New Opportunity for Districts: Outcomes-Based Contracting Initiative

Who We Are

For over a decade, the Center for Education Policy Research (CEPR) at Harvard University has worked with school agencies around the country to examine what educational strategies improve student outcomes. In our new initiative, CEPR will collaborate with Professor Susan Athey, an expert on contracting at Stanford’s Graduate School of Business, and Schmidt Futures, a philanthropy, to support a set of school agencies and contractors through the details of an outcomes-based contract together.

Goals of the Initiative

The goals of the Outcomes-Based Contracting Initiative (OBCI) are to use powerful market incentives to:

• Bring together schools and service providers (both for-profit and nonprofit) to find new ways of improving core academic outcomes;
• Provide schools with a reliable way to improve student achievement at a scalable cost; and,
• Unlock new R&D investment and attract new talent to the K-12 market.

Pilot: Mathematics

For the OBCI pilot, likely launching in 2021, we will target specific areas of mathematics selected by participating schools. Possible focus areas could include algebra or algebra readiness with focus on preparing students who would otherwise begin Algebra 1 with a low chance of success, leading to a cycle of remediation and, for some, drop-out.

We will invite service providers and districts to partner to deliver Augmented Tutoring. We imagine the most likely version to be a combination of human tutoring or coaching and online personalized instruction. Research has shown that tutoring, in one form or another, is a reliably impactful academic intervention.^[1] Some providers will begin from pure human tutoring and attempt to blend online learning without losing effectiveness. Others will begin from online instruction and aim to improve it through the incorporation of a human connection to the student. We make no attempt to pre-judge which will be the more successful path.

Although we are open to feedback, our current view of the division of responsibilities is:

• Schools will identify students who are appropriate for the initiative and make them available for tutoring.
• Service providers will agree to deliver services to identified students and to be paid, at least in part, only when students succeed—i.e., provider will not receive full payment for a student unless and until that student reaches a pre-agreed benchmark. (The amounts and the contingencies for payment for students who are unsuccessful would need to be negotiated. Service providers will set intermediate milestones that will trigger payments similar to the way NASA did with the original SpaceX contract.^[2])
• An OBCI intermediary will (a) measure student outcomes and determine whether benchmarks have been met; (b) manage payments to service providers based on success criteria; and, (c) facilitate collaboration between schools and service providers.

Eligible Partners

We are seeking up to five districts and up to five service providers to serve several thousand students across the participating districts. To participate:

• Service providers must demonstrate (a) a credible plan and commitment of resources to achieve the target outcomes in a specific geography and (b) a willingness to measure results and engage in outcomes-based contracting.
• Schools/districts must demonstrate executive sponsorship and a credible plan to (a) make students available for the amount of time and in a location agreed with the service provider and (b) share data as needed for the initiative.

RSVP for the OCBI Workshops

Cost

• For the pilot, we anticipate a portion of payments will be funded by philanthropy. In the long-term, funding will come from districts and states.
• We anticipate the underlying cost for augmented tutoring to be between $500 and $2,000 per student. This may be higher than other school-based interventions, but the economic value to the student and society of succeeding versus failing in Algebra 1 is substantial.^[3]

Timeline

We will kick off this project with four two-hour virtual workshops in the fall of 2020. From that point, we will determine participation, work plan elements, and next steps. We also anticipate roughly quarterly calls to understand progress and trouble-shoot, where needed. (See agenda below for details).

Contact

If you are interested or have questions about this Outcomes-Based Contracting Initiative, please contact Sarah Glover at sarah_glover@gse.harvard.edu or 406-579-1817.