Opinion: For Results, Schools Need Outcome-Based Contracting

As K-12 education faces significant challenges, including declining proficiency rates in math and reading, particularly among underserved populations, there is a growing need for innovative approaches. System-level innovation that improves student outcomes can fill that void.

One such approach, outcome-based contracting (OBC), ties ed-tech vendor payments to student achievement, creating accountability and incentivizing tangible results. By shifting from a traditional pay-for-service model to a results-driven partnership, OBC fosters responsibility, promotes competition and drives real improvements in student performance.

Implementing OBC typically involves four key steps:

1. Identify outcomes and metrics: School districts should define student populations served, desired outcomes, and metrics to measure progress. Data analysis and stakeholder input are critical to ensure that goals are relevant and feasible.
2. Payment strategy and pricing: Structure payments to include base amounts for service delivery, with additional performance-based bonuses awarded for achieving specified outcomes on a per-student basis.
3. Creating and executing RFPs: Draft explicit requests for proposals that outline the OBC approach, expected outcomes, metrics and payment structure. This clarity helps vendors align their tools effectively with district goals.
4. Establish mutual accountability: Agree on a success plan between the district and vendor, including teacher training, usage requirements for the tool, and a regular cadence for meetings and monitoring. This ensures both parties remain aligned and accountable for achieving shared outcomes.

The groundbreaking OBC approach originated from the Center for Education Policy Research at Harvard University, in collaboration with Stanford University Graduate School of Business and Schmidt Futures. Their aim is threefold:

• Forge new partnerships between school districts and service providers to improve academic outcomes.
• Provide districts with scalable and reliable methods to boost student achievement.
• Stimulate new R&D investments and attract fresh talent to the K-12 market.

Taking the mantle from foundational research at Harvard and Stanford, the Southern Education Foundation (SEF), a longstanding nonprofit, is working to expand the reach of OBC models across school districts nationwide. SEF created the Center for Outcome-Based Contracting to help districts adopt OBC as a strategic approach to address equity gaps and drive measurable student improvements. By offering resources and support, the center aims to see OBC implemented at scale, empowering schools and vendors alike to align educational investments with impactful results.

Building on the principles of data and evidence-based innovation, OBC aligns with the objectives set forth by Results for America, a nonprofit organization that champions data-driven policies to improve outcomes in education and other sectors. Their "Moneyball for Education Policy Recommendations" advocate for an education system that prioritizes measurable outcomes, encouraging investments in programs with a proven track record of effectiveness. This approach, rooted in using data to maximize impact, reflects OBC’s emphasis on holding education providers accountable for service delivery and real, measurable improvements in student achievement.

A commitment to OBC also means a commitment to transparency. Using student-level data to measure impact, ed-tech vendors can pinpoint where their products are most effective and adjust as needed, creating a continuous feedback loop for improvement. This approach strengthens relationships with funders and school districts and aligns with Results for America’s “investing in what works” principle. Through real-time data and evidence, OBC enables districts to make smarter, data-informed decisions, ensuring resources are allocated to benefit all students, particularly those most in need.

If outcome-based contracting continues to gain traction, it will offer a robust framework for creating a more accountable, data-driven education system that prioritizes student outcomes. By shifting the focus from buying services to paying for results, OBC directs educational investments toward substantial improvements for all students, emphasizing reaching underserved populations.

And by embracing OBC, policymakers, school districts and ed-tech vendors commit to a future where every educational dollar is strategically invested with transparency and purpose, transforming students’ lives and creating lasting educational change.

Sunil Gunderia is chief innovation officer at the ed-tech company Age of Learning.