"Merit" is disgusting. It's extremely difficult to teach in urban areas. It's not the teachers themselves, but the 'culture' and lack of resources. Keep the Feds out! Public education should be as local as humanly possible.
Yeah, it's completely ridiculous to just blindly tie student performance to teacher pay, because most of the time the teacher's effectiveness can't translate into Straight-A's for the students. I'm not sure what the motivation for pressing what seems like a fair policy but is actually completely unfair and not at all thought-out, but I'd wager it's yet another effort to bust up union influence of some sort.
"Merit pay" is ridiculous precisely because of what you just said, in many environments it's a complete red-herring to blame the teacher. It comes from a lack of an ability to think this issue out thoroughly and a lack of courage to face deeper societal issues at work here. It's like blaming a Driver's Ed teacher if a student has a car accident a few months down the road.
If a school is underfunded, merit pay unfairly hurts teachers. If a school is in a poor environment or needs repaired, merit pay unfairly hurts teachers. If a school lacks the necessary resources to provide for their students, merit pay unfairly hurts the teachers. If students simply decide not to listen or don't do the work because they don't care, merit pay unfairly hurts teachers.
It's a scape-goat game, and that's why it's ridiculous. Merit pay only works if all schools are properly funded, resourced, and all the students actually pay attention and come from decent households. So basically, it's a "works well in a perfect world" policy. Does that mean we shouldn't fire "bad" teachers? No, but it's really hard to judge what makes a teacher "bad" in the first place, let alone making some ignorant connection to teacher performance and grades. What we should be doing is rebuilding schools and giving existing schools the proper resources, and actually paying teachers more, instead of trying to find ways to avoid the real issue.