In 1984, Waunakee Community School District (Wisconsin) developed the Teaching Incentives Pilot Program to study teacher compensation, teacher evaluation, and staff development. The program goals were (1) to provide a system to retain and reward competent teachers, (2) to promote educational excellence through quality instructors, and (3) to link evaluations and staff development to the improvement of classroom instructors. To reach these ends, an alternative salary committee consisting of teachers, administrators, board members, and community members was formed. A subcommittee designed an evaluation instrument and model that was field tested from September through December 1985. During this time, feedback from teachers and administrative participants was encouraged. The evaluation subcommittee studied recommendations and field test data and approved them for inclusion in the proposal. Meanwhile, the salary subcommittee worked on monetary incentives to encourage professionalism, promote educational excellence, and reward teachers for demonstrated competence. In March 1986, the entire committee approved the proposals summarized in this report as final recommendations for meeting the original pilot program's goals. Sections 2 through 9 outline the elements of the proposal, including the general program, career ladder and salary structures, teacher performance evaluation model, evaluation process guidelines, performance criteria, and formal and summative evaluation reports. The proposal will work only if constantly monitored, assessed, and modified. (MLH)