What standards should the NC State Superintendent of Public Instruction apply when approving or rejecting local school districts' differentiated pay plans, and can those plans pay teachers extra just for joining a particular professional organization or for years of experience already covered by the state salary schedule?

Plain-English summary

John Kinlaw, on behalf of the State Superintendent of Public Instruction, asked the AG for general standards to apply when approving or disapproving differentiated pay plans local school districts submitted under G.S. § 115C-238.6(a), and for the AG's view on certain specific provisions in proposed plans. Senior Deputy AG Edwin M. Speas, Jr. supplied a three-part framework and then walked through four problem provisions.

The three-part framework. The statutes did not list specific approval criteria, so the AG inferred them from the broader statutory structure. The State Superintendent's review should test each plan against (1) whether it was adopted through the procedures required by G.S. § 115C-238.3(c), (2) whether it is based on one or more of the five types of plans listed in G.S. § 115C-238.4(a) or a modification of those types, and (3) whether it is reasonably and rationally related to improved student performance. The last criterion ties back to G.S. § 115C-238.1, which describes the primary goal of the Performance-based Accountability Program (of which differentiated pay is a part) as "to improve student performance."

The four specific provisions. The AG assumed each had cleared the procedure and statutory-basis prongs, and tested them against the rational-relationship prong.

First, plans paying extra for mere membership in a professional organization. The AG framed the test: is paying for membership alone (as opposed to paying for membership coupled with participation in educational programs the organization offers) reasonably related to improved student performance? The AG did not categorically forbid such provisions but signaled that mere-membership pay would face skeptical review.

Second, plans paying extra only for membership in one specified professional organization. Here the AG was more directive. Local officials may not arbitrarily favor one professional organization over another for differentiated-pay purposes. Citing State v. Mems, 281 N.C. 658 (1972) (where an entity is singled out for special treatment, that action must have a reasonable and rational basis), the AG recommended that the State Superintendent require local officials to demonstrate that the specified organization is the only one that can contribute to an employee's professional growth before approving such a provision. In practice, that is a hard showing.

Third, plans paying extra based on years of experience. Experience is already one of the two principal factors in the State Salary Schedule. The AG read the legislative authorization for local differentiated pay as generally intending plans to compensate for factors not already accounted for in the state schedule (such as contributions to improved student performance). Provisions paying for experience should account for experience in a substantially different way from how the state schedule does, and there should be a relationship between that type of experience and improved student performance. Otherwise the provision is just stacking ordinary experience pay on top of itself.

Fourth, plans that disqualified teachers not employed in the prior school year. The AG was uncertain why employment status in the prior year would matter to differentiated-pay eligibility in a current year. Unless local officials could demonstrate a rational basis for denying a teacher the opportunity to earn differentiated pay solely because the teacher was not employed in the prior year, the AG recommended disapproval.

The opinion is a useful early-1990s articulation of how the State should ride herd on local pay-plan creativity: the State Superintendent is neither a rubber stamp nor a content moderator, but a gatekeeper applying procedure, statutory-basis, and rational-relationship tests.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Performance-based Accountability Program and the differentiated pay framework in G.S. § 115C-238.1 through -238.6 have been repealed, amended, and restructured since 1993. NC's compensation framework for public school teachers has gone through several major redesigns, including the ABCs accountability model, performance pay experiments, and post-2010 statutory changes. The State Salary Schedule itself has been heavily restructured. Anyone with a current question about local supplemental or performance pay should consult the current Chapter 115C provisions, current State Board of Education rules, and counsel familiar with NC public-education compensation law.

Common questions

Q: Why did the AG focus so heavily on the "rational relationship to improved student performance" test?
A: Because the statute did not provide any other yardstick. G.S. § 115C-238.1 declared the purpose of the Performance-based Accountability Program (and differentiated pay within it) was to improve student performance. Without specific approval criteria in the statute, the AG turned to the stated purpose and used it as the substantive test. Plans that paid for things unrelated to improving student performance would not satisfy that purpose.

Q: Is paying teachers for joining a particular union or professional association legal under this framework?
A: Only if local officials can show the rational basis required. The AG did not flatly ban such provisions but recommended skeptical review, especially when the plan singled out one organization. State v. Mems supports applying rational-basis scrutiny when an entity gets special treatment. In practice, a plan that rewards membership in a specific organization with no showing why that organization is uniquely positioned to improve student performance is hard to defend.

Q: Why does paying extra for "years of experience" raise a problem?
A: Because the State Salary Schedule already accounts for years of experience. If local differentiated pay just adds an experience-based bump, the plan duplicates what the state framework already does. The AG read the legislature's intent as compensating for factors not already in the state schedule. A local plan that captures a substantively different aspect of experience (mentorship, hard-to-staff school assignment, advanced subject-matter expertise that grows with experience) might fare better than one that just stacks years.

Q: Is the "must have been employed last year" eligibility rule ever defensible?
A: The AG saw no obvious reason but did not flatly forbid it. Local officials could try to articulate a rational basis (a continuous-employment policy goal, a measurement-window constraint, a budgetary constraint). The opinion's posture is that without such a showing, the State Superintendent should disapprove.

Q: What were the "five types of pay plans" listed in G.S. § 115C-238.4(a)?
A: The opinion does not enumerate them, but the statute at the time listed types like performance-based pay, knowledge-and-skills-based pay, mentor pay, hard-to-staff school assignment pay, and similar models. The AG required local plans to be "based on" one or more of those types or some modification of them.

Q: Did this opinion bind local school districts?
A: It informed the State Superintendent's approval decisions. Since the State Superintendent approves plans under G.S. § 115C-238.6(a), the AG's three-part framework effectively shaped what local plans had to look like to win approval. Local districts that disagreed with disapproval could litigate, but the AG's standards became the operating baseline.

Background and statutory framework

The Performance-based Accountability Program and its differentiated-pay component were 1990s tools NC used to push school districts toward outcome-based compensation. The legislative theory was that traditional salary schedules, based mainly on credentials and years of service, did not reward the behaviors and outcomes that actually improve student learning. Differentiated pay was supposed to let districts target compensation toward measurable improvement levers: instruction in shortage areas, performance bonuses tied to student achievement, mentor and lead-teacher roles, and similar.

The statute placed approval authority in the State Superintendent (G.S. § 115C-238.6(a)) and gave local school officials discretion to design plans within the five-type framework. What the statute did not do was list approval criteria. The AG's 1993 opinion fills that gap with the three-part framework, then applies it to specific provisions to give the State Superintendent operational guidance.

The opinion is also a study in how a deferential reviewer should still draw lines. The AG did not impose substantive content standards. It deferred to the legislature's choice of the five types, deferred to local procedural compliance, and confined substantive review to the legislatively-stated purpose: improved student performance. Within that envelope, the AG was willing to disapprove provisions (like single-organization-membership pay and prior-year-employment carve-outs) that could not be defended in rational-relationship terms.

Citations

• N.C.G.S. § 115C-238.1 (primary goal of Performance-based Accountability Program is to improve student performance)
• N.C.G.S. § 115C-238.3 (local school officials' authority to prepare differentiated pay plans)
• N.C.G.S. § 115C-238.3(c) (procedures local school officials must follow in developing plans)
• N.C.G.S. § 115C-238.4 (five types of pay plans)
• N.C.G.S. § 115C-238.4(a) (the enumerated five types, or modifications)
• N.C.G.S. § 115C-238.6 (State Superintendent approval)
• N.C.G.S. § 115C-238.6(a) (specific approval authority)
• State v. Mems, 281 N.C. 658, 190 S.E.2d 164 (1972) (NC Supreme Court; where an entity is singled out for special treatment, that action must have a reasonable and rational basis)

Source

• Landing page: https://ncdoj.gov/opinions/approval-of-differentiated-pay-plans-by-state-superintendent-of-public-instruction/

Original opinion text

May 13, 1993

John Kinlaw Department of Public Instruction Education Building 301 N. Wilmington Street Raleigh, N.C. 27601-2825

RE: Advisory Opinion; G.S. §§ 115C-238.3, .4 and .6 Approval of Differentiated Pay Plans by State Superintendent of Public Instruction

Dear John:

Local school officials have prepared differentiated pay plans for local school employees under authority of G.S. §§ 115C-238.3 and .4 and submitted those plans to the State Superintendent of Public Instruction for his approval pursuant to G.S. § 115C-238.6(a). On behalf of the State Superintendent, you have asked for our advise regarding the standards the State Superintendent should apply generally in approving or disapproving these plans, and regarding certain specific provisions of plans actually proposed by local school officials.

The statutes do not prescribe any specific criteria the State Superintendent is to apply in approving or disapproving differentiated pay plans. In the absence of specified criteria, we must assume the General Assembly intended the State Superintendent to review proposed plans to assure that the plans comply with obligations imposed on local officials in developing plans and to assure that those plans are consistent with the General Assembly's purpose in authorizing differentiated pay. Essentially two obligations are imposed on local school officials in developing differentiated pay plans: (1) to develop the plans in accordance with the procedures prescribed by G.S. § 115C-238.3(c); and (2) to "base" plans on one or more of the five types of pay plans listed in G.S. § 115C-238.4(a), or a modification of those types of plans. The purpose differentiated pay plans must be designed to achieve has been prescribed by the General Assembly. That purpose is "to improve student performance." G.S. § 115C-238.1 (describing the "primary goal" of the Performance-based Accountability Program, of which differentiated pay plans are a part, as the "improve[ment] of student performance."). Thus, in deciding whether to approve or disapprove a differentiated pay plan, the State Superintendent should apply three criteria: (1) whether the plan was adopted in accordance with the procedures required by G.S. § 115C-238.3(c); (2) whether the plan is based on one or more of the types of plans listed in G.S. § 115C-238.4(a) or, some modification thereof; and (3) whether the plan is reasonably and rationally related to improved student performance.

With this background, we turn to the specific provisions about which you have sought our advice. In each instance, we assume that the provisions were developed in accordance with required procedures and that the provisions are based on one or more of the types of plans listed in G.S. § 115C-238.4(a).

First, you have asked about provisions of plans providing that employees, at least in part, may earn differentiated pay based on membership in professional organizations. The issue raised by such provisions is whether they are reasonably and rationally related to improved student performance. In deciding whether to approve such a provision, the State Superintendent should determine whether paying employees for mere membership in professional organizations (as contrasted, for example, with rewarding employees for membership in professional organizations related to their duties and participating in educational programs offered by those organizations) is reasonably related to improvement in student performance.

Second, you have asked about provisions providing that employees, at least in part, may earn differentiated pay based on membership in a specified professional organization. In our opinion, local school officials may not arbitrarily favor membership in one professional organization over membership in another for purposes of awarding differentiated pay. See State v. Mems, 281 N.C. 658, 190 S.E.2d 164 (1972) (where an entity is singled out for special treatment, that action must have a reasonable and rational basis.). There is no obvious rational basis for singling out membership in one professional organization, to the exclusion of all others, as a basis for awarding differentiated pay. Before the State Superintendent approves such provisions, we recommend he require local school officials to demonstrate that a specified organization is the only professional organization that can contribute to a employees' professional growth.

Third, you have asked about provisions providing for the payment of differentiated pay based on years of experience. Experience is one of the two principal factors that determine the regular pay of employees under the current State Salary Schedule. In authorizing local school officials to develop differentiated pay plans to provide compensation in addition to that provided by the State Salary Schedule, we believe the Legislature generally intended that those plans base differentiated pay on factors other than those already accounted for in the State Salary Schedule, e.g., contributions to improved student performance. Thus, in deciding whether to approve such provisions, we recommend that the State Superintendent determine whether such provisions account for experience in a substantially different manner than experience is already accounted for under the State Salary Schedule, and that there is a relationship between experience of that type and improved student performance.

Fourth, you have asked about provisions that make employees not employed during the 1992-93 school year ineligible for the opportunity to earn differentiated pay for their work during the 1993-94 school year. We are unsure as to the basis for denying an employee the opportunity to earn differentiated pay solely because that employee was not employed the preceding year. Therefore, unless local school officials can demonstrate some rational basis for denying employees the opportunity to earn differentiated pay in the 1993-94 school year solely because they were not employed during the 1992-93 school year, we recommend that the State Superintendent disapprove such provisions.

Edwin M. Speas, Jr.
Senior Deputy Attorney General