Although the phrase "compensation parity policy" for preschool teachers may seem clear at first, the term is used in a variety of ways and refers to a range of different policies. All of these policies seek to improve the financial rewards for teaching preschool relative to teaching older children, but they differ in how far they go toward true equality. Policies vary in precisely what is covered by "parity." In this paper, the authors employ a framework that distinguishes between full compensation parity and other forms of compensation improvement, which are commonly labeled parity but are subtly different. For simplicity, they distinguish between three levels, or tiers, of compensation improvement: parity, partial parity, and sub-parity. Moreover, they identify three components of parity: salary, benefits, and payment for professional responsibilities. This paper also provides insight into the current efficacy of parity policy. In practice, a number of states have some form of parity policy, generally focused on salary. Although these states' salary parity policies differ in aims and scope, the authors find clear associations between having a state parity policy and pre-K teacher pay. [This report is part of a series of materials on pre-K compensation parity, developed in partnership between the Center for the Study of Child Care Employment (CSCCE) and the National Institute for Early Education Research (NIEER). For another report in this series, "Strategies in Pursuit of Pre-K Teacher Compensation Parity: Lessons From Seven States and Cities," see ED591985.]