Schools spend billions of dollars annually on products and services, including everything from staplers and textbooks to teacher coaching and training. Does it help students learn more? Some educational materials end up stuck in a closet. A lot of software is obsolete. But central office bureaucrats frequently renew contracts with external vendors, regardless of usage or efficiency.
One idea for smarter education spending is for schools to enter into smarter contracts. Here, part of the payment depends on whether students use the service and learn more. This is called outcome-based contracting and is a way to share risk between the buyer (school) and seller (vendor). Outcome-based contracts are most common in healthcare. For example, health insurers may pay drug companies more if a drug actually improves people's health and less if it does not.
The idea is relatively new in education, but many schools tried a different version in the 2010s: evaluating and paying teachers based on how much their students' test scores improved. Teachers did not like this and enthusiasm for this system of teacher accountability waned. Then, in 2020, Harvard University's Center for Educational Policy Research announced that it would test the feasibility of paying tutoring companies based on how much students' test scores improved.
This initiative is especially timely during the pandemic. The federal government will eventually provide about $190 billion to reopen schools and help students who fell behind when schools were closed. Tutoring has become a leading solution for academic recovery, with schools contracting with outside companies to provide tutors. Many educators are concerned that billions of dollars could be wasted on low-quality teachers that benefit no one. Can a school insist that the tutoring company pay a portion of the payment based on whether the student's performance improves?
The Harvard Center recruited a handful of school districts that wanted to try outcomes-based contracting. Researchers and districts shared ideas about how to set performance goals. How much should we expect students’ achievement to improve after a few months of tutoring? To what extent should contracts be guaranteed to suppliers to provide tutors, and how much should they be conditional on student performance?
The first hurdle was whether the tutoring company would be willing to provide the service without knowing exactly how much they would be paid. The district sent a request for proposals to online tutoring companies. Tutoring companies bid and terms varied. An online tutoring company agreed that 40% of its $1.2 million contract with Duval County Public Schools in Jacksonville, Florida, would be contingent on student performance. Another online tutoring company signed a contract with Ector County Schools in the Odessa, Texas area that stipulated the company would have to accept fines if children's scores dropped.
Midway through the pilot, the outcomes-based contracting initiative moved from the Harvard Center to another nonprofit, the Southern Education Foundation, and we recently learned from Jasmine Walker, senior manager there, how the first group of contracts was going. Walker said she experienced this firsthand, because until fall 2023 she served as director of mathematics for Duval County Schools in Florida, where she oversaw outcomes-based private education contracts.
Here are some lessons she learned:
Planning takes a lot of time
Creating an outcomes-based contract requires analyzing years of historical test data and documenting how much achievement has typically increased for students who need tutoring. Educators must then decide, based on research evidence on private tutoring, how much they can reasonably expect student achievement to improve after 12 weeks or more.
Incomplete data was a common problem
The first school districts in the pilot group began their outcomes-based contracts in fall 2021. During the pilot, school leadership changed, layoffs occurred, and leaders of the tutoring initiative left the district. There was no data on whether the private tutoring helped the 1,000 students who received it because there was no one in the district's central office to track it. Half of the students attended 70% of the tutoring sessions. Half didn't. The test scores of nearly two-thirds of students who received tutoring increased between the beginning and end of the tutoring program. However, these students also took regular math classes every day and likely achieved some improvement anyway.
Decreased number of tutoring students due to delays in signing contracts
Walker said the two districts were unable to begin tutoring children until January 2023, rather than fall 2022 as originally planned. That's because it took so long to iron out contract details and get approval within the district. Many schools did not want to wait and began other interventions to help students in need faster. Naturally, the school did not want to exclude these students from other interventions during the school year.
These delays have had a major impact on Duval County. Only 451 people received tutoring instead of the expected 1,200. The number of students has declined, forcing Walker to recalculate Duval's results-based contract. Instead of a $1.2 million contract that included $480,000 based on her student performance, she reduced it to $464,533, with $162,363 contingent on it. Tutored students achieved 53% of regional growth and proficiency goals, resulting in a total payment of $393,220 to the tutoring company. This is much less than the company originally expected. However, the average payment per student was $872, consistent with the original terms of $600 to $1,000 per student.
The conclusion is still unclear
What we don’t know from these case studies is whether similar students who did not receive tutoring achieved similar growth and mastery. Maybe all the other things teachers were doing made a difference. For example, in Duval County, math proficiency increased from 28% of students to 46% of students. Walker believes that outcomes-based private education contracts were “one means” among many.
It is unclear whether outcome-based contracts are a way for schools to save money. This type of intensive tutoring (more than three times a week during the school day) is new and the district did not previously have a pre-pandemic tutoring contract for comparison. But generally, if all student goals are met, companies can make more money through outcome-based contracts than they would otherwise, Walker said.
“It’s not about saving money,” Walker said. “What we want is for our students to achieve. It doesn't matter whether the students spend the full contract amount if they actually achieved the results. Because in the past, they still paid the fees and they didn’t get the results.”
The biggest change to outcomes-based contracting is partnerships with providers, Walker said. One contractor monitored student attendance during tutoring sessions and called to investigate when attendance was lacking. Students were compensated for attending tutoring sessions and the tutoring companies even paid for them. “Kids love Takis,” Walker said.
Advice for Schools
Walker offers two pieces of advice to schools considering outcomes-based contracts. One of them is to make the contingency reserve at least 40% of the contract amount. Smaller incentives may not motivate suppliers. For the second results-based contract in Duval County, Walker increased the contingency amount to half the contract amount. To get this, tutoring companies need the students they tutor to achieve growth and proficiency goals. This tutoring currently takes place during the 2023-24 school year. Mid-year results show pupils have exceeded expectations, but full year results are not yet available.
More importantly, Walker says the biggest lesson he learned was to involve teachers, parents and students early in the contract negotiation process. She says teacher “buy-in” is important because the classroom teacher ensures that tutoring actually takes place. Otherwise, outcomes-based contracts can feel like “just another thing” the central office adds to teachers’ workloads.
Walker also said she wishes more time had been spent educating parents and students about the importance of school attendance and tutoring sessions. “It’s important that everyone understands the mission,” Walker said.
Innovation can be unstable, especially in the beginning. Now the Southern Education Foundation is working to expand its outcomes-based contracting initiative nationally. A second group of four school districts began an outcomes-based contract for tutoring in the 2023-24 school year. Walker said rate cards and record keeping are improving since the first pilot round, which took place amid the stress and chaos of the pandemic.
The foundation is also seeking to expand the use of outcomes-based contracts beyond tutoring to include educational technology and software. Nine school districts plan to begin outcomes-based contracts for educational technology this fall. Her next dream is to design outcomes-based contracts for curriculum and teacher training. I will watch.
This story Outcome-Based Contracting Jill Barshay wrote and produced. Hechinger Reportis a nonprofit, independent media outlet focused on inequality and innovation in education. join proving point and others Hechinger Newsletter.