Aligning Superintendent Incentives with Educational Goals
Updated: Apr 7, 2022
January 26th, 2021 Isn't it important to have a Superintendent's efforts aligned with Board (and therefore parent) priorities?
The search for the right person is critical, but once that person starts there is a fundamental problem in education. The incentives have very little to do with making sure the superintendent is focused on doing what their Board (and their parents) want - providing better education for their kids. In private industry, the answer to this is universal. The CEO (and usually all high level executives) always have some portion of their compensation dependent on meeting goals and targets that represent measurable improvement in performance.
You would never see a CEO (or any executive) with pay at the level of a District Superintendent who did not have a significant portion tied to performance. It just would not happen.
This is called “aligning incentives with goals,” and it would be completely unheard of for the executives of an organization with a budget the size of most school districts.
We all want a Super who just “does the right thing” because that’s how they’re built. We expect that, and we should most certainly hire someone who works hard for our kids just because it’s important to them.
But we also all know human nature.
We know no matter how hard working and dedicated someone is, any job involves choices on what gets done next. When we get to that 12th hour on duty that day and want to get “one last thing” done before going home, we prioritize.
And if there are two things remaining to be done with equal potential impact but one of them may result in some extra pay? We know which one gets picked. That alignment has worked extremely well throughout human history. It makes sure executive energies are channeled in ways the Board has determined are best for the organization – usually meaning best for its customers.
Certainly, there are dangers in this. Incentive programs need to be designed well enough to avoid “unintended consequences”. If you incentivize someone to care about nothing but gross profit percentage that may sound great, but what if profit percentage rises but sales drop? Is that beneficial to the organization? What happens if higher profit margins lead to worse customer service? And what if the metrics uses are things that can be easily “gamed” – by the people who benefit from doing that? In my career I spent decades designing incentive programs for private industry, mostly revolving around improving customer service while keeping the financials in the black. I’ve seen poorly designed programs with flaws you could drive several trucks through. No one needs that. Meanwhile, I have also seen the results of well designed programs that are properly measured and managed.
Happier customers, growing sales, better profit margins. Everyone wins.
Picking the metrics that define “success” is critical. We need measures that track both education performance as well as financial performance. For educational performance, in California we already have a set of measures defined – by the state – as the way our school districts are judged. The California School Dashboard.
The Dashboard is not perfect. Much has been said about the issues with the measures and their potential for being gamed by districts. With the known issues, the Dashboard is still the way our school districts are measured by the state. Dashboard performance is used to determine what districts are performing well as well as what districts are in need of special assistance.
For financials, the results are very easy to measure objectively. Simply look at the district’s financial performance in it’s annual budgeting and reporting processes. This can also be gamed (see “Sweetwater Unified”) but that can be identified and corrected.
With that, here is a proposed incentive program for Superintendents, based on one proposed to the Oceanside Unified school board during it’s search for a new Super in 2018. Keep in mind this is just a draft - finalizing anything like this would require access to more in-depth data on a district than I have, and, of course, discussion with the Board to get guidance on their priorities. Superintendent Incentive Program
Base Pay Typically one would see a minimum of 10%, and more likely up to 30% of annual compensation tied to an incentive plan. I would suggest pegging a Super’s base pay to “a little bit more than their highest-paid Associate Superintendent” and then putting the difference between that and the target total compensation into the incentive plan.
Target total paycheck compensation. This is up to the Board to determine, based on what they feel is proper compensation for the job in their area. Most San Diego County districts pay their Superintendents in the range of $200-250,000/year (not including non-paycheck compensation…)
The key decision here would be to determine realistic targets and the potential for reaching those targets. The general theory of bonus design is you want to make it achievable at least 75% of the time. Less than that and people get discouraged (“I’ll never hit that target, why try?”), more than that and the targets are obviously too easy – it becomes a bonus more for “just doing your job” than for “doing it better”.
Financial performance bonus A reasonable measure here would be the ending reserve fund balance. The state has a mandated “reserve for economic uncertainties” (that varies by size of district) and often there is a “Board Policy” that requires higher levels. That should be the standard. Unlike a private business, where “the highest possible profit” would be the target, managing a district is a tightrope walk between spending too much (and running the district into “qualified” status with the state and county) vs. spending too little – when we SHOULD be spending money on improvements. So, if we say the reserve target is 5%, then the bonus would be based on coming close to that, but not going under. A target of, say, “5 to 10%” might be reasonable. Going under would certainly be a subtraction from the bonus – a superintendent driving an organization headed for bankruptcy is not good – but going too far over would also be a deduction, since that money is not being spent on the education of our kids. Financials should not weigh too heavily on the program, however, since the objective is education. I’d give it a maximum of perhaps 30% weighting in the plan. Special Circumstances For Dashboard measures, we know that the state sometimes makes changes, the numbers are not released when they should be, etc, etc. During the Covid crises, standardized test measures are suspended and attendance numbers are questionable. We’d have to have some legal minds craft some language here, but I’d say in general if the state either cannot produce a number for a category or changes the rules on that category for the year, the bonus is automatically calculated as if the first step up had been achieved – giving “the benefit of the doubt” to the employee, perhaps with Board approval being needed. A decision would need to be made covering what happens if a measure in the district is at target or can’t be improved any further. My matrix includes accommodations for that, assuming if a measure is already green or blue then we’ve “done the best we can” and deserve recognition for that.
The matrix would look something like this….
Note that “no change” when a district is Red, Yellow, or Orange (“R/Y/O”) results in no bonus money – districts in that territory need to improve – while no change if a district is already green or blue is fine and results in bonus money. The “plus” numbers (+1, +2, etc) reflect moving up a tier – from Red to Yellow, for instance, is “+1”. Red to Blue (yay!) would be “+4”.
Here’s a sample where the Superintendent reaches roughly 75-80% of goals (five out of 7 measures go up one, budget comes in with a 7% reserve.)
By this measure, the Superintendent would make their base pay of $200,000 plus a $52,000 bonus for they year - $252,000, right in the ballpark of what Superintendents in our county make. And the district would get actual improvement, not just an occupant in the Superintendent’s office.
The maximum – if they knock it out of the park, gets everything into “blue” and brings in the budget on target, is a nice $118K bonus, which would certainly put them at or above the top range in the county. But wouldn’t it be worth it – to the parents of the district – if their Superintendent were able to improve the education of their kids so dramatically? Conclusion
Who knows if these targets are good. Determining real targets would require some number crunching, and the process should include an annual public hearing in front of the Board to discuss that years’ targets, along with obtaining Board approval.
And, lastly, the incentive plan – in a more stripped down manner – should flow all the way down through the principals, admin staff, support and teachers at the sites, all based on the same measures. That’s how you align the entire organization with the same goals. What if the person working the front desk, the custodian, and your kids teacher all got a bit of extra money in their check based on the fact that their school excelled in some measure here? Don’t they deserve that, and don’t you think it would be worthwhile to reward them for it? Note there is no “minus” in this bonus plan. It’s what’s called an “all carrot, no stick” plan. That’s intentional. We want to incentivize improvement. Punishment for failure should be up to the Board, as it is now.
Of course, doing something like this would all depend on a District and Board that is intent on having a Superintendent motivated to improve education.
The solution is simple. Make sure the superintendent not only knows their job is to improve education and keep the district on good financial footing , but also that part of their pay is riding on it.
Then we’ll see how heaven and earth can be moved to make education better for our kids, won’t we?