Schools are experimenting with a new way to buy educational software and tutoring services: instead of paying vendors upfront, they tie part of the payment to whether students actually learn. This approach, called outcomes-based contracting, has spread rapidly since the pandemic, with school districts in more than 20 states now testing it. But does it actually work? A first independent evaluation offers cautiously optimistic findings, though the picture is more nuanced than vendors or policymakers might hope.

What Did Researchers Find When They Studied Outcomes-Based Contracts?

Researchers from WestEd, a San Francisco-based nonprofit research organization, evaluated tutoring and educational technology programs across eight early-adopter school districts in California, Florida, Mississippi, and Texas between August 2024 and March 2026. They studied 10 different interventions, but only four could be rigorously analyzed using a method that compares students who just barely qualified for tutoring with statistically similar students who just barely missed the cutoff. Of those four, three showed measurable academic gains for students.

One particularly striking finding involved artificial intelligence-powered reading software. Second graders who used the AI tutor were substantially more likely to reach proficiency on their state's reading assessment compared to similar students who did not use it. However, the same program did not produce benefits for older elementary students, suggesting that age and developmental stage matter significantly when deploying educational technology.

"That's a really important finding because that tells us what's working for whom and under what conditions," said Brittany Miller, executive director of the Center for Outcomes Based Contracting, which commissioned the study.

Brittany Miller, Executive Director at Center for Outcomes Based Contracting

How Are Schools Actually Using These Contracts to Improve Implementation?

Beyond the academic results, researchers observed significant changes in how schools managed their tutoring and technology programs. Districts and vendors began meeting regularly to review data on student progress. Schools monitored whether students were actually attending tutoring sessions and tracked their advancement toward specific goals. Teachers and school leaders invested more effort in ensuring students showed up to sessions.

These implementation improvements suggest that outcomes-based contracts create accountability that extends beyond the vendor relationship. However, there's an important caveat: the evaluation cannot definitively prove that the financial incentives in the contracts themselves drove these changes. Each participating district received roughly $80,000 worth of coaching and technical assistance from the Center for Outcomes Based Contracting to help design the contracts, establish outcome measures, monitor progress, and troubleshoot problems. It's possible that this intensive support, rather than the contracts themselves, prompted schools to monitor attendance more closely and hold regular data meetings.

Steps to Implement Outcomes-Based Contracting in Your District

• Establish Clear Outcome Measures: Define specific, measurable academic goals before signing any contract, such as reading proficiency levels or attendance benchmarks that both schools and vendors must work toward.
• Build Data Systems First: Create systems to track student attendance, progress toward goals, and actual usage of tutoring or technology services so you can monitor performance in real time.
• Schedule Regular Review Meetings: Plan frequent check-ins between school staff and vendors to review data, identify implementation problems early, and make mid-course corrections before the contract period ends.
• Target Interventions Carefully: Use eligibility criteria to ensure the right students receive the right services, rather than allowing schools to enroll higher-achieving students who don't need the intervention.

What Are the Remaining Questions About This Approach?

While the study offers encouraging signs, significant questions remain unanswered. The evaluation did not find that outcomes-based contracting saved schools money. WestEd did not conduct a formal cost-effectiveness analysis, but 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 ensuring students attended tutoring sessions, while some vendors reported losing money.

The research also revealed implementation challenges that could limit the approach's scalability. For six of the 10 interventions studied, 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 receive tutoring, or they failed to get eligible students to attend after-school programs. One district even allowed all its first graders to use reading software if they scored anything less than perfect on a kindergarten assessment.

"Most schools were paying for services, and we have no idea whether or not they were working for kids, or even if kids got the services," said Brittany Miller.

Brittany Miller, Executive Director at Center for Outcomes Based Contracting

Resource-strained districts, WestEd researchers noted, are likely to have a much harder time implementing outcomes-based contracts successfully. The center is now experimenting with less expensive models that reduce coaching and technical assistance to under $10,000 per district, down from the roughly $80,000 provided to early adopters. Future evaluations will help determine whether districts can achieve similar results with far less outside support and whether the contracts themselves, rather than the intensive coaching, are driving the improvements.

One unexpected benefit emerged from the data infrastructure built for outcomes-based contracts. Once districts created systems to monitor tutoring attendance and student progress for these contracts, they began using those same systems to track other interventions that weren't covered by outcomes-based arrangements. This spillover effect suggests that the real value may lie not just in the financial incentives, but in building a culture of data-driven decision-making in schools.

"What's really important for continual improvement is that the districts can learn really rigorously whether something is working," said Sean Tanner, a researcher at WestEd on the evaluation team.

Sean Tanner, Researcher at WestEd

Whether outcomes-based contracting ultimately fulfills its promise of improving student learning while holding vendors accountable remains an open question. The approach cannot replace rigorous academic research, but it could help schools understand which interventions are working in real time, rather than waiting years for formal studies to be completed. For now, the evidence suggests that outcomes-based contracting works best when paired with strong implementation support, clear targeting of students, and robust data systems to monitor progress.