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Performance Contracting

The pressures for change in public schools have never been greater. Taxpayers want more for fewer dollars, while school personnel bargain for increased wages. Governmental agencies and minority groups demand that minority-group children receive equal (not necessarily identical) educational opportunities; parents and community groups want to be involved in the planning and operation of schools; and pressures for accountability are multifaceted and real. Performance contracting has been suggested as one feasible solution to many of these problems.

We believe that performance contracting allows schools to experiment with and validate new learning systems with low risk and costs. We do not believe it has demonstrated total cost savings in overall school budgets, although it may do so in specific areas. We support the application of the concept by school districts with adequate evaluation so long as it is perceived as a means for effecting positive change.

1972 AASA Resolution

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Herman Melville in Moby Dick painted a vivid picture of Captain Ahab down in his cabin late at night seated before his screweddown table with a battered roll of yellowish sea charts spread before him. In the shifting gleams of light from the heavy pewter lamp that swayed with the motion of the ship, he traced lines and courses on the wrinkled chart that would lead through the maze of ocean eddies and currents to the habitat of the great sperm whale. So intent and so completely absorbed was Captain Ahab in his task that the furrows of his leathery face seemed to become part of the tracing on the chart.

Every true leader must pause from time to time to check his bearings and to chart a course. The superintendent of schools is no exception. Through consultation with his associates he must establish purposes, fix goals, and decide upon a course of action. Without such planning his efforts and the efforts of those to whom he is responsible as a leader may be nothing more than aimless wandering that leads to nothing and to nowhere.

As a program is planned answers are sought to such questions as: What purposes or goals should set the course of action? What problems or issues should be given priority? What will be attempted? What will be done? Where is the point of beginning?

The answers to these questions will be rooted deeply in the maze of forces and issues that face the school from every side and that come to the superintendent's office for consideration and decision. These forces and issues constitute the climate in which the school operates. They give character to curriculum content and to instructional methods, and they must be reckoned with in the policy formation of every school district whether it be large or small.

Recent years have seen increasing attempts to apply modern management techniques to the problems of educational administration. Educational planners, in particular, have made continuing efforts to adapt for school systems certain modes of resource allocation-such as Planning-Programming-Budgeting—that originally developed in industry and government. Unfortunately, hard-pressed school administrators sometimes have seen such alternatives as panaceas, have applied them indiscriminately, and, consequently, have undermined their potential benefits.

School systems may be reacting in a similar way to the newest and most provocative of these approaches-performance contracting. Performance contracting has aroused the interest of the educational community for several reasons:

• First, it seems to hold some answers to the persistent

problem of effectiveness, especially for programs designed
to alleviate the specific educational deficiencies of the
disadvantaged. By linking payment directly and sensitively
to results, performance contracting is supposed to motivate

the private sector to realize fully its presumably great potential for producing significant educational changes. Secondly, performance contracting seems to ensure more rational, efficient resource allocation, for it relies explicitly on measured outcomes. A school system that lets such a contract is supposed to be buying tangible progress and paying only for value received. Moreover, certain performance contracts try to build in future efficiency by specifying that the contractor use only cost-effective (rather

an labor-intensive) methods that the school system later can adapt for proprietary use. • Thirdly, by involving the private sector in difficult, risky en

terprises, performance contracts presumably encourage the introduction and testing of highly productive technologies that school systems need but have been unable to use and to integrate with their curricula. These technologies are supposed to produce long-term benefits when they are transferred from the contractor to the school system and are fully incorporated during the final "transfer" and "turnkey"

stage of the performance contract. • Finally, performance contracting is seen both as a genuine

response to increasing community and governmental demands for palpable educational results and as a possible effective way to counter growing community resistance to approving ever larger appropriations. When a school system requests funds for a performance contract, in effect, it shows the community in more precise ways what it can buy rather than asking it to contribute to the general, undifferentiated support of a school system whose “product is unclear.”


Regardless of the justice of these claims, the educational community has shown great interest in performance contracting. Since Texarkana's landmark performance contract of September 1969, more than twenty-five school systems—including those of San Diego, Dallas, Detroit, Philadelphia, and Portland, Oregon-have entered into performance contracts of various types. Many other districts are giving serious consideration to this approach. Such swift, widespread reaction reflects the school administrator's urgent need for better modes of resource allocation, and it underlines the researcher's responsibility to explore this promising alternative. Yet it also poses a threat to the success of the contracts in question and hence to the future development of performance contracting, foi most school system officials, even those who have let contracts know relatively little about the technique. Their decisions to use per. formance contracting have been largely unconsidered, neither preceded nor followed by systematic attempts to assess the par.

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