The Education Business Blog
Special Education appears to be the first K12 market segment seeing the education stimulus dollars flow in volume.
At PCI Education we saw our numbers start to move up towards the end of May. By August we were roaring on all cylinders. As a private company we don’t report out our details, but July was up over prior year and orders booked in August were more than double what we saw in 2008. I’ve heard through the grapevine that Cambium is in the same boat.
What is particularly stunning for us is that according to the reports on the USDOE’s site by the end of August only about 15% of wave 1 of the IDEA ARRA funds had been committed. This handy report shows all the stimulus buckets for education and how much each state has already spent – bookmark it if you don’t have it.
As I meet with other folks around the industry I’m not hearing similar stories about revenues. Some people have seen a modest pick up, but so far other segments seem to be lagging behind us. So the important question is – is there something unique about Special Ed or are we just on the leading edge of what everyone else will start seeing soon?
Timing
The Special Ed and Title 1 dollars were the first education stimulus money’s released to the states back in April. Given this, it makes sense that our customers would see the funds first.
It took a full 8 weeks before we even saw a modest uptick and a full four months before we were comfortable that we were seeing a true trend. At months 5 and 6 we seem to be fully into it.
I would be interested in hearing from others in comments if you are seeing similar patterns. As confirmation – we only started hearing from people at the District level that they had the funds in hand towards the end of July.
Market Cycle
We also know that the regular IDEA funds were released as normal in July. Since districts usually order most instructional materials in the summer, what we might be seeing is educators spending their regular IDEA funds in anticipation of using the stimulus funds for salaries etc. later in the year. Even if this is true – which given the restrictions on using ARRA for avoiding the funding cliff doesn’t seem too likely – we are seeing a huge spike in business.
The bad news for other publishers is that if ARRA funds for your products were not available in the summer buying months you may not see the big bump until next summers buying season. We do expect more of a bump in November/December than normal as schools buy materials for the spring semester – but the big buys will come in 2010. The good news – districts have two more years to obligate the funds so they won’t loose the funds at year end.
Clear Guidelines
One of the advantages Special Education has is that the IDEA funds are specifically earmarked and because the program is decades old the guidelines are clear. As an established funding arena it may just be easier for districts to start spending these funds first because they don’t have to engage in all the internal negotiations more ambiguous new programs (like SFSF) come with.
On top of this, because the Feds plan to audit the spending for compliance, school districts may hang back for more complete guidance in other areas before being comfortable spending the money.
Funds may be taking longer in other markets because there are two additional steps involving a lot of politics that Special Ed can ignore.
- Get clear guidance from the Feds on what is allowed
- Negotiate within a district on how the funds will be spent
New Products
Some of our particular spike may also be product related. PCI has two new comprehensive reading programs which are being well received in the market. PCI Reading Program and our new Environmental Print Program which are for students with intellectual and developmental disabilities at the middle and high school level. These are selling very well and this is driving some of the spike in our business.
The good news is that if you have something similar in terms of new products the stimulus funds will give them wings into the market. The even better news is that this doesn’t account for all the activity we are seeing.
If you have been skimping on R&D and don’t have recently released product this may be more of a problem for you – schools still want fresh copyrights!
Conclusion
I believe we are among the first to see what other publishers will start seeing as we get into the fall. There are a couple of unique things about Special Ed and about PCI that may be accelerating the funds coming our way – but the funds will flow. We expect the pace to continue for the next several months and to peak in the summer of 2010.
Perhaps the best news in all of this is that the spike in business is pushing us to do exactly what the act was intended to do – we are hiring for several new positions.