Recommendations are made for a system of incentives at the state and local levels to ensure that highly capable people are attracted to and retained in the teaching profession. These recommendations include ways in which teachers can be empowered through expanding to new and more professional roles. An introduction to this report outlines issues and practices in teacher empowerment and recommends that strengthening three areas--status, knowledge, and access to decision making--will change the perception of teachers and can be the beginning of empowerment. Ten recommendations are made for a system of incentives for recruiting, empowering, and retaining capable teachers. Recommendations include: developing training programs for teacher leadership, establishing mentorship programs for new teachers, and recruiting students of color into teaching--a high priority. A variety of state and local incentives are provided to address each of the 10 recommendations. The report concludes with three legislative initiatives that elaborate on the state and local strategies or activities for implementing the recommendations. (JD)