Performance Contracting

Performance Contracting in Education

Scarce resources and the public's increased emphasis on outcomes and accountability prompted government agencies, such as the U.S. Department of Defense, to explore the applicability of performance contracting in the 1960s, prior to education agencies contemplating its use. From 1906 to 1911, Cleveland, Ohio, public school administrators explored measuring performance outcomes in the area of spelling as a means of increasing the quality and cost efficiency of the education they provided their students. Yet it was not until the late 1960s that the federal government viewed performance contracting, in its true form, as a viable means of achieving educational accountability and allocated Office of Economic Opportunity and Elementary and Secondary Education Act (ESEA) funds to support the process. After contemplating the impact that consolidating students with widely divergent academic achievement levels would have [Page 696]upon an already high dropout rate and considering the current national and local political and social climates, the Arkansas School District also deemed the time suitable for investigating the concept of performance contracting.

On September 10, 1969, Arkansas School District 7 partnered with the U.S. Office of Education and, using ESEA funds, entered an agreement with Dorsett Educational Systems, Inc., for the Texarkana Dropout Prevention Program. It was the first school district to employ performance contracting. The program, also known as the Texarkana Project, provided basic reading, math, and study skills instruction to at least 200 regular education students in Grades 7 through 12 who were functioning below (two or more grade levels) their assigned grade levels in the areas of reading and math. Project staff administered either the Iowa Test of Basic Skills or the Science Research Association test to students to determine their levels of performance at program entry and to determine their exit level achievement. The district agreed to pay Dorsett Educational Systems a prorated sum not to exceed $135,000 to increase per-student performance by one grade level in each subject within 60 to 167 hours of instruction. Incentives offered to students who completed their lessons included radios, premium stamps redeemable for gifts at a redemption center, and a television for the top student. Implementation inconsistencies rendered the Project's test results invalid. However, the district purchased the Project equipment and extended the Project for 2 additional years by entering a second performance contract with a different contractor, Educational Development Laboratories, Inc. The enterprise did not achieve definitive results regarding the effectiveness of performance contracting as a tool to increase student achievement.

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