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NCLB Outrages

NCLB Has Become a Major Selling Point for Education Companies

The deluge of salespeople has grown so intense in Broward County, Fla., that school officials now set aside one day a month for vendors to make their sales pitches.

Talk to vendors selling to public school officials and — unless they sell furniture or office supplies — the conversation sooner or later will turn to how their products will help schools comply with the demands of the No Child Left Behind Act.

At least, that’s how it seems sometimes to Susan Wright, director of Title I programs for the Clark County, Nev., school system. Today, no sales pitch is complete without a healthy reference to NCLB.

“Everybody has a scientifically based program that they want us to buy,” she says. “There isn’t a Cadillac that can boast so many features.”

From the perspective of the education industry, however, what can anyone expect? The demands of NCLB loom heavy over school officials, leaving them open to suggestions that there are products that can help. The law also sets aside some federal funds for specific educational needs — a promising business opportunity for any company ready to meet those needs.

Yet, still unclear is whether NCLB is really much of a boon to the education industry.

Industry analysts offer mixed opinions. Some companies have won big contracts to write new statewide exams. Business is good for software companies selling reading and math instruction and data-management programs. And new companies are entering what could one day become a profitable new industry to provide supplemental services for students in low-performing schools.

J. Mark Jackson, a senior analyst at Eduventures Inc., a leading market research firm in Boston, isn’t ready to draw any sweeping generalizations about the law’s impact on education vendors.

Put aside teacher salaries, building construction, and other basic services, and the education industry can expect to see spending on its products grow by about 4.8 percent this year, he says. Furniture manufacturers, for example, are not going to see new business fueled by NCLB.

What the law has done, he says, is increase demand — and make some new money available — in specific areas of the education market. For example, NCLB requires schools to divert upwards of 20 percent of Title I funds to provide supplemental education services to students in high-poverty schools that fall short of NCLB goals for three years in a row. The promise of these funds is fueling growth in the tutoring industry.

“Overall, spending is not expanding rapidly at all,” Jackson says. “What we’re really seeing is a shift of expenditures into different market categories.”

Growth and mergers

For some companies, this shift in the market is no small thing. Catapult Learning (formerly Sylvan Education Solutions) has pushed hard to get on states’ lists of approved tutoring providers, and according to company President Jeffrey Cohen, the firm has started tutoring programs at “several hundred schools” in the past year.

Meanwhile, Plato Learning Inc. has signed contracts worth nearly $22 million with the Idaho Department of Education to provide public schools with software to manage student information, curricula, and data analysis — all key elements of any school district’s efforts to meet NCLB goals.

But the impact of NCLB goes beyond increased revenues for these companies. School officials have a greater need to align curricula to state standards, prepare students for high-stakes tests, and track student data to identify remedial needs, say industry analysts.

And some of the larger education firms are responding to this need with a series of mergers, consolidations, and strategic partnerships to ensure they can provide a comprehensive, “one-stop-shopping” suite of services and products.

In recent years, for example, Plato Learning has acquired seven companies. The largest is the $52 million purchase of Lightspan Inc., which provides online elementary courses and software and a popular computer-based assessment system. More than 1,500 school districts use Lightspan products.

New York City-based Kaplan Inc. recently announced a strategic partnership with Scranton Testing and Assessment. The two companies hope to combine Kaplan’s supplemental services, curriculum, and assessment tools with Scranton’s test-management system to allow school officials to better track student learning needs.

“You’re seeing either informal partnerships or formal acquisitions and mergers,” Jackson says. “It’s build or buy.”

It’s a trend that’s by no means universal. For many firms, today’s education market is not so very different from three years ago. At Excelsior Software Co., a Greeley, Colo.-based firm, NCLB has fueled a slight increase in business for assessment management software for the K-12 market, says Brad Baird, vice president of sales and marketing.

But unlike some companies, Excelsior has not made any significant change in its product line-up because of NCLB. One of the biggest concessions to the law’s market impact was to include state-by-state standards to its electronic gradebook software so it can be customized to the needs of individual districts.

Changing relationships

“NCLB was a validation of the direction we’ve been going for quite a while,” Baird explains. “I would say NCLB mostly changed the focus of our marketing efforts from individual teachers up to district-level administrators.”

Other companies also have revised their sales pitch in light of NCLB. Go online. You’ll find references to the law in ads, sales brochures, and websites, such as this one: “Renaissance Solutions qualify for federal funding and meet the requirements of No Child Left Behind.”

The website of Blackboard Inc., a Washington, D.C.-based education technology firm, has a special section on NCLB that includes suggestions on how the company’s products can help with specific provisions of the law. It also lists potential sources of federal money that could pay for its products.

But even before NCLB, the high-stakes testing movement was changing the way many companies did business with school officials, says John Super, senior vice president of strategy and business development at Plato Learning.

Instead of selling single-purpose products, some of the larger education firms have been packaging “solutions” to the problems of schools, he says.

To boost student reading skills, for example, educators not only need classroom instructional materials but also training for teachers, assessment tools, software to track student progress and disaggregate the data, and computerized remedial coursework for low-performing students.

Steven Pines, executive director of the Education Industry Association, says this model of helping schools with their goals — instead of simply selling a product — is a noteworthy change in the education industry. “They’re really devising a variety of solutions for schools, and that’s a subtle but more sophisticated position of the vendors.”

Good companies already are taking this approach, he says. So, “for companies that have a tradition of working in partnership with school districts, I’d say that NCLB has expanded and deepened those relationships, but it hasn’t fundamentally altered the relationships.”

Caution urged

Vendors have always pushed for sales, but NCLB has encouraged salespeople to become more aggressive.

The deluge of salespeople has grown so intense in Broward County, Fla., that school officials now set aside one day a month for vendors to make their sales pitches.

“We were getting pulled in many different directions, and we thought this would be a better way to provide a forum,” says Frank Vedolo, the district’s executive director of educational programs. “We get 10 to 12 vendors to do approximately 30-minute presentations for key curriculum staff.”

In Clark County, where students at 13 schools are eligible for supplemental services this year, school officials complain of overly aggressive salespeople targeting parents to sign up their children for after-school tutoring, Wright says. There are 22 state-approved tutoring providers in Nevada.

“People are becoming very aggressive,” she says. “There’s money tied to it, and sometimes they approach parents on their own, and a lot of parents get intimidated by some of the tactics used.”

The competition for business is intense in the software industry, as well. New companies are popping up, and some have no track record in serving schools or understanding their needs. That prompts Jackson to cite an old maxim: “Buyer beware.”

“More than ever, there has to be due diligence when choosing suppliers in the education market,” he says. “The nature of these new companies, their experience, the fact that a person can be in business at a moment’s notice, this is the time when professional buying practices are very important.”

At the Center on Education Policy, Director Jack Jennings adds his own warning: The pressure to respond to NCLB’s demands puts school officials at risk of making purchasing decisions when many products and services still have to prove themselves

“Unfortunately, some school districts may buy things that won’t be very good for them,” he says. He also worries that state-approved tutoring companies might fail to align their instruction with the curriculum.

“It’s possible, in a few years, we’ll find that kids haven’t progressed as much as we hoped,” Jennings says.

It’s these kinds of concerns that Plato Learning and other companies attempt to address with their suite of services, Super says. He suggests school officials can put together their own successful mix of products and services with good “project management.” He advises school officials to include vendors as part of the implementation team.

Some smaller districts simply won’t have the resources to take on such a challenge, he says. That’s why he foresees the day when school systems might form consortia to not only negotiate prices but to pool resources to research vendor products and develop comprehensive instructional and assessment systems that will be used throughout the consortium.

“This will require a higher sophistication on the part of school districts and school board members,” Super says. “But, in the end, it’s a new world we have to live in, and it means a lot of changes.”




— Del Stover
School Board News
2004-11-09
http://www.nsba.org/site/doc_sbn_issue.asp?TRACKID=&VID=55&CID=682&DID=34739


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