This study reviewed the historical development of the teacher-compensation paradigm, discussed the current trends in alternative compensation policy strategies, and examined the teacher-compensation policies and practices in one state. The study was a mixed-methods policy analysis that used multiple linear regression, cluster analysis, and interpretative interviews to examine how 24 local school districts in a major metropolitan area of a Midwestern state develop and implement teacher-compensation policies. A significant relationship was found between the percentage of district revenue received from the state and the ratio of actual classroom teachers to students and the districts beginning teacher salary and maximum teacher salary. Interview data examined the role of the local human-resource officer in implementing policy and developing strategic practices. Local policy and practice, as shown through the human-resource officer, illustrates regional similarity and significant local variation as the districts seek to recruit, reward, and retain highly qualified teachers in an atmosphere of increasing accountability and decreasing revenue. (Author)