New York schools chiefs stand to pocket bonuses of up to $40,000 (pound;26,000) if student test scores substantially improve this year - and next in line may be the city’s teachers - as corporate-style management tactics sweep US education authorities.

Local businesses clubbed together to put up a $600,000 bounty for the pilot project - the latest shake-up to New York’s state school system since Mayor Michael Bloomberg assumed direct control over them in June, vowing to turn around flagging performance.

“Accountability for improving student performance must start at the top,” said schools chancellor Joel Klein. “Performance-based pay should work as well in the public sector as it does in the private.”

Pupils’ marks in standardised English and maths exams must improve by at least 20 per cent and drop-out rates fall by one-fifth for school district managers to claim the cash rewards.

The American Federation of Teachers, which represents New York’s 80,000 teaching staff, extended a frosty reception to the scheme, noting in a statement that the managers already earn $152,000 a year.

Performance-based pay has a patchy track record across America, experts said. Programmes in Arkansas and Kentucky were plagued by grade inflation.

Schemes tend to work best where bonuses are linked to clear-cut goals, said Kathy Christie, of the Education Commission of the States, which collects data on US-wide education policies. But they frequently get bogged down in bureaucracy and staff squabbling.

Teachers’ merit pay is hard to pin down, she argued, as it cuts across experience and qualification-based salary scales and entails collective bargaining with unions.

This year New York doled out $13.5m to principals for better 2000-01 exam results. But unions complained that high-performing schools with less scope for improvement lose out to poorly-performing schools showing modest gains.