The short version is that they take the average raise available for all teachers (say $1000) and parcel it out into chunks (500/250/125). You can earn chunks of a raise by completing various professional development opportunities, taking classes, etc.
Frankly I understand the rationale behind the change, but it's disheartening to think that years of experience don't matter any more, and now I need to regularly engage in activities outside of contracted hours in order to earn any sort of raise. I know that PD can make me a better teacher, but I'm involved in several extra-curriculars and have a young family, so the thought of piling on even more is very daunting.
To be fair, on the up side they've proposed eliminating an upper limit on teacher compensation, so in theory a teacher could load up on enough classes, workshops, seminars, etc., that they could move above where our previous schedule ended.