Schools are racing to spend billions of federal stimulus dollars earmarked to help students make up for lost instruction time, often contracting with tutoring companies that have no proof their methods are effective, public records show.

An influx of $122 billion into public education has attracted legions of online tutoring companies, including established players with a record for advancing students and venture-capital-backed startups that let students chat through questions around the clock. Schools face pressure to act quickly: They must spend the money before it expires in 2024.

The federal American Rescue Plan, passed in March 2021, stipulated that 20% of the money should address lost instructional time and only be spent on evidence-based programs. The Education Department said it is urging states and districts to use the funds on programs that supplement in-person learning, but it is up to the districts to verify the services are effective. Tutoring is one tool to help students catch up, school officials have said, at a time when national and statewide assessments show achievement in math and reading lagging behind after more than 50 million children learned remotely at various points during the pandemic.

Nayla Medina, 10, and her mother, Lana, in Altadena, Calif. Nayla uses Paper for online tutoring and essay reviews.

While some states and districts are hiring in-person tutoring corps, many are looking online, which eases the burden of finding enough qualified tutors locally. Formats include scheduled video sessions as well as text-only chats available 24 hours a day. Companies that traditionally advertised to families say they are now pitching to districts to capitalize on the stimulus money.

“It’s like a feeding frenzy with vendors,” said Carmen Coleman, chief academic officer at Kentucky’s Jefferson County Public Schools, which is spending $3.8 million on services from two chat-based online tutoring companies.

Houston Independent School District has allocated $113 million for tutoring and academic interventions. Miami-Dade County is aiming to spend $33 million, and Omaha Public Schools has budgeted $24.3 million.

When Charlotte-Mecklenburg Schools in North Carolina considered 54 companies vying for its $50 million budget to tutor its lowest-performing students, it cut a third of the bidders from consideration because they had no evidence to show their methods improve student performance, the district’s public bid records show.

The district chose 30 companies that will be paid based on how many students use their services, said Frank Barnes, chief accountability officer for Charlotte-Mecklenburg.

One of the companies that the district turned down because it lacked evidence, the bid records show, is Paper Education Company Inc., an online-tutoring company founded in 2014 in Montreal. Paper pairs tutors in the U.S. and Canada with students seeking help in 200 subjects and four languages, for chat-based online sessions. The company has rapidly gained traction in recent years, attracting nearly $400 million in venture capital and signing contracts with 350 districts nationwide.

The Paper tutoring website on Nayla Medina's computer.

Paper Chief Executive Philip Cutler says the company is effective because it gives every student in a district access to an unlimited number of online sessions with a tutor, whenever they want, at a cost to the district of between $30 and $50 per student annually. Most tutoring companies charge per hour that the service is used.

Mississippi’s education department announced last month it’s spending $10.7 million for Paper to provide 138 districts with tutoring. Tennessee’s education department is in the process of awarding Paper a contract, the state and company say.

SHARE YOUR THOUGHTS

Is tutoring the best solution to help move students forward? If so, how should schools assess its effectiveness? Join the conversation below.

Paper doesn’t have data backing its premise but recently hired LearnPlatform, an education technology company, to perform studies with Paper and its district customers over the next year.

“In an ideal world you’d have 10 years to do the research,” said Mr. Cutler. “There’s anecdotal feedback we collect all the time.”

Paper said it directs its tutors not to teach new concepts but to help guide students through questions. Tutors don’t see where a student is located, which tutors said can create problems since states use different approaches to teaching some concepts. Paper said its tutors can work with any curriculum.

Southern California parent Lana Medina turned to Paper a few times when her fifth-grade daughter Nayla had math questions, but it confused her more, she said, because the tutors were using methods to solve fractions that didn’t align with what her daughter had learned in class at her French-immersion magnet program.

Ms. Medina and her daughter have found the service convenient and helpful, however, for essay review and French homework. They first stumbled across Paper a year ago while Ms. Medina tried to help Nayla with a complicated French assignment. Her daughter chatted with a tutor for hours that day and still uses Paper regularly.

“If your kids don’t want to learn from you or you don’t have time, it’s really nice to have that option,” Ms. Medina said.

Ms. Medina and Nayla at Altadena Arts Magnet school. Ms. Medina said her daughter found Paper’s tutoring service helpful for some subjects but confusing for math.

Carey Wright, Mississippi’s superintendent of education, said the state plans to collect data to study whether Paper is improving student performance. “The ideal outcome is for children to learn and achieve,” Ms. Wright said.

Darin Brawley, the superintendent of Compton Unified School District, which currently uses Paper, said this month at an education-technology conference that he isn’t going to renew a contract with a chat-based tutoring company because no student-tutor relationships were created and it was “not successful at all.”

Many tutoring companies have produced studies to show their effectiveness. Tutored by Teachers, founded in 2019, has research showing students increased English language arts scores by 13% and math scores by 19% after four weeks of intense intervention. The company pairs teachers virtually with students in small groups during the school day, with tutor pay starting at $36 an hour.

Online tutoring companies say they haven’t faced the same labor shortages befalling other industries. Some require a teaching license. Others employ tutors in India at a fraction of the cost.

Paper hires tutors who are in college or have a college degree, starting at $16 an hour in the U.S. and $16.50 in Canada.

Alyssa Andre, an English as a Second Language teacher in Harrisburg, Pa., became a Paper tutor last fall for extra income. The chat-only format appealed to her so she didn’t have to be chipper and camera-ready after a long day in the classroom, she said. “I needed something low engagement,” said Ms. Andre, who tutors in Spanish and English. She said the work is rewarding and said one of the biggest complaints she sees in an internal group chat is that tutors at times aren’t given enough hours.

Paper has raced to hire more tutors to meet contract demands, expanding from hundreds of tutors last year to more than 2,000 today.

Paper advertises its services as “one-to-one” tutoring, though tutors are often helping several students at once in different chats. The company doesn’t disclose how many of the two million students with access to the service are active users.

Research shows the most impactful tutoring includes regularly scheduled sessions with a consistent tutor. Even so, Boston Public Schools Superintendent Brenda Cassellius said she thinks Paper, which the district uses, is effective if it helps a student work through a difficult concept that’s holding them back. “When the lightbulb turns on, that’s the dosage you need,” Ms. Cassellius said. Over six months, nearly 5,500 Boston students used Paper for tutoring or essay review, the district said, about 10% of enrollment.

Ector County Independent School District in Odessa, Texas, uses a results-driven approach. It has paired 6,000 students, about 19% of its enrollment, with online tutoring vendors FEV Tutor, Air Tutors and Amplify for reading and math help. Each student must complete 30 tutoring hours per subject, supervised on campus with consistent tutor-student relationships. The $6.1 million in contracts for this school year include payments that can swing up or down by 10% depending on how much academic improvement the school measures in its students.

In the West Texas oil region, schools couldn’t find enough qualified tutors locally so the online services have been ideal, said Superintendent Scott Muri.

Students who are tutored are showing greater academic growth than those who aren’t, Mr. Muri said. “We have this incredible opportunity thanks to federal stimulus dollars to invest and make a profound impact,” he said.

Write to Sara Randazzo at sara.randazzo@wsj.com