This bimonthly newsletter provides information about the progress of the Honor States Grant Program, a governor-led effort to improve college--and work-ready graduation rates. This issue explores efforts by governors and state policymakers to experiment with alternative compensation policies that can improve teacher quality. Compensation policies for three states that move beyond the traditional salary schedule are highlighted. Suggested resources for policymakers are included. Contents include: (1) Facts at a Glance; (2) Reconsidering Human Capital Policies: Minnesota, Texas, and Florida Launch Compensation Reforms to Improve Teacher Quality; (3) A Bird's-Eye View: Assessing Compensation Models Across the 50 States; (4) Teachers Lead the Call to Action: 18 Distinguished Educators Propose 21st Century Pay Reform; (5) Federal Update: Fiscal Year 2008 Education Funding; (6) Resource Box; (7) Foundation Corner: The Milken Family Foundation, The Teaching Commission, and The Joyce Foundation; and (8) What's Next: How States Can Reform Compensation Policies to Improve Teacher Quality and Raise Student Achievement.