INDIANAPOLIS (WBBM/CBS) — Indiana teachers would have their pay linked to student performance under a proposal that cleared a legislative hearing.

As WBBM Newsradio 780’s Lisa Fielding reports, the proposed bill would require teachers to be evaluated each year. Teachers would be ranked into one of four categories.

LISTEN: Newsradio 780’s Lisa Fielding reports

Local school districts would also create their own evaluation systems, but would have to include objective measures of student achievement.

Teachers whose evaluation falls into the lowest two categories would not receive any automatic pay raises.

Supporters say the bill aims to recognize and reward outstanding teachers.

But critics say test scores should not play such a heavy role in teacher evaluations.

Separately, school districts in Indiana could see major shifts in funding but overall education funding would remain at current levels under a state budget plan presented Thursday by Republicans who control the Indiana House.

House Ways and Means Committee Chairman Rep. Jeff Espich of Uniondale says the budget’s school funding formula would give increases to districts currently getting less per-pupil funding, while districts with bigger per-student amounts would lose cash. Education officials say the change would mean serious cuts of millions of dollars to some districts, including some in urban and rural areas.

The House budget includes several changes from Republican Gov. Mitch Daniels’ proposal, including the restoration of a proposed 3 percent cut to higher education. The House budget also includes limits on college tuition increases that would affect Indiana universities.

(TM and © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS Radio and EYE Logo TM and Copyright 2010 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press contributed to this report.)

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