It's timely for me because my school is in the process of applying for a grant to start using Q-Comp, Minnesota's version of merit pay. Governor Pawlenty is a huge fan and has made a pool of funds available, at a time when the state is cutting funding left and right to try to balance the budget.
We need to balance our budget too -- we can't be squeamish about things like principles.
But actually, we've found a way to do merit pay that sort of fits with our mission. Only 10% of the pay increase is tied to test scores, and that applies to all teachers, not to any teacher in particular - so it gives us an incentive to work together. The rest is tied to projects that teachers come up with at the beginning of the year.
For example, as a social studies teacher my project might be to design and run a class that utilizes oral history. I write up the proposal. If I'm successful in my stated goals, I get the extra pay bump. Q-Comp even provides some funds for materials for my project (such as tape recorders, etc.).
Teachers at our school who experienced Q-Comp in traditional districts and hated it are excited about doing it this way. It's cooperative rather than competitive. I'll keep you posted on whether we get the funding.