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By: Karen Billings

1/1/2009

An analysis of key events that impact the education market.

The New Administration and Education

Will President-elect Barack Obama and his new administration have the chance to fund their education priorities during their first year in office? We know their focus will be on solving our economic problems and other national priorities. These issues will likely prevent them from funding the education programs they outlined in their education platform.

THE SITUATION AT THE FEDERAL LEVEL

During his campaign, Obama argued that NCLB has been under funded and proposed an additional $18 billion a year in new spending on preschool and K-12 programs. However, that was before the financial crisis mushroomed and Congress started providing government bail-out programs.

Given the financial turmoil and huge deficit spending that will still be with us in early 2009, I don’t see Congress approving any increases in education funding. Typically, when Congress deals with a priority issue they pass a measure extending the funding levels of the departments for the remainder of the year. While that sounds all right, it really amounts to a cut. With education, for example, rising enrollment and inflation means less money per student. We must hope the new administration maintains a focus on education during 2009. And as the economy gets back on track that they make a convincing case for Congress to boost education spending because that investment is important to shore up the economy and to be competitive globally.

THE SITUATION IN STATES AND DISTRICTS

While federal priorities set the tone for support for education funding, the states’ economies dictate how and when education dollars get spent.

Because of the downward shift in the economy, most states are facing tremendous budget shortfalls, some even approaching the federal government for their own bailouts. Only 10 states expect revenues to be stable in fiscal 2009, including energy-rich Oklahoma, Texas, and West Virginia. The rest are facing fiscal shock within government operations, in large part because of a drop in their tax revenues from the problematic realestate market. Most states have been forced to impose targeted cuts on K- 12 education programs and some even did mid-year budget corrections.

Implications for Sales - Short Term

K-12 districts across the country are tightening their belts by delaying purchases, cutting non-essential travel, and increasing class sizes. You can expect that school executives will reduce staff-level hiring, defer maintenance, eliminate field trips, reduce instructional materials, and cut non-academic programs, such as afterschool enrichment programs. Expect to have prior planned travel cancelled and make substitute-meeting arrangements, perhaps through online connections. Also expect that K-12 purchasing will be delayed—including new orders that were ready to go. Confirm before you ship products.