Replacing the Principal of a School on the Wrong Side of a Passing Grade—Does It Work?

Most U.S. public schools receive a rating or grade that is based largely on test scores. The goal of these rating systems is to provide incentives for improving school effectiveness. However, there can be unintended consequences when the ratings do not accurately reflect differences in school effectiveness.

Julie Berry Cullen, Eric Hanushek, Gregory Phelan, and Steven Rivkin studied the impact of Texas elementary school ratings on the careers of principals. Those leading schools barely rated failing are 38 percentage points less likely to continue in their positions than those in schools barely rated acceptable. The fact that principals with nearly identical effectiveness have such different outcomes reflects an information failure, potentially arising from pressure from the less-informed public, school-board members, or other stakeholders.

These ratings effects could improve school quality if ineffective school leaders who depart are replaced by more effective leaders. However, there is no evidence that replacing principals in schools that fall below the cutoff improves the quality of school leadership and raises student achievement. In fact, since the rating system relies on test score pass rates rather than achievement growth, there is little relationship between a school’s rating and its principal’s effectiveness in raising achievement.

These findings underscore the importance of school accountability design. Rivkin: “A system based on pass rates or achievement levels can harm educators in schools serving disadvantaged populations that make a failing rating and a career hit more likely, independent of the quality of the school. This is not only unfair, but it hinders efforts to attract and retain effective leaders where they are most needed.”

Read the study in the Journal of Human Resources: “Performance Information and Personnel Decisions in the Public Sector: The Case of School Principals” by Julie Berry Cullen, Eric A. Hanushek, Gregory Phelan, and Steven G. Rivkin.

Julie Berry Cullen is professor of economics at University of California, San Diego and research associate at NBER. Eric A. Hanushek is Paul and Jean Hanna Senior Fellow in Education, Hoover Institution, Stanford University; senior research fellow at University of Texas at Dallas; and research associate at NBER. Gregory Phelan is assistant professor of economics at Kennesaw State University. Steven G. Rivkin is professor of economics at University of Illinois at Chicago, senior research fellow at University of Texas at Dallas, and research associate at NBER.