Back in 2007, the city and teachers' union agreed to give bonuses to teachers whose schools show student achievement, which resulted in millions in payouts. But now the city is scrapping the program. Why? The NY Times reports, "The decision was made in light of a study that found the bonuses had no positive effect on either student performance or teachers’ attitudes toward their jobs."

All told, the city gave out $56 million in bonuses (a portion of the money came from private donations) over three years, with the most given out for the 2008-2009 school year—$31 million, perhaps due to very easy tests. The Daily News reports, "To reach a deal with the union to create the program in 2007, the city traded away a lower retirement age, allowing teachers at the time to opt for a pension at 55 instead of 60 if they contributed more to their own pensions. Education Department officials blamed the failings of the program on the original design. Bonuses were awarded based on schoolwide performance. They did not go directly to individual teachers." The United Federation of Teachers only agreed to the merit-pay/bonus plan because a committee of school administrators dictated how the bonuses would be distributed.

The study's lead researcher, USC visiting professor Julie Marsh, told the NY Times, "We did not find improvements in student achievement at any of the grade levels. A lot of the principals and teachers saw the bonuses as a recognition and reward, as icing on the cake. But it’s not necessarily something that motivated them to change." The Department of Education says it will continue looking for a merit-based reward system that works.