Directs the State Board of Education to establish a pilot program authorizing the Charlotte-Mecklenburg Schools (CMS) to develop and implement alternative salary plans for teachers and administrators to improve student performance and teacher effectiveness through a performance-based compensation system. Specifies that CMS will receive funds for 2011-12 and for subsequent school years based on the 2011-12 allocation to develop and implement the compensation system. Requires the performance-based pay schedule: (1) align annual salary adjustments for teachers and administrators with documented student growth in learning, and (2) evaluate teachers and administrators at the local level to measure student academic growth based on an evaluation system including specified components. Requires that CMS ensure a part of the teacher evaluation will be based on data and indicators of student learning growth assessed as specified. Directs CMS to annually submit to the Department of Public Instruction an evaluation of the performance-based compensation system, including aggregate performance results of teachers and administrators. Directs the State Board of Education to grant waivers of laws, rules, policies, procedures, and practices to enable CMS to implement and sustain the compensation system, and to allow CMS flexibility in allocating mandated state increases to employees.