Modern personnel economics emphasizes the importance of strategic, integrated compensation policy in an organization. In this paper I review key features of the compensation system for public school teachers. The rigidities and inefficiencies that arise from single salary schedules and other features of the compensation regime, and their interaction, argue for broad definition of performance-based pay reform. National data on elements of compensation reform in K-12 are reviewed. (Contains 16 figures, 4 tables, and 6 notes.) [This paper was produced in co operation with Rand Corporation, and University of Missouri-Columbia. For the research brief summarizing this working paper, see ED510481.]