This report presents findings stemming from the first-year evaluation of the Texas Educator Excellence Grant (TEEG) program, one of several statewide performance incentive programs in Texas. In June 2006, Governor Perry and the 79th Texas Legislature created the Governor's Educator Excellence Award Program, one component of which is the TEEG program. TEEG Cycle 1 provided approximately $100 million in noncompetitive, 12-month grants to over 1,100 public schools. Schools eligible to participate had records of academic success and high percentages of economically disadvantaged students. More specifically, this report provides an overview of TEEG school selection criteria, program design features of schools' locally-designed performance incentive plans, teachers' attitudes and behaviors in TEEG schools, and interviews with schools that decided not to participate in TEEG. Preliminary findings during the first year of TEEG implementation indicate that many of the traditional arguments against performance incentive policies, namely the negative impact on teacher collaboration and instructional quality, were not reported by teachers in Cycle 1 schools. While these findings do offer insight into the early experiences of educators, authors caution that it is too soon to attribute those findings to the TEEG program itself. The following are appended: (1) NAEP [National Assessment of Educational Progress] Analyses by Student Subgroups; (2) Overview of State Performance Incentive Programs; (3) Executive, Legislative, and Regulatory Division Interviewees; (4) TEEG Selection Process, Further Analyses; (5) Glossary of TEEG Taxonomy Components; (6) Overview of TEEG Taxonomy Findings; (7) Spring 2007 TEEG Teacher Surveys; and (8) Declining TEEG Interview Protocol. (Contains 60 tables, 11 figures, and 55 footnotes.)