Teacher Incentive Fund
Last Revised: December 17, 2025
- Issue Areas
- K-12 education
Program overview
Providing incentives to attract and retain effective educators in high-need schools: In 2006, Congress created the Teacher Incentive Fund (TIF) as a competitive grant program to implement performance-based compensation for educators and principals. High-need school districts where participating schools have at least half of its students receiving free or reduced-price lunch were eligible for the grant. As a strategy to bolster staffing and retention rates in high-need districts, bonuses were offered to teachers who met certain performance standards, took on leadership roles by conducting teacher evaluations, or taught hard-to-staff subjects, such as high school math and science.
Evaluating principal and teacher performance based on observation and student achievement: Teacher bonuses or salary increases are determined by performance, measured by classroom observations throughout the year and student achievement on state tests or diagnostic assessments relative to state or district goals. Performance ratings are based on a scale (usually 1 to 4) that combines student achievement with observation ratings. Similarly, for principals, performance is evaluated based on school report cards of student achievement relative to state averages and observations throughout the year.
Differentiating bonuses based on teacher performance: The TIF grant requires that there are incrementally higher bonuses for higher achieving teachers. In a 2017 evaluation of TIF, while 70 percent of teachers received some form of additional, performance-based compensation, the maximum bonus was nearly four times the average bonus. The incremental bonus structure provides additional incentive for teachers to both meet and exceed performance goals.
Aligning incentives to schoolwide goals: Beyond individual performance bonuses, bonuses can also be allocated to all educators if the entire school meets certain achievement metrics, such as improving school-level scores on state exams. The benefits of school-wide bonuses include fostering a collaborative atmosphere and improving organizational cohesion around specific goals for students.
- Strategies
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Educator recruitment and retention
A study with a rigorous design provides some evidence for TIF as a strategy for improving student achievement in math and reading.
- A 2020 randomized control trial found that offering bonuses of an average yearly cost of $100 per student had a small significant impact of about 0.04 standard deviations on student achievement. However, these impacts are smaller (0.01 standard deviations) and become insignificant when using an alternative analysis method.
Compensation should be combined with other workforce development strategies: To increase the number of teachers earning performance bonuses, professional development opportunities should be embedded in teacher roles throughout the year. TIF grant funding was used to support additional professional development or to incentivize teachers taking on leadership roles within a school.
Provide additional compensation for teachers taking on leadership or mentor roles: To scale up the professional development for educators, many schools rely on teachers to mentor others or conduct classroom observations. These additional responsibilities for mentor teachers should come with additional pay using TIF funds, and should amount to a 15 to 20 percent pay increase.
Clearly define conditions and amounts of incentives: School and district leadership need to effectively communicate the requirements for incentives, especially who is eligible for bonuses, how teacher performance is measured, and that there are different levels of incentives based on performance. Clear communication ensures teachers understand how they can earn bonuses, which will help orient their work to meet the goals required for bonuses.
Ongoing staff and program evaluations: Compensation programs rely on timely and accurate data to evaluate staff and student performance. Additionally, the TIF grant included a requirement to evaluate program implementation at the school and district level to examine how to both increase student achievement in high-need schools and how to strengthen the educator workforce.