Schools spend billions of dollars a year on products and services, including everything from staplers and textbooks to teacher coaching and training. Does any of it help students learn more? Some educational materials end up mothballed in closets. Much software goes unused. Yet central-office bureaucrats frequently renew their contracts with outside vendors regardless of usage or efficacy.
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.