After firing nearly 40 percent of the teachers at three under-performing schools, Houston's superintendent Abelardo Saavedra is turning to the carrot of merit pay to recruit and keep good teachers.

Although last year Houston took a rather Marxist view of merit pay by giving 80 percent of its teachers a piddling bonus of $440, next year Saavedra will be modifying the program, giving a smaller number of teachers the opportunity to earn something a bit more meaningful: up to $3,000 through combined individual and school-wide bonuses. Teachers who teach subjects tested on the Texas state test will be eligible for $1,500 bonuses if their students' scores improve substantially. There's also the lure of an additional bonus for all teachers of $500 for each subject area in which schools' test scores improve--provided the teachers showed up to work on a regular basis.

Making merit pay a year-round incentive, this summer Saavedra has also hired teachers to tutor high school seniors who failed the state test, giving these teachers a $100 bonus for every student they help to pass the test.