At PCI we are putting the finishing touches on our 2010 budget. The Stimulus funds are creating a particular challenge as we look out over the next 12-24 months. On the one hand there should be plenty of new money in the market next year. On the other, despite ARRA an additional 9 states are sliding into California like crises as the housing slump begins to affect tax receipts.
There are two core questions companies need to answer as they think about priorities for the coming year.
- Timing – when will the funds flow?
- Volume – how much of the stimulus will be available for instructional materials?
1. When will stimulus dollars flow for instructional materials?
The tribe gathered, bad coffee was drunk, stale muffins were eaten, and we shared insights and guesses about where education technology and publishing are headed in era of tight budgets and ARRA munificence. It was a typical first week of December in New York.
SIIA Education Technology Business Forum – Tuesday Dec. 1
Education jobs fell for the first time since 1959 while enrollments were increasing. There were only three other years in the past 50 years where education employment shrank – and all of them were during periods of declining enrollment as the baby boom petered out.
The decline was -0.9%, or 121,000 jobs lost. It is also the biggest drop by a wide margin in both percentage and actual jobs (the previous record was 1981 where it was down -0.4% or 29,000 jobs).
My last post on the difficulty of educational reform got me thinking about that other massive system we are trying to reform – healthcare. One way to understand the healthcare system is to compare it to education – where we have had universal single payer access for over 100 years.
In that vein – what would education look like if if it were run like the healthcare system? By transporting our healthcare practices to another environment we can strip away the patina of familiarity and acceptance and see some of the insanity in our system in a harsher light.
Well meaning people can disagree strongly on the specifics of what is needed (and they do). I found as I wrote this that I had to examine my own pre-conceived notions. For example – state funding for education creates some of the same problems the system of private monopolies in medical insurance forces us to wrestle with. The public option in healthcare is the mirror image of charter schools in education – both aim to open up competition and provide alternatives.
The Superintendent’s panel at EdNet this week featured a discussion about education reform that was like a cold bucket of water to the face.
The vis insita, or innate force of matter is a power of resisting, by which every body, as much as in it lies, endeavors to preserve in its present state, whether it be of rest, or of moving uniformly forward in a straight line.
The panelists were discussing what will change in the next 5-10 years in education. They were looking globally at the overall system (teacher evaluation, bell schedule, technology, instructional materials, funding flows, etc.). In this context the Superintendent of one of the largest districts in the country (LACOE), in a state (CA) that is experiencing a state of extreme financial distress, stated that she didn’t think anything significant would change until we had a “major crisis.”
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.
Moodys* has completely withdrawn credit ratings for Houghton Mifflin Harcourt (HMH) after downgrading it to high risk just last month. This action means Moodys believes there is a high probability of default. From a practical standpoint this means that it will be harder and more expensive to service the company’s $6.7 billion in debt on $2.1 billion in revenue.
According to the Irish Times the rationale was:
“the business risk and competitive position of the company versus others within its industry; the capital structure and financial risk of the company; the projected financial and operating performance of the company over the near-to-intermediate term, and management’s track record and tolerance for risk,”
At 35,000 feet, with a steaming Starbucks and a purring iPod I read my Grandfather’s memoirs last Wednesday. I’d already put in several hours of work when I decided to crack the sheaf of Xeroxed reflections written three years before he passed in 1964.
Ninety eight years ago in the summer of 1911 he was young Officer in Training in the English Army. Then poetry happened.
“I was on a march across Salisbury Plain in full regalia because we were going to sleep out that night. It turned out to be the hottest day on record and out of 600 more than 200 collapsed on the way. We were not a happy company, but we managed to bathe in the river when we reached out destination and that revived us. At night we lay down on the ground near the old ruins of Stone Henge, the oldest and most astonishing group of temple stones in England…The evenings are very short in England in summer and I think it was shortly after 4 in the morning when I was stamping around trying to get some circulation in my cold feet that I noticed the sun starting to rise over the old temple stones. At the same moment there was a racket and over the stones came one of the earliest aeroplanes in the world, the first I had seen and about 1,000 feet up. I was looking at a combination of the oldest and newest in the world. While I stood transfixed the motor of the plane conked out and the plane wobbled all over the place, but finally landed right side up. We rushed over and there was the pilot strapped in but shaking so hard he couldn’t do a thing. We unstrapped him and laid him on the ground to carry on his shaking because he had had a close brush with death.”