As some schools experiment with cash incentives for students, others are resurrecting the idea of paying teachers bonuses for good performance. Traditionally, teachers have been paid based on two factors: their number of years of service and the type of college degree they hold. That formula was cemented into place by union contracts, on the theory that teachers deserved equal pay for equal work.

But recent research suggests those factors have very little to do with how well students learn. In fact, it's teacher quality that seems to be the most determinant factor in student achievement. Now, some teachers unions, especially at the local level, seem to be warming to the idea of experimenting with bonuses. Nationally, the American Federation of Teachers says that performance pay is worth exploring, although the much larger National Education Association continues to vehemently oppose it.

Some of the opposition stems from failed experiments with so-called "merit pay" in the 1980s and 90s. In those programs, school principals were given a lump of cash to mete out to teachers who they thought were doing a good job. Critics assailed such pay systems as unfair and subject to favoritism. But lately, thanks to state assessment exams and the federal No Child Left Behind law, schools have been flooded with data they can use to make more quantitative judgments.

Denver has put in place what's viewed by many as a national model for incentive pay. Approved by voters in 2005, the city's ProComp program uses a mix of criteria to determine award bonuses. The criteria include student achievement, professional development and committing to work in hard-to-staff schools or subjects. High performing teachers can earn bonus payments of as much as $14,000 per year, and in some cases more. "We were trying to create a balance that rewarded teachers for all the things they do in the classroom," says Brad Jupp, a longtime Denver school teacher and union negotiator who led the effort to develop ProComp and now serves as a policy adviser to the superintendent.

Other districts have followed suit. In 2007, New York City implemented a trial at approximately 200 of its K-12 schools. The program focuses on the performance of entire schools, as opposed to individual educators, and awards up to $3,000 per faculty member to schools that meet performance targets. In 2006, Guilford County, North Carolina--the state's third-largest school district--instituted what may be the nation's highest-paying teacher incentive program. Based on a mix of factors similar to those used by Denver, teachers there can augment their salary by up to $18,000 a year.

Not all new programs have been well received. Florida's STAR program, approved by the state legislature in 2006, ran into problems from the beginning. The state was to give bonuses to the top 25 percent of teachers based almost exclusively on standardized test scores. Teachers balked at being rated by that one measure, and the program was never fully implemented. But it's the Houston school district that has been called the poster child for getting it wrong on performance-based pay. Houston's system also relied on student test scores, but the rewards were based on arcane formulas that most of the teachers found confusing. Both the Florida and Houston programs have been overhauled to include more buy-in from teachers and to reduce the emphasis on test scores.

Whether any of these programs have a real impact remains to be seen. So far, there's scant research suggesting a relationship between teacher bonuses and student performance. "It's just too early to say," says Matthew Springer, the director of the National Center on Performance Incentives at Vanderbilt University. "There's just this belief that performance incentives have worked for the private sector, so they can be translated to the education sector. It's still up for debate."

While that debate gets a lot of attention, it remains true that 97 percent of the nation's school districts continue to use traditional single-salary pay systems. That may be about to change. Three years ago, Congress established the Teacher Incentive Fund, a Department of Education program that provides grants for incentives systems in high-need schools. The federal stimulus law included $200 million for the fund. Meanwhile, President Obama's budget for next year includes a dramatic increase in the program's budget, from $97 million to $487 million.