One idea for smarter education spending is for schools to sign smarter contracts, where part of the payment is contingent upon whether students use the services and learn more. It’s called outcomes-based contracting and is a way of sharing risk between buyer (the school) and seller (the vendor). Outcomes-based contracting is most common in healthcare. For example, a health insurer might pay a pharmaceutical company more for a drug if it actually improves people’s health, and less if it doesn’t.
Although the idea is relatively new in education, many schools tried a different version of it – evaluating and paying teachers based on how much their students’ test scores improved – in the 2010s. Teachers didn’t like it, and enthusiasm for these teacher accountability schemes waned. Then, in 2020, Harvard University’s Center for Education Policy Research announced that it was going to test the feasibility of paying tutoring companies by how much students’ test scores improved.
The initiative was particularly timely in the wake of the pandemic. The federal government would eventually give schools almost $190 billion to reopen and to help students who fell behind when schools were closed. Tutoring became a leading solution for academic recovery, and schools contracted with outside companies to provide tutors. Many educators worried that billions could be wasted on low-quality tutors who didn’t help anyone. Could schools insist that tutoring companies make part of their payment contingent upon whether student achievement increased?
The Harvard center recruited a handful of school districts who wanted to try an outcomes-based contract. The researchers and districts shared ideas on how to set performance targets. How much should they expect student achievement to grow from a few months of tutoring? How much of the contract should be guaranteed to the vendor for delivering tutors, and how much should be contingent on student performance?
The first hurdle was whether tutoring companies would be willing to offer services without knowing exactly how much they would be paid. School districts sent out requests for proposals from online tutoring companies. Tutoring companies bid and the terms varied. One online tutoring company agreed that 40% of a $1.2 million contract with the Duval County Public Schools in Jacksonville, Florida, would be contingent upon student performance. Another online tutoring company signed a contract with Ector County schools in the Odessa, Texas, region that specified that the company had to accept a penalty if kids’ scores declined.
In the middle of the pilot, the outcomes-based contracting initiative moved from the Harvard center to the Southern Education Foundation, another nonprofit, and I recently learned how the first group of contracts panned out from Jasmine Walker, a senior manager there. Walker had a first-hand view because until the fall of 2023, she was the director of mathematics in Florida’s Duval County schools, where she oversaw the outcomes-based contract on tutoring.
Here are some lessons she learned.
Planning is time-consuming
Drawing up an outcomes-based contract requires analyzing years of historical testing data, and documenting how much achievement has typically grown for the students who need tutoring. Then, educators have to decide – based on the research evidence for tutoring – how much they could reasonably hope student achievement to grow after 12 weeks or more.
Incomplete data was a common problem
The first school district in the pilot group launched its outcomes-based contract in the fall of 2021. In the middle of the pilot, school leadership changed, layoffs hit, and the leaders of the tutoring initiative left the district. With no one in the district’s central office left to track it, there was no data on whether tutoring helped the 1,000 students who received it. Half the students attended 70% of the tutoring sessions. Half didn’t. Test scores for almost two-thirds of the tutored students increased between the start and the end of the tutoring program. But these students also had regular math classes each day and they likely would have posted some achievement gains anyway.
Delays in settling contracts led to fewer tutored students
Walker said two school districts weren’t able to start tutoring children until January 2023, instead of the fall of 2022 as originally planned, because it took so long to iron out contract details and obtain approvals inside the districts. Many schools didn’t want to wait and launched other interventions to help needy students sooner. Understandably, schools didn’t want to yank these students away from those other interventions midyear.
That delay had big consequences in Duval County. Only 451 students received tutoring instead of a projected 1,200. Fewer students forced Walker to recalculate Duval’s outcomes-based contract. Instead of a $1.2 million contract with $480,000 of it contingent on student outcomes, she downsized it to $464,533 with $162,363 contingent. The tutored students hit 53% of the district’s growth and proficiency goals, leading to a total payout of $393,220 to the tutoring company – far less than the company had originally anticipated. But the average per-student payout of $872 was in line with the original terms of between $600 and $1,000 per student.
The bottom line is still uncertain
What we don’t know from any of these case studies is whether similar students who didn’t receive tutoring also made similar growth and proficiency gains. Maybe it’s all the other things that teachers were doing that made the difference. In Duval County, for example, proficiency rates in math rose from 28% of students to 46% of students. Walker believes that outcomes-based contracting for tutoring was “one lever” of many.
It’s unclear if outcomes-based contracting is a way for schools to save money. This kind of intensive tutoring – three times a week or more during the school day – is new and the school districts didn’t have previous pre-pandemic tutoring contracts for comparison. But generally, if all the student goals are met, companies stand to earn more in an outcomes-based contract than they would have otherwise, Walker said.
“It’s not really about saving money,” said Walker. “What we want is for students to achieve. I don’t care if I spent the whole contract amount if the students actually met the outcomes, because in the past, let’s face it, I was still paying, and they were not achieving outcomes.”
The biggest change with outcomes-based contracting, Walker said, was the partnership with the provider. One contractor monitored student attendance during tutoring sessions, called her when attendance slipped and asked her to investigate. Students were given rewards for attending their tutoring sessions and the tutoring company even chipped in to pay for them. “Kids love Takis,” said Walker.
Advice for schools
Walker has two pieces of advice for schools considering outcomes-based contracts. One, she says, is to make the contingency amount at least 40% of the contract. Smaller incentives may not motivate the vendor. For her second outcomes-based contract in Duval County, Walker boosted the contingency amount to half the contract. To earn it, the tutoring company needs the students it is tutoring to hit growth and proficiency goals. That tutoring took place during the current 2023-24 school year. Based on mid-year results, students exceeded expectations, but full-year results are not yet in.
More importantly, Walker says the biggest lesson she learned was to include teachers, parents and students earlier in the contract negotiation process. She says buy-in from teachers is critical because classroom teachers are actually making sure the tutoring happens. Otherwise, an outcomes-based contract can feel like yet “another thing” that the central office is adding to a teacher’s workload.
Walker also said she wished she had spent more time educating parents and students on the importance of attending school and their tutoring sessions. ”It’s important that everyone understands the mission,” she said.
Innovation can be rocky, especially at the beginning. Now the Southern Education Foundation is working to expand its outcomes-based contracting initiative nationwide. A second group of four school districts launched its first outcomes-based contracts for tutoring this 2023-24 school year. Walker says that the rate cards and recordkeeping are improving from the first pilot round, which took place during the stress and chaos of the pandemic.
The foundation is also seeking to expand the use of outcomes-based contracts beyond tutoring to education technology and software. Nine districts are slated to launch outcomes-based contracts for ed tech this fall. Her next dream is to design outcomes-based contracts around curriculum and teacher training. I’ll be watching.
This story about outcomes-based contracting was written by Jill Barshay and produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Proof Points and other Hechinger newsletters.
http://dlvr.it/T7Ry0R
