Although today's performance pay plans take many forms, the most commonly proposed version--in which teachers are rewarded on the basis of their students' standardized test scores--flows from flawed logic and several troublesome assumptions: that teachers lack motivation and supposedly need financial awards to give students what they need; that U.S. schools are failing compared with school systems in other parts of the world; and that measuring academic achievement--through the use of standardized testing--is all that counts. Denver, Colorado's Pay for Performance pilot resulted in a new approach to looking at performance. The new plan replaces the traditional approach to compensation with its combined focus on student academic growth; teacher knowledge and skill; professional evaluation; and market incentives, which refer to bonuses awarded to teachers working in difficult-to-serve schools or in difficult-to-staff positions. The discussion of performance pay should lead states and districts to a new consideration of the true goals of education.