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Bill Gates on School Budgets: Cut Wisely, Change Pay Schemes

Microsoft Chairman Bill Gates says he knows that the nation's schools are struggling financially, and could be for years to come. But he argues that states and districts need to continue to press to create new merit pay models, and that they should consider allowing larger class sizes—if those classes are taught by effective teachers.

In a speech today, the business icon and philanthropist also urged school officials to avoid making cuts such as furloughs and reducing school days and school years, which he says amount to "one-time" fixes that hurt students academically.

Gates, speaking at the Council of Chief State School Officers' annual policy forum in Louisville, Ky., called for moving away from systems that pay teachers based on seniority or obtaining master's degrees, which he says haven't been show to raise student achievement.

"There's simply no profession in existence that I can think of where seniority is a primary determination" in compensation, said Gates, as opposed to some kind of "value-based measure."

Rewards for teachers "don't have to be gigantic" he argued, and in fact, even modest incentives would change the culture of school systems.

Gates said that in his home state of Washington, teachers' can get an $11,000 yearly salary bump for master's degrees. That amounts to a $300 million annual cost, he said. The pricetag for similiar programs around the nation, he said, would stretch into the billions. As with many like-minded advocates of compensation overhauls, Gates said that money should be rechanneled into a system that rewards teachers for performance. (See my colleague Steve Sawchuk's recent story on experiments in new salary models.)

Critics of merit pay systems, as we've reported, say there's scant evidence they produce better student outcomes. A recent comprehensive study said as much. But Gates and many other business leaders continue to make a major push in that direction, saying its necessary to attract and reward good teachers.
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Gates also argued that the need for performance-based systems extends to in-service and pre-service teacher training.

"When you design a system that is not measuring and rewarding performance, every element of it becomes ineffective," he said, including "textbook design, professional development, master's degrees, schools of education."

Gates praised U.S. Secretary of Education Arne Duncan for a speech he made earlier this week, which probably isn't surprising, given that they sounded some of the same arguments. Like Duncan, Gates said that as states and districts struggle financially, they could afford to raise class sizes if they created systems in which skilled teachers handled that extra workload and were rewarded for it. He said he wasn't talking about moving from 20- to 40-student class sizes, but far more modest bumps.

As many as 46 states faced budget shorfalls heading into fiscal 2011, and school districts are hemorrhaging cash, too. But Gates also said American schools risk falling behind top-performing Asian countries, by making quick-fix cuts such as furloughs and chopping away at instructional time.

"Anything that goes further in that direction," Gates said, "could make reducing the achievement gap with those countries even more difficult."

Photo of Bill Gates, taken this month by AP.

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