The Education Business Blog

A few months ago we started a LinkedIn group for consultants who serve education and the companies in the education market. We've been slowly building and have 96 members as of this morning.

If you serve the market come over and join - we want to crack 100 members. We are a friendly group and are figuring out how to share ideas and practice ideas.

If you are a company that serves the market this is a great place to find consultants who can help you grow to the next level.

Here is the description of the group:

This is a networking group for consultants who serve the education industry - textbook publishing, education technology, supplemental materials, professional development, and enterprise systems. Members are in management consulting, public relations, professional services, recruiting, financing, marketing, sales, and other consulting functions.

Here is the direct link

What impact will the economic stimulus have on educational materials and technology? A front page New York Times article yesterday left no doubt that education will be a significant part of the legislation. The Times reports that the total education allocation could be as much as $75-$95* billion a year over current allocations for the next two years. In sector that accounts for about $530 billion in total expenditures, 92% of which has traditionally come from state and local taxes, this represents a seismic shift in the Federal Government's influence on the market.

The questions executives in the industry have to wrestle with are how much of the total will be spent on instructional materials, when will funds flow, and what products will schools buy? The answers to these questions will drive investments, hiring, and M&A for the next couple of years.

I've talked to a few folks around the industry to see what people are thinking and the notes below represent a collective set of insights. It is still early days, the legislation probably won't be in a final format until mid to late February, but many companies are making decisions now about their '09 plans.

How Much Will Be Spent on Instructional Materials?

Historically about 1%-2% of education funding is spent on textbooks and supplemental resources and another 1%-2% is spent on education technology. 70%-80% of education funding goes to salaries. The question is will those ratios hold up with this new funding?

I'm betting that the percentage for materials and tech will be higher than normal - 4%-6% of the total is an educated guess. The bulk of the funds will still go to salaries - but it won't be for hiring, it will used to avert layoffs. Schools really don't like to hire people with transitory funds. Between unions and other requirements if they can't see sustained funding they will use the rest of the funds for infrastructure and other one-time purchases. A good chunk will also go to construction and deferred maintenance which could should boost the technology side of the equation.

Education companies have no compunction about scaling up and down based on market conditions - witness the efforts around any major adoption on the upside or the rolling layoffs at HRH on the downside. If the goal is creating new jobs quickly steering funds to instructional materials will have an immediate impact.

Rather than a contraction it is possible that we could actually see growth in our sector this year. If the annual increase is $80 billion then anywhere from $3 b to $4.7 b could flow to materials and technology. At least half of that would replace funds that have been cut or allocated elsewhere already, so the net impact could be $1b to $2.3 b in increased spending, or about 10% growth in the market. This would create a lot of publishing jobs if it happens.

If I'm wrong and the traditional ratios hold then we'd see flat sales year over year as the infusion replaces funds that the states have cut or will be cutting soon. Either way the stimulus is good news for education companies.

One huge caveat is that it is possible that states that are particularly strapped (e.g. California and Florida) would use the Federal infusion into education to move funds they would have spent there to other parts of their budgets. This could result in no net improvement or still a contraction in education spending depending on how dire their overall budgets are. If you have significant sales in one of these states you should pay particular attention to how the stimulus is implemented locally.

When Will Schools Start Spending?

The consensus is that the impact on publishers will be fairly immediate even if the federal funds don't start flowing for a few months. Most School Districts are sitting on budgets that were allocated and approved last year - in other words the funding is there, they just aren't spending it. Once Administrators are confident that the new money will be available from the Feds they are likely to restart spending from their current budgets. Since the significant portion of the education buying cycle is still ahead of us we may actually see a fairly normal year through August.

Note that any indecision about how to implement the program at the state level could delay schools releasing current funds until those questions are resolved.

The implication for companies is that you should be out working the pipeline for the big deals that could close in May-August. If the bill passes in February by late April or May you should start to have a handle on how schools are going to react and you can adjust at that time.

What Products Will Schools Buy?

The impact will be uneven across the industry. In this economic climate and with these funds there are types of products that will do better and some subject areas that will be favored.

Because the funding is only for a couple of years Districts will be loathe to commit to anything that requires ongoing expenditures. This means that subscription products and products that have big annual support fees or large infrastructure requirements won't do as well as one time purchases. A print reading program will probably beat out a subscription based on-line reading program in this climate because it costs less and it is a one time purchase.

By subject area the goals of NCLB aren't disappearing so expect to see an ongoing focus on Reading and Math. STEM is also a clearly stated priority of the new administration (see Obama's statements) so I would expect to see a heightened priority in this area. Many states are now testing Science which would couple local pressure with Federal priorities.
The legislation is also targeting existing programs that have been historically considered partially funded mandates - notably Title 1 (economically disadvantaged schools) and IDEA (Special Education). These are long term federal priorities in education and do not require extended arguments over program design and implementation. Focusing here is smart politics if the goal is getting funds released quickly.

Companies that provide professional development may also do well since Title 1 has significant set asides for training. One of my contacts also speculated that Districts might be willing to invest more in their current teachers by hiring contractors to be in the buildings doing longitudinal on-site PD for the next couple of years rather than hiring new staff.

Conclusions

This legislation is good news for our industry. At a minimum it may replace funds that have been cut by the states and on the upside it could actually create some growth in the market. Companies that provide products with a one-time purchase that target core subject areas and can be purchased with Title 1 or IDEA funds should do very well indeed.

If you would like to disagree or add something to the conversation please post a comment or send me a guest blog post. Guest posts are very welcome, if you would like to know more please send me a note.

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*A note on the numbers. The total federal education budget under the legislation could be as much as $150 billion a year for the next two years. Since the Feds are already spending about $60 billion we have structured this analysis around the incremental $80-$90 billion.

The ideas presented here are speculative, general, and are not business advice. The implications for any specific company should be analyzed to craft a specific response to the market. Full disclaimer here.

A new free white paper that tackles the practical challenges teachers face when they use video games was released this week by the Software Information Industry Association (SIIA). I was the author of the paper and the co-chair of the working group that produced the paper.

Barrels of ink and pixels by the gigabit have been spilled trying to answer the question "Do video games work as teaching tools?" We started from a simpler perspective - assuming that games can support learning what are the practical tips that teachers can use to boost the odds of success? We interviewed the pioneers in the classroom and at the companies that have developed successful games and summarized their hard won insights in the paper.

I excerpt the executive summary below and over the coming days will post some of the more detailed findings. For the complete paper visit the SIIA's website and download the PDF.

Most of what we surfaced is applied common sense that goes with any supplemental implementation. There are some key differences with games that we emphasize in the paper.

The paper is organized into three main sections:

1. Selling the Idea - How can you convince your school to try games?
2. Preparation - What should the teacher do to prepare themselves, their students, the classroom, and the technical infrastructure?
3. Implementation - What classroom management approaches work best with games and simulations?

Each of the points in the summary are expanded upon in the paper.

Summary ...

Phase 1 - Selling the Idea

The effective deployment of any instructional resource requires the support of teachers. Educators cannot feel threatened, be uncomfortable, or lose control when they use something new. With EduGames, the potential for all three of these issues is higher, so a well crafted strategy to address them is essential. Administrators need to understand their unique role and see resources that they can use to explain the project to stakeholders. If an administrator is driving the deployment, he/she needs to be prepared to support a wide range of teacher familiarity and comfort with EduGames. Administrators will need to be equipped with research and references that can be shared with parents and the press. Information Technology groups will prioritize stability, efficacy, network safety and cost control when they evaluate new products. Advocates for EduGames need to earn the trust of IT early in the process, or the project can be shut down before it even begins. Students should not feel threatened, and they need to understand how it will work. They also have sophisticated filters for good games and won’t easily tolerate poor design. As with any new instructional resource, gaining parental support is an important part of the political process. Widespread misconceptions about games can stall efforts unless you are prepared to address them. Regularly inform parents of the purpose, scope, and results of the project. Demonstrate the connection to 21st Century Skills to earn the support of the community. Where possible invite parents into the process.

Phase 2 – Preparation

A holistic approach that addresses technical infrastructure, installation, support resources, professional development, and lesson planning covers most of the bases. Because EduGames are still largely unknown to most educators, implementation services can not be optional. In order to reach sustained -- rather than experimental -- usage, schools and districts need to dedicate time and money to preparing the environment thoroughly. Districts vary widely in technology infrastructure, the openness of IT to new solutions and their general policies about games and learning. However, in general, advocates need to acknowledge that games need extra support and cooperation from IT. Implementing any new instructional approach requires professional development. Even teachers who are gamers do not intuitively know how to use games in the classroom. Tightly link professional development and initial student use -- any delay can lead to problems. Plan on a minimum of a ½ day on-site with hands-on time in teams. Teachers need to understand how the activities connect to the standards, what the goals are for the exercise, and which students it can benefit the most. They should also introduce the games at a pace they are comfortable with. Teachers are the lynch pin to success. Get the right teachers on board, and they will inspire their students and the other teachers in your building. Ideally you want people who are leaders – politically, technically, and pedagogically.

Phase 3 - Implementation

The majority of the comments we received on teaching strategies related to blended learning. Mix game play with discussion, lecture, reading and writing to gain the most benefits.

Panelists encouraged others to tap those aspects of games that make them fun – competition, failure, and transgressive play.

Lessons and game activities should be organized so they can be “consumed” in a 45-50 minute class period. It can be useful to start small in order to accommodate the natural learning curve teachers and students will need before they become proficient with a new resource.

There are pedagogical and practical reasons for having students play in teams of 2-4 rather than alone. Pedagogically, games force collaborative decision making. Grouping helps reduce barriers to learning by grouping proficient gamers with non-gamers. Practically, working in teams lowers the technology footprint needed, and it allows students to cover for each other during absences.

Classroom management for EduGames is very similar to any hands on activity.

An actively involved teacher providing content expertise and focus moves things along.

Games appear to be particularly good at encouraging peer tutoring.

To date, behavioral issues like bullying have not been an issue.

Backend integration with the school’s management systems relieves a lot of the administrative burden from teachers.

Given the novelty of game-based learning, many educators remain skeptical of the games’ ability to facilitate learning or to embed assessments appropriately. It is important to provide external validation of the learning that is taking place. Over time, if games deliver as promised, we expect educators to become more comfortable with in-game assessments.

I want to express my thanks to the SIIA and the Games & Simulations Working Group for the opportunity to work on this project. It was fun, informative, and I hope it contributes in a meaningful way to the growth of the EduGames market.

Education is high on the list for the economic stimulus package being proposed by the Obama Administration. Congress also supports turbo charging education so the likelihood of significant aid to schools is very high. But where oh where will the money actually go?

• Construction?
• Maintenance?
• Teachers?
• Instructional Materials?

As a nation we have some clear choices to make. We should be fighting for the right things amidst all the logrolling and back slapping that go on in DC. If you are part of the education publishing industry you should be engaged with the government relations work at AEP, SIIA, or AAP. These folks are working hard to make sure our voices are heard and they need your support and engagement. All of them welcome members who get involved in this effort.

As experts in this area and as citizens we have a responsibility to speak up. This doesn't mean pulling strings for our particular companies, it means making sure all of our money is spent wisely with the long term in view.

Patrick Riccards over the Eduflack blog has a great analysis titled Shovel-Ready or Funding-Worthy? It is a sound synopsis of the choices at the Federal and local level. Will the money go to the best connected (e.g. districts with lobbyists) or will it go the place where it will make the longest term difference in the economy (e.g. STEM).
I'll let Patrick have the last word:

We just need to remember that the stimulus is not intended as a bailout. It is meant to serve as an investment in our nation. It is meant to create jobs and strengthen economic opportunity, both now and in the future. For our school systems, that means it shouldn't go to the first program in line or the first idea that offers to create a job or make us feel better about ourselves. We need to focus on the investment side of the equation, ensuring that these new federal dollars are going into efforts that will make a difference — both in the short and long term — and can demonstrate real ROI. If K-12 dollars are in short supply, shouldn't we make sure that new dollars are being spent on worthy efforts? Let's eliminate shovel-ready from our vocabulary (at least of K-12 vocabulary). It's time to practice saying "funding worthy."

Government Affairs Links:

AEP - Association of Education Publishers. Primarily supplemental companies, a mix of print and technology providers with an emphasis on instructional materials.
SIIA - Software Information Industry Association. Technology oriented and a mix of instructional and enterprise solutions for education.
AAP - The Association of American Publishers. Large companies, primarily the basal textbook providers.

The Consumer Products Safety Improvement Act (CPSIA) is punishing the children's publishing industry. Go over to Publishers Weekly to read their summary of the disruption caused by the mandate that all products targeted at children under 12 be tested for lead and phthalates.

The law was passed in response to issues with Chinese toys - but it was written in such a broad fashion that it is sweeping into its net products that have never included lead or plastics (like paper and cardboard).

The problem is that the industry just found out in November that it applies to books and they have to be in compliance by February. Violations carry stiff fines which could bury small publishers.

No one - and I mean no one - is suggesting that we ship unsafe products to children. But the way this was implemented makes no sense. We should be targeting it at products that have the potential to contain lead. Otherwise it is nothing but an earmark for the lawyers and the industry that performs these tests. As always - follow the money.

Links

Consumer Products Safety Improvement Act - Official site of the CPSC
CPSIA- Central - Blog that tracks all things CPSIA
ALA Wiki on CPSIA - American Library Association's Wiki that tracks CPSIA related issues
AAP Twitter Feed - Some updates as available on Twitter at acaciaO. Hash tag #cpsia

Guest blogger Michele King provides a practitioner's perspective to Randy Wilhelm's post Web Content is a Source for Differentiated Instruction. Michele is an administrator at a large urban school district and a former 1st Grade bilingual teacher.

By Michele King

As the Instructional Support Coordinator for a large urban district, I am responsible for transitioning our district away from print-based instructional resources to a database driven solution accessed by teachers over the Internet. I read Mr. Wilhelm’s post with great interest and my experience working with teachers closely aligns with the “Schools and Generation Net” survey results.

A compelling finding out of this survey is that 60% of educators agreed districts need to be investing more in digital resources, shifting dollars away from print materials. Teachers perceive (and rightly so) that district level staff typically drive this decision. Instructional trailblazers are often on their own in the digital frontier.

Who are the 40% that disagree with investing more in digital resources? I call them the “binder” teachers – those that cling to papers from days gone by as their primary source for instructional planning. I’ll never forget the occasion in which I visited a teacher’s classroom and found her preparation centered on boxes labeled by months. I could almost hear her thinking, “Oh, it’s January, I better dust off my February box and pull out my Valentine activities. What copies do I need to be making?” The only differentiation I observed was by calendar month.

Malcolm Gladwell, author of the current New York Times best-seller, Outliers, wrote a very interesting article for The New Yorker called “Most Likely To Succeed”. The article discusses how to determine what makes one a “bad” teacher versus a “good” teacher. A key premise of the article is that teachers have to be sensitive to the individual needs of students (hello, differentiation). I wholeheartedly agree with that premise, however, what the article does not discuss is that teachers need help in gaining access to appropriately aligned resources that enable them to deliver instruction in a more targeted and effective fashion.

The first phase of our online instructional guide initiative is to flat line the current curriculum and restructure it into a web-friendly format. The idea is for content to be easily accessed and consumed by the teacher for instructional planning purposes. As I rolled out our pilot program to a dozen or so schools, every single time I presented at least one person brought up the need for more efficient access to web-based resources. Our teachers are hungry for a cultural transition in the schools (and school districts) away from the binder-based mentality to the 21st century notion that teachers should be able to efficiently access what they want when they want it.

Imagine that!