Differentiated Pay

In May 2017, the State Board of Education passed the new Strategic Compensation Policy 5.600 that provides greater clarity on the qualifications for differentiated pay plans pursuant to Tenn. Code Ann. §49-3-306(h), which requires districts to create and implement differentiated pay plans.

The department recognizes that a strong differentiated pay plan is one component of a comprehensive talent management strategy for ensuring that there is an effective teacher in every classroom. Tennessee Succeeds, the department’s strategic plan, outlines in two priority areas, All Means All and Educator Support, the importance of aligning data based decision making with human capital decisions.

District Plans


2017-18 Differentiated Pay Submission Process

Each district must submit the 2017-18 Differentiated Pay Plan Submission by June 30. Submission includes:

  • 2017-18 Differentiated Pay Plan
  • Implementation Update on 2016-17 Differentiated Pay Plan (based on payouts to teachers during the 2016-17 school year)
  • 2017-18 Salary Schedule (upload in excel format)

Please email Compensation.Questions@tn.gov if you have any questions.

Submission Process FAQ

We are not making any changes to our differentiated pay plan. Do we still have to fill out the template?

Yes. Please complete the differentiated pay plan template to submit your 2017-18 differentiated pay plan and salary schedule and your 2016-17 implementation update. Ideally, districts are reflecting on the implementation of the prior year’s plans and using the district Human Capital Data Reports to refine plans over +time. We encourage districts to revisit their plans each year. 

Do we need to submit any supporting documents (e.g., job descriptions for additional roles or bonus eligibility requirements)?

Supporting documents are not required, but feel free to include additional information about the district’s differentiated pay plan as needed. This reduces the chance that we will have to contact your district and request additional information which slows the approval process.

What is an alternative salary schedule?

An alternative salary schedule utilizes other components, often performance criteria, in addition to or in place of education and experience to determine base pay increases. 

We want to make changes to our plan but are not sure where to start.  What next steps can we take?

The website contains a plethora of resources, including existing districts plans from across the state. Please contact the educator talent team at Compensation.Questions@tn.gov so that we can assist your district team in developing the plan.   

My district currently has an alternative salary schedule. Do we need to submit additional documentation or get the schedule reapproved?

Yes. The strategic compensation policy approved in April 2017 establishes a three year review cycle for alternative salary schedules. Every three years, districts must re-submit approval to the board to continue with the alternative salary schedule. Additionally, districts must annually complete the differentiated pay plan template and implementation update as well as submitting a copy of your alternative salary schedule for 2017-18. If the district is making changes, please contact the educator talent team at Compensation.Questions@tn.gov so that we can determine if the change will require approval from the State Board of Education.

We would like more information about an alternative salary schedule. Where can we get this information?

The website contains a plethora of resources, including existing districts plans from across the state. Please contact the educator talent team at Compensation.Questions@tn.gov so that we can assist your district team in developing the plan.

Where do we submit our plan?

Please complete the 2017-18 differentiated pay plan template. This link includes sections to report on your 2016-17 implementation update and upload your 2017-18 salary schedule.

When can we expect to hear back about our plan’s approval?

Our goal is to notify you within three weeks of submission of your plan. However, if we have to reach out for additional or clarifying information, this may delay official approval.

District Planning Resources

Differentiated Pay Resource Guide
Webinar Recordings

To watch a webinar, follow the link below to install the free AT&T Connect software and play the recording.

Accelerated Planning Cohort Session Materials
Session #1: Compensation Design as Part of an Overall Human Capital Strategy

Whole Group Session: September 5, 2013

Session 1 Resources

Session #2: Human Capital System Costs, Impacts, and Trade-offs

Regional Sessions: October 16-18, 2013

Session 2 Resources

Session #3: Overcoming Fiscal considerations Problems of Practice

Regional Sessions: November 20-22, 2013

Session 3 Resources

TCRS Letter

Tennessee Consolidated Retirement System (TCRS) letter regarding differentiated pay and earnable compensation

Frequently Asked Questions

Is the differentiated pay plan policy a new policy?

State law [T.C.A § 49-3-306(h)], adopted by the General Assembly in 2007, already requires school districts to adopt and implement differentiated pay plans to aid in staffing hard to staff subject areas and schools and attracting and retaining highly qualified teachers. However, this law has never been enforced. Beginning in the 2014-15 school year, the department will begin to enforce this law, and the increased flexibility provided by the new salary schedule will assist districts in meeting this requirement.

Does the differentiated pay plan policy mandate pay for performance?

The differentiated pay plan policy does not mandate pay for performance. However, the revised differentiated pay plan policy prevents districts from basing across-the-board pay increases solely on years of experience or advanced degrees. Districts must differentiate teacher compensation based on at least one additional criterion. Differentiated pay criteria can include any of the following: additional roles or responsibilities, hard-to-staff schools or subject areas, and performance based on State Board approved teacher evaluation criteria.

Do base pay changes and bonuses awarded through a district’s differentiated compensation plan count toward retirement benefits through TCRS?

The department reached out to the Tennessee Consolidated Retirement System (TCRS) to get further guidance on this issue. TCRS stated that TCA § 8-34-101(14)(B)(i)(b) dealing with “Earnable Compensation” governs this issue. If the bonus is available to all teachers (even though it may be up to the teacher to qualify for the actual funds) or if the bonus is offered to a broad class of employees (such as math teachers), then the bonus should be reported to TCRS and employee/employer contributions withheld. The bonus will be included in the calculation of retirement benefits if within the average final compensation (AFC).

Who approves differentiated pay plans?

According to T.C.A § 49-3-306(h), the Tennessee Department of Education has approval authority of the differentiated pay plans.

What guidelines are used to approve differentiated pay plans?

The department approves differentiated pay plans based on the criteria listed in theState Board policy.