receive, Title I funds, whichever number of 
schools is greater; or
    (b) Is a high school that has had a graduation rate as defined in 
34 CFR 200.19(b) that is less than 60 percent over a number of years.
    To identify the persistently lowest-achieving schools, a State must 
take into account both:
    (i) The academic achievement of the ``all students'' group in a 
school in terms of proficiency on the State's assessments under section 
1111(b)(3) of the ESEA in reading/language arts and mathematics 
combined; and
    (ii) The school's lack of progress on those assessments over a 
number of years in the ``all students'' group.
    Performance-based compensation system (PBCS) means a system that--
    (a) Provides additional compensation for teachers and principals in 
one of the following circumstances--
    (1)(i) Design Model 1. Additional compensation for teachers and 
principals who receive an overall evaluation rating of effective or 
higher under the evaluation systems described in the application; and
    (ii) Of those teachers and principals eligible for compensation 
under paragraph (a)(1)(i) of this definition, additional compensation 
for teachers and, at the applicant's discretion, for principals, who 
take on additional responsibilities and leadership roles; or
    (2)(i) Design Model 2. Additional compensation for teachers who 
receive an overall evaluation rating of effective or higher under the 
evaluation system described in the application and who take on career 
ladder positions; and
    (ii) Additional compensation for (A) principals who receive an 
overall evaluation rating of effective or higher under the evaluation 
system described in the application, or (B) principals who receive an 
overall evaluation rating of effective or higher under the evaluation 
system described in the application and who take on additional 
responsibilities and leadership roles.
    (b) May provide the following compensation:
    (1) Compensation for educators (which at the applicant's option may 
be for teachers or principals or both) who receive an overall 
evaluation rating of effective or higher under the evaluation systems 
described in the application or under comparable evaluation systems in 
another LEA, and who either: (i) transfer to a high-need school from a 
school of the LEA that is not high-need, or, (ii) for educators who 
previously worked in another LEA, are hired to work in a high-need 
school.
    (2) Compensation for other personnel, who are not teachers or 
principals, based on performance standards established by the LEA so 
long as those standards, in significant part, include student growth, 
which may be school-level student growth.
    A principal is any person who meets the definition of that term 
under State or local law. At an LEA's discretion, it may also include 
an assistant or vice principal or a person in a position that 
contributes to the organizational management or instructional 
leadership of a school.
    Priority school means a school that has been identified by the 
State as a priority school pursuant to the State's approved request for 
Elementary and Secondary Education Act (ESEA) flexibility.
    Student growth means the change in student achievement for an 
individual student between two or more points in time. For the purpose 
of this definition, student achievement means--
    (a) For grades and subjects in which assessments are required under 
section 1111(b)(3) of ESEA: (1) a student's score on such assessments 
and may include (2) other measures of student learning, such as those 
described in paragraph (b) of this definition, provided those measures 
are rigorous and comparable across schools within an LEA.
    (b) For grades and subjects in which assessments are not required 
under section 1111(b)(3) of ESEA: Alternative measures of student 
learning and performance such as student results on pre-tests, end-of-
course tests, and objective performance-based assessments; student 
learning objectives; student performance on English language 
proficiency assessments; and other measures of student achievement that 
are rigorous and comparable across schools within an LEA.
    A teacher is any person who meets the definition of that term under 
State or local law.
    A vision of instructional improvement is a summary of the key 
competencies and behaviors of effective teaching that an LEA views as 
necessary to produce high levels of student achievement, as well as how 
educators acquire or improve these competencies and behaviors.

Proposed Selection Criteria

    This notice contains two sets of proposed selection criteria. The 
first set proposes selection criteria that would be used, in whole or 
in part, in any year in which we conduct a General TIF Competition. The 
second set would be used, in whole or in part, together with one or 
more of the General TIF Competition selection criteria, in any year in 
which we conduct a TIF Competition with a Focus on STEM. For FY 2012, 
the Department intends to

[[Page 12269]]

conduct two competitions--a General TIF Competition and a TIF 
Competition with a Focus on STEM.

Background

    General TIF Competition Selection Criteria: We propose the General 
TIF Competition Selection Criteria (proposed selection criteria (a) 
through (f)) to be used to review an applicant's proposal for funding 
under any FY 2012 competition and any future competitions. We believe 
that these proposed selection criteria would be helpful in ensuring 
that an applicant selected for funding has or will have: (1) An HCMS 
that enhances the quality and sustainability of its PBCS and advances 
an LEA's vision of instructional improvement; (2) a well-designed PBCS 
that uses reliable teacher and principal evaluations to identify, 
compensate, and promote effective staff in high-need schools; (3) a 
professional development plan to help all educators in high-need 
schools that are part of the PBCS become effective; (4) extensive 
teacher and principal involvement in the development and implementation 
of the proposed educator evaluation systems and PBCS; (5) a management 
plan (including a plan for an effective project evaluation) that is 
adequate to support the development and implementation of the proposed 
project; and (6) a sustainability plan to ensure the longer-term 
viability of the proposed project.

TIF Competition With a Focus on STEM Selection Criteria

    We propose an additional selection criterion, selection criterion 
(g), that would be used, in whole or in part, in addition to one or 
more of the General TIF Competition selection criteria for any TIF 
Competition with a Focus on STEM the Department conducts. This 
selection criterion focuses on comprehensive approaches to improving 
STEM instruction.

Proposed Selection Criteria

    We propose the following selection criteria for evaluating an 
application under this program. We may apply one or more of these 
criteria; the general selection criteria in the Education Department 
General Administrative Regulations (EDGAR) in 34 CFR 75.210; criteria 
based on statutory provisions in accordance with 34 CFR 75.209; or any 
combination thereof in any year in which there is a TIF competition. In 
the notice inviting applications, or the application package, or both, 
we will announce the maximum possible points assigned to each 
criterion.
    (a) A Coherent and Comprehensive Human Capital Management System 
(HCMS). We will consider the quality and comprehensiveness of each 
participating LEA's HCMS as described in the application. In 
determining the quality of the HCMS, as it currently exists and as the 
applicant proposes to modify it during the grant period, we will 
consider the extent to which the HCMS described in the application is--
    (1) Aligned with each participating LEA's clearly described vision 
of instructional improvement; and
    (2) Likely to increase the number of effective educators in the 
LEA's schools, especially in high-need schools, as demonstrated by--
    (i) The weight given to educator effectiveness--based on the 
educator evaluation systems described in the application--when human 
capital decisions are made;
    (ii) The range of human capital decisions for which the applicant 
proposes to factor in educator effectiveness--based on the educator 
evaluation systems described in the application.
    (iii) The feasibility of the HCMS described in the application, 
including the extent to which the LEA has prior experience using 
information from the educator evaluation systems described in the 
application to inform human capital decisions;
    (iv) The commitment of the LEA leadership to implementing the 
described HCMS, including all of its component parts; and
    (v) The adequacy of the financial and nonfinancial strategies and 
incentives, including the proposed PBCS, for attracting effective 
educators to work in high-need schools and retaining them in those 
schools.
    (b) Rigorous, Valid, and Reliable Educator Evaluation Systems. We 
will consider, for each participating LEA, the quality of the educator 
evaluation systems described in the application. In determining the 
quality of each evaluation system, we will consider the extent to 
which--
    (1) Each participating LEA has finalized a high-quality evaluation 
rubric, with at least three performance levels (e.g., highly effective, 
effective, developing, unsatisfactory), under which educators will be 
evaluated;
    (2) Each participating LEA has presented:
    (i) A clear rationale to support its approach to differentiating 
performance levels based on the level of student growth achieved; and
    (ii) Evidence, such as current research and best practices, 
supporting the LEA's choice of student growth model or models;
    (3) Each participating LEA has made substantial progress in 
developing a high-quality plan for multiple teacher and principal 
observations, including identification of the persons, by position and 
qualifications, who will be conducting the observations, the 
observation tool, the events to be observed, the accuracy of raters in 
using observation tools and the procedures for ensuring a high degree 
of inter-rater reliability;
    (4) The participating LEA has experience measuring student growth 
at the classroom level, and has already implemented components of the 
proposed educator evaluation systems;
    (5) In the case of teacher evaluations, the proposed evaluation 
system--
    (i) Bases the overall evaluation rating for teachers, in 
significant part, on student growth;
    (ii) Evaluates the practice of teachers, including general 
education teachers and teachers of special student populations, in 
meeting the needs of special student populations, including students 
with disabilities and English learners;
    (6) In the case of principal evaluations, the proposed evaluation 
system--
    (i) Bases the overall evaluation rating on, in significant part, 
student growth; and
    (ii) Evaluates, among other factors, a principal's practice in--
    (A) Focusing every teacher, and the school community generally, on 
student growth;
    (B) Establishing a collaborative school culture focused on 
continuous improvement; and
    (C) Supporting the academic needs of special student populations, 
including students with disabilities and English learners, for example, 
by creating systems to support successful co-teaching practices, 
providing resources for research-based intervention services, or 
similar activities.
    (c) Professional Development Systems to Support the Needs of 
Teachers and Principals Identified Through the Evaluation Process. We 
will consider the extent to which each participating LEA has a high-
quality plan for professional development to help all educators in 
high-need schools served by the PBCS improve their effectiveness. In 
determining the quality of this plan for professional development, we 
will consider the extent to which each participating LEA describes a 
high-quality plan to--
    (1) Use the disaggregated information generated by the proposed 
educator evaluation systems to identify the

[[Page 12270]]

professional development needs of individual educators and schools;
    (2) Provide professional development in a timely way; and
    (3) Provide professional development that is likely to improve 
instructional and leadership practices, and is guided by the 
professional development needs of individual educators as identified in 
(1).
    (d) Involvement of Educators. We will consider the quality of 
educator involvement in the development and implementation of the 
proposed PBCS and educator evaluation systems described in the 
application. In determining the quality of such involvement, we will 
consider the extent to which--
    (1) The application contains evidence that educator involvement in 
the design of the PBCS and the educator evaluation systems has been 
extensive and will continue to be extensive during the grant period; 
and
    (2) The application contains evidence that educators support the 
elements of the proposed PBCS and the educator evaluation systems 
described in the application.
    (e) Project Management. We will consider the quality of the 
management plan of the proposed project. In determining the quality of 
the management plan, we will consider the extent to which the 
management plan--
    (1) Clearly identifies and defines the roles and responsibilities 
of key personnel;
    (2) Allocates sufficient human resources to complete project tasks;
    (3) Includes measurable project objectives and performance 
measures; and
    (4) Includes an effective project evaluation plan;
    (5) Specifies realistic and achievable timelines for:
    (i) Implementing the components of the HCMS, PBCS, and educator 
evaluation systems, including any proposal to phase in schools or 
educators.
    (ii) Successfully completing project tasks and achieving 
objectives.
    (f) Sustainability. We will consider the quality of the plan to 
sustain the proposed project. In determining the quality of the 
sustainability plan, we will consider the extent to which the 
sustainability plan--
    (1) Identifies and commits sufficient non-TIF resources, financial 
and non-financial, to support the PBCS and educator evaluation systems 
during and after the grant period; and
    (2) Is likely to be implemented and, if implemented, will result in 
a sustained PBCS and educator evaluation systems after the grant period 
ends.
    (g) Comprehensive Approach to Improving STEM Instruction. To meet 
Priority 3, we will consider the quality of an applicant's plan for 
improving educator effectiveness in STEM instruction. In determining 
the quality of the plan, we will consider the extent to which--
    (1) The financial and nonfinancial strategies and incentives, 
including the proposed PBCS, are adequate for attracting effective STEM 
educators to work in high-need schools and retaining them in these 
schools;
    (2) The proposed professional development opportunities--
    (a) Will provide college-level STEM skills and content knowledge to 
STEM teachers while modeling for teachers pedagogical methods for 
teaching those skills and that content at the appropriate grade level; 
and
    (b) Will enable STEM teachers to provide students in high-need 
schools with increased access to rigorous and engaging STEM coursework 
appropriate for their grade level, including college-level material in 
high schools;
    (3) The applicant will significantly leverage STEM-related funds 
across other Federal, State, and local programs to implement a high-
quality and comprehensive STEM plan; and
    (4) The applicant provides evidence (e.g., letters of support) that 
the LEA has or will develop extensive relationships with STEM experts 
and resources in industry, academic institutions, or associations to 
effectively implement its STEM plan and ensure that instruction 
prepares students to be college-and-career ready.

Final Priorities, Requirements, Definition, and Selection Criteria

    The Secretary will announce the final priorities, requirements, 
definitions, and selection criteria in a notice in the Federal 
Register. The Secretary 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 Orders 12866 and 13563: 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.
    This regulatory 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 Executive Order 12866. Notwithstanding this determination, 
we have assessed the potential costs and benefits--both quantitative 
and qualitative--of this regulatory action and have determined that the 
benefits justify the costs.
    We have also reviewed these proposed priorities, requirements, 
definitions, and selection criteria under Executive Order 13563, which 
supplements and explicitly reaffirms the principles, structures, and 
definitions governing regulatory review established in Executive Order 
12866. To the extent permitted by law, Executive Order 13563 requires 
that an agency--
    (1) Propose or adopt regulations only on a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety,

[[Page 12271]]

and other advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are proposing the priorities, requirements, definitions, and 
selection criteria in this notice only on a reasoned determination that 
their benefits justify their costs. In choosing among alternative 
regulatory approaches, we selected those approaches that maximize net 
benefits. Based on the analysis that follows, the Department believes 
that these proposed priorities, requirements, definitions, and 
selection criteria are consistent with the principles in Executive 
Order 13563.
    In this regulatory impact analysis we discuss the need for 
regulatory action, the potential costs and benefits, net budget 
impacts, assumptions, limitations, and data sources, as well as 
regulatory alternatives we considered.

Need for Federal Regulatory Action

    The proposed priorities, requirements, definitions, and selection 
criteria are needed to implement the TIF program. The Secretary does 
not believe that the authorizing legislation for this program, 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 PBCSs. The authorizing and 
appropriations language is very brief and provides only broad 
parameters to govern the program. The priorities, requirements, 
definitions, 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 a TIF 
program competition 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) Limiting eligible LEA applicants to those that already have in 
place the basic infrastructure necessary to generate student growth 
data at the classroom level. However, we took an alternative approach 
because we recognize that one purpose of the TIF program is to nurture 
innovation and reform in LEAs that may be beginning their reform 
efforts in this area.
    (2) Requiring an applicant to commit a certain percentage of non-
TIF funds to the project in order to help ensure the project's 
sustainability after the grant period. However, we took an alternative 
approach that requires the PBCS to be part of an LEA-wide HCMS because 
we believe that having the PBCS implemented as part of an LEA-wide HCMS 
will help generate project sustainability. Further, we believe that the 
proposed selection criteria that direct reviewers to assess the degree 
of LEA commitment, both financial and non-financial, and its effect on 
project sustainability, will be sufficient to ensure that funded 
projects are sustained after the end of the grant period.
    The proposed priorities, requirements, definitions, and selection 
criteria reflect and promote the purpose of the TIF program. They also 
align TIF, where possible and permissible, with other Presidential and 
Departmental priorities, such as the State Fiscal Stabilization Fund, 
the Race to the Top Fund, the School Improvement Grants program, and 
the ESEA Flexibility initiative. The proposals would also provide an 
eligible applicant with a great deal of flexibility in designing the 
systems and selecting the activities to carry out its proposed project. 
The Secretary believes that the proposals in this notice appropriately 
balance the need for specific programmatic guidance while providing 
each applicant with flexibility to design innovative and enduring 
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 in this notice 
justify 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 will improve the 
quality of teaching and educational administration. Through the 
regulatory action proposed in this notice, the Secretary seeks to 
clarify the scope of activities he expects to support with program 
funds and the expected burden to prepare an application and implement a 
project under the program. A potential applicant must consider 
carefully the resources needed to prepare a strong application and the 
applicant's capacity to implement a successful project.
    The Secretary believes that the costs of complying with the 
proposed priorities, requirements, definitions, and selection criteria 
would be largely limited to the paperwork burden of 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 applicant would pay the costs of actually 
carrying out activities under a TIF grant with program funds and any 
matching funds. Further, many of the systems that TIF funds will 
support, including educator evaluation systems and systems of 
professional development, are ones that LEAs regularly support with 
their own funds. Thus, the costs of implementing a TIF project using 
these proposed priorities, requirements, definitions, and selection 
criteria would be minimized for any eligible applicant, including a 
small entity.
    Elsewhere in this section under Paperwork Reduction Act of 1995, we 
identify and explain burdens specifically associated with information 
collection requirements.

[[Page 12272]]

Accounting Statement

    As required by OMB Circular A-4 (available at http://www.Whithouse.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 the FY 2012 
appropriation. Expenditures are classified as transfers to States, 
LEAs, and nonprofit organizations.
    Accounting Statement Classification of Estimated Expenditures:

------------------------------------------------------------------------
                 Category                      Transfers (in millions)
------------------------------------------------------------------------
Annual Monetized Transfers................  $284.5
From Whom to Whom.........................  Federal Government to
                                             States, LEAs, and
                                             nonprofits.
------------------------------------------------------------------------

Effect on Other Levels of Government

    We have also determined that this regulatory action would not 
unduly interfere with State, local, or tribal governments in the 
exercise of their governmental functions.

Paperwork Reduction Act of 1995

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department conducts a preclearance consultation program to 
provide the general public and Federal agencies with an opportunity to 
comment on proposed and continuing collections of information in 
accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 
3506(c)(2)(A)). This helps ensure that: the public understands the 
Department's collection instructions, respondents can provide the 
requested data in the desired format, reporting burden (time and 
financial resources) is minimized, collection instruments are clearly 
understood, and the Department can properly assess the impact of 
collection requirements on respondents.
    We estimate that each applicant would spend approximately 248 hours 
of staff time to address the proposed priorities, requirements, 
definitions, and selection criteria, prepare the application, and 
obtain necessary clearances. Based on the number of applications the 
Department received in the FY 2010 competition, 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.
    We have submitted an Information Collection Request (ICR) for this 
collection to OMB. If you want to comment on the proposed information 
collection requirements, please send your comments to the Office of 
Information and Regulatory Affairs, OMB, Attention: Desk Officer for 
U.S. Department of Education. Send these comments by email to [email protected] or by fax to (202) 395-6974. You may also send a 
copy of these comments to the Department contact named in the FOR 
FURTHER INFORMATION CONTACT section of this notice.
    In preparing your comments you may want to review the ICR, which we 
maintain in the Education Department Information Collection System 
(EDICS) at http://edicsweb.ed.gov. Click on Browse Pending Collections. 
This proposed collection is identified as proposed collection 1810-
0700. This ICR is also available on OMB's RegInfo Web site at 
www.reginfo.gov.
    We consider your comments on this proposed collection of 
information in--
     Deciding whether the proposed collection is necessary for 
the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collection, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed priorities, requirements, and 
selection criteria between 30 and 60 days after publication of this 
document in the Federal Register. Therefore, to ensure that OMB gives 
your comments full consideration, it is important that OMB receives 
your comments on the proposed collection within 30 days after 
publication. This does not affect the deadline for your comments to us 
on the proposed priorities, requirements, and selection criteria.
    Please note that a Federal agency cannot conduct or sponsor a 
collection of information unless OMB approves the collection under the 
PRA and the corresponding information collection instrument displays a 
currently valid OMB control number. Notwithstanding any other provision 
of law, no person is required to comply with, or is subject to penalty 
for failure to comply with, a collection of information if the 
collection instrument does not display a currently valid OMB control 
number. We will provide the OMB control number when we publish the 
notice of final priorities, requirements, definitions, and selection 
criteria.

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, definitions, 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, 
definitions and selection criteria proposed in this notice. We expect 
that in determining whether to apply for TIF funds, an eligible entity 
would evaluate the costs of preparing an application and implementing a 
TIF project and weigh them against the benefits likely of 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

[[Page 12273]]

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 
173,172 nonprofit organizations that had an educational mission and 
reported revenue to the Internal Revenue Service (IRS) by December 
2011, 168,669 (over 97 percent) had revenues of less than $5 million. 
In addition, there are 12,358 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 apply. In the FY 2010 TIF competition, 
approximately 23 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 FY 2012 competition will be similar to the 
FY 2010 competition because only a limited number of nonprofit 
organizations are working actively on the development of PBCSs and many 
of these organizations are larger organizations. Thus, the likelihood 
that the priorities, requirements, definitions, and selection criteria 
proposed in this notice would have a significant economic impact on 
small entities is minimal.
    In addition, the Secretary believes that the priorities, 
requirements, 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 be comparable if the competition 
relied exclusively on the selection criteria in 34 CFR 75.210 for this 
competition.
    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: 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 is 
available via the Federal Digital System at www.gpo.gov/fdsys. At this 
site 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). To use PDF you must have Adobe Acrobat Reader, 
which is available free at this site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

    Dated: February 24, 2012.
Michael Yudin,
Acting Assistant Secretary for Elementary and Secondary Education.
[FR Doc. 2012-4832 Filed 2-28-12; 8:45 am]
BILLING CODE 4000-01-P