1. Beginning with school year 2010-11, teachers who elect to participate in the teacher choice compensation package shall be eligible for stipends based on the following criteria:

(1) Score on a value-added test instrument or instruments. Such instruments shall be defined as those which give a reliable measurement of the skills and knowledge transferred to students during the time they are in a teacher’s classroom and shall be selected by the school district from one or more of the following assessments:

(a) A list of recognized value-added instruments developed by the department of elementary and secondary education;

(b) Scores on the statewide assessments established under section 160.518 may be used for this purpose, and the department of elementary and secondary education shall develop a procedure for identifying the value added by teachers that addresses the fact that not all subjects are tested at all grade levels each year under the state assessment program;

(c) Scores on annual tests required by the federal Elementary and Secondary Education Act reauthorization of 2002 for third through eighth grade may be used as value-added instruments if found appropriate after consideration and approval by the state board of education;

(d) A district may choose an instrument after a public hearing of the district board of education on the matter, with the reasons for the selection entered upon the minutes of the meeting; provided, however, that this option shall not be available to districts after scores are established for paragraphs (a), (b), and (c) of this subdivision;

(2) Evaluations by principals or other administrators with expertise to evaluate classroom performance;

(3) Evaluations by parents and by students at their appropriate developmental level.

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Model instruments for these evaluations shall be developed or identified by the department of elementary and secondary education. Districts may use such models, may use other existing models, or may develop their own instruments. A district that develops its own instrument shall not use that instrument as its sole method of evaluation.

2. The department of elementary and secondary education shall develop criteria for determining eligibility for stipend increments, including a range of target scores on assessments for use by the districts. The test-score options listed in subdivision (1) of subsection 1 of this section shall be given higher weight than the evaluation options listed in subdivisions (2) and (3) of subsection 1 of this section. The decision of individual districts about the qualifications for each increment based on the evaluations listed in subdivisions (2) and (3) of subsection 1 of this section and for value-added instruments for which target scores have not been developed by the department of elementary and secondary education may address the district’s unique characteristics but shall require demonstrably superior performance on the part of the teacher, based primarily on improved student achievement while taking into account classroom demographics including but not limited to students’ abilities, special needs, and class size.