School purchasing can seem like an administrative backwater, far removed from the heart of teaching and learning. But the way schools buy products and services like educational software or tutoring programs can influence whether students actually learn, some policymakers argue.
Instead of paying vendors simply for delivering these tools, school districts are experimenting with a new approach to purchasing, called outcomes-based contracting, in which part of a vendor’s payment depends on whether students actually use the service and meet agreed-upon academic goals. The idea is to share risk between schools and vendors — and create incentives for both sides to pay closer attention to whether an intervention is working.
Outcomes-based contracts have long been used in the healthcare industry. For example, insurers often pay drug companies less if patients don’t improve. Since the pandemic, the method has spread rapidly in education, particularly for tutoring and educational technology. A new Michigan law requires schools to use this type of contract to tap into a $50 million fund for online or virtual tutoring. School districts in Florida, Texas, California and more than 20 other states are also experimenting with the approach, according to the Center for Outcomes Based Contracting, a nonprofit organization that promotes the practice.
The first independent evaluation of outcomes-based contracts offers reasons for optimism, but also for caution. Researchers from WestEd, a San Francisco-based nonprofit research organization, studied tutoring and educational technology programs in eight early-adopter districts in California, Florida, Mississippi and Texas between August 2024 and March 2026. Three of the interventions produced measurable academic gains for students. But the study stops short of proving that the contracts themselves deserve the credit.
Researchers faced a common challenge in education: How to determine whether a particular intervention actually caused students to learn more. Student achievement depends on so many things, from classroom instruction and curriculum to family circumstances. To isolate the effect of tutoring or educational software delivered under an outcomes-based contract, WestEd compared students who had scored just below an eligibility cutoff and received the intervention with statistically similar students who had scored just above the cutoff and did not.
Of the 10 interventions the researchers hoped to evaluate, only four could be analyzed using this rigorous approach. Three showed positive academic effects. The fourth, an online tutoring program, was intended to run for most of the school year but lasted only about two months, too short to expect measurable gains.
Student performance improved in three interventions covered by outcomes-based contracts
For the other six interventions, researchers couldn’t make clean comparisons between similar students because schools did what schools often do: They filled empty tutoring seats with higher achieving students who weren’t supposed to get tutoring, or they failed to get eligible students to attend after-school tutoring programs, for example. One district allowed all its first graders to use reading software if they posted anything less than a perfect score on a kindergarten assessment.
Targeting interventions to the right students
One of the more intriguing results involved instructional reading software powered by artificial intelligence. Second graders who used the AI tutor were substantially more likely to reach proficiency on the state’s reading assessment than similar students who did not. The same program, however, did not produce benefits for older elementary students.
“That’s a really important finding,” said Brittany Miller, executive director of the Center for Outcomes Based Contracting, which commissioned the WestEd study. “Because that tells us what’s working for whom and under what conditions.”
Most schools, Miller said, were “paying for services, and we have no idea whether or not they were working for kids, or even if kids got the services.”
The mixed results that outcomes-based contracts can produce — good, bad or neutral — are equally important, Miller argues, so that schools can more precisely target the right interventions to the right kids.
“Because guess what? Not every kid needs 30 minutes of every ed tech product every week,” she said.
Attending to implementation
WestEd researchers said they observed notable changes in day-to-day implementation. Schools and vendors met regularly to review data, monitored whether students were actually attending tutoring sessions and tracked their progress toward goals. Teachers and school leaders put more energy into making sure students showed up.
But there’s a caveat. The evaluation cannot determine whether those implementation improvements stemmed from the financial incentives built into the contracts or from the extensive support the districts received from the Center for Outcomes Based Contracting. Each participating district got roughly $80,000 worth of coaching and technical assistance from the center to help design the contracts, establish outcome measures, monitor progress and troubleshoot implementation problems.
In other words, the evaluation tested outcomes-based contracting plus intensive implementation support — not the contracts in isolation. It’s possible that the coaching and technical assistance alone could have prompted schools to monitor tutoring attendance more closely, hold regular data meetings and make mid-course corrections.
Cutting costs
The center is now experimenting with less expensive models that reduce the assistance to under $10,000 per district. Researchers hope future evaluations will help determine whether districts can achieve similar results with far less outside support — and whether the contracts themselves are driving the improvements.
Researchers also observed unexpected spillover effects. Once districts built data systems to monitor tutoring attendance and student progress for outcomes-based contracts, they began using those same systems to track other interventions that weren’t covered by the contracts.
“Certain interventions are not going to work with or without an outcomes-based contract,” said Sean Tanner, a researcher at WestEd on the evaluation team. “What’s really important for continual improvement is that the districts can learn really rigorously whether something is working. As a researcher, I find the OBC [outcomes-based contracting] model really compelling because it builds natural experiments into the process.”
Outcomes-based contracting can’t replace academic research. But it could help schools understand better which interventions are working in real time, instead of waiting for a multi-year randomized controlled trial to be conducted.
The evaluation didn’t find that outcomes-based contracting saved schools money. WestEd did not conduct a formal cost-effectiveness analysis, but its interviews with participating districts suggested that overall spending was similar to traditional contracts. Some districts absorbed costs when they failed to meet their own responsibilities, such as making sure students attended tutoring sessions. At the same time, some vendors reported losing money.
Whether outcomes-based contracting ultimately fulfills its promise remains an open question. Resource-strained districts are likely to have a much harder time doing it, the WestEd researchers observed. And while the researchers found positive academic results in three interventions, they still cannot determine whether those gains stemmed from the contracts themselves, the intensive coaching districts received or both. What the study does point to is that contracts can do more than enforce payments. They can change how districts monitor, manage and learn from the programs they buy.
Jill Barshay is a senior reporter at The Hechinger Report, where she writes the weekly “Proof Points” column about education research and data. This column was initially published by The Hechinger Report.