Principals of public schools in Hartford, Connecticut, will share a pool of $175,000 (Pounds 116,000) if they can raise the average student scores on standardised tests by three percentage points or more.
"We see this as a way of getting our administrators to focus on what we think is the most important goal, and that is to increase student achievement, " said Ted Carroll, vice-president of the citizen school board. "It's also a way for us to begin to discern those administrators who are achieving excellence from those who are not."
Principals and teachers are offended by the idea, even though they stand to earn as much as $1,500 each. They tried, unsuccessfully, to block the scheme.
"We feel it's insulting to suggest that we would do something for more money that we aren't already doing out of pride in our jobs," said Baxter Atkinson, principal of the Mark Twain elementary school and president of the Hartford Principals and Supervisors Association.
The district ranks last in every category of the Connecticut Mastery Test, which measures student achievement. In some Hartford schools, no student has scored near the state targets over the past decade.
Teachers and administrators point out that 96 per cent of the city's 24, 000 students are minorities, most of them Hispanic and many from single-parent families with low incomes.
"Give me a million dollars and I won't be able to raise the test scores any better than we are doing already," said Cheryl Daniels, a sixth-grade (Year 8) teacher and president of the Hartford Federation of Teachers.
"We can't control the variables. We can't control drug problems, the problems of single-parent families or housing problems." She and Mr Atkinson insisted that the bonus money would have been better spent on equipment and teacher training.
Mr Carroll called such protests ludicrous: "They talk about poverty, broken homes, poor nutrition. That's all true, but we also believe that through effective teaching and effective leadership, it's possible to overcome those barriers. And if teachers and principals don't make a difference, who does?"