Fwd: [arn2-strategy] NCLB Profiteers

[Susan Harman <susanharman@igc.org>]

Begin forwarded message:

> From: Bob Schaeffer <bobschaeffer@earthlink.net>
> Date: Fri Apr 21, 2006  7:27:22 AM US/Pacific
> To: ARN Main List <arn-l@interversity.org>,  arn2-strategy 
> <arn2-strategy@yahoogroups.com>
> Subject: [arn2-strategy] NCLB Profiteers
> Reply-To: arn2-strategy@yahoogroups.com
>
> EDUCATION LAW MEANS MONEY FOR MANY CONTRACTORS
> Associated Press -- April 21, 2006
> by Ben Feller and Andrew Welsh-Huggins
>
> Lew and Sharon Goldfarb went looking for a way to make some extra cash
> and help children learn, too. They found both in President Bush's No
> Child Left Behind Act.
>
> The suburban Columbus, Ohio couple bought a franchise with a
> Florida-based company, Club Z! In-Home Tutoring Services, that provides
> one-on-one academic help. The Goldfarbs have 100 tutors working for
> them, and much of their business is a result of the 2002 education law.
>
> The law promises poor parents a free tutor for any child at a school
> that gets federal poverty aid but has not made steady progress for 
> three
> straight years. The government estimates $2.5 billion was available for
> schools to hire tutoring companies this year.
>
> “The fact that I could run a business, be my own boss, help kids and
> financially do well made it seem like a great opportunity,” said Lew
> Goldfarb, 48. He hopes his business grows to the point that he can 
> leave
> his regular job — as an attorney for Honda of America.
>
> The most aggressive education law in a generation, No Child Left Behind
> aims to make sure all children can read and do math on grade level. It
> also has benefited an industry of vendors, who collect public money and
> help schools meet the law's requirements.
>
> Revenues for products and services sold to public schools hit almost 
> $22
> billion in 2004-05, according to Eduventures, a market research 
> company.
> That was up 6 percent from the year before, and revenues are expected 
> to
> keep growing at that kind of rate. But the market is not expanding for
> all. Some vendors say the law has cost them money by eroding demand for
> any academic area not considered to be a federal priority.
>
> “If you look at K-12 funding as one big bucket, the money is getting
> sloshed around from one area to another,” said Tim Wiley, a senior
> analyst at Eduventures. “That's where No Child Left Behind is having 
> the
> greatest effect.”
>
> Money is flowing to testing, tutoring and teacher training. All three
> areas have direct ties to deadlines under the No Child law.
>
> In Texas, for example, the state is paying about $60 million a year to
> Pearson Educational Measurement, one of the world's biggest providers 
> of
> testing services. Five years ago, the state's Pearson contract was $36
> million a year.
>
> In its 2005 annual report, the company credited rising sales to
> “significant market share gains and first year of mandatory state
> testing under No Child Left Behind.”
>
> Cynics dubbed the law “the testing company welfare act,” said Henry
> Scherich, president of North Carolina-based Measurement Inc., a leading
> test provider.
>
> But he said his company, with revenues between $60 million and $80
> million, already was experiencing growth from states' own emphasis on
> testing.
>
> The law has even changed the art of the sales pitch. Now some vendors
> will pay to track down specific teachers — like a third-grade reading
> instructor at a school that hasn't made adequate progress for three
> straight years.
>
> Companies turn to marketing firms, too, such as MDR, which has seen
> demand soar for data that describe how schools are falling short, 
> broken
> out by grade, subject and employee.
>
> “There are a lot more publishers that are building around math and
> reading, specifically aiming to prove they can improve test scores,”
> said Mike Subrizi, vice president of database operations at MDR. “That
> wasn't in the dialogue before No Child Left Behind.”
>
> The growth likely is to continue for some vendors.
>
> A new federal estimate shows that only 233,000 of 1.4 million eligible
> children took advantage of free tutoring in the 2003-04 school year.
>
> Federal tutoring business represents just 1 percent of revenue for
> Huntington Learning Centers, one of the nation's large providers. “The
> critics who are out there think a lot of companies are benefiting
> financially from NCLB, which is not the case,” said Julie DeLucca,
> Huntington's director of school services. Still, it's not pennies.
>
> Minnesota-based PLATO Learning, approved for the federal tutoring
> program in 45 states, had revenues of $3.7 million from that work last
> year. Baltimore-based Catapult Learning, whose Education Station
> subsidiary provides tutoring in 25 states, estimates districts will
> spend $500 million this year nationwide.
>
> As president of the School Market Research Institute, Bob Stimolo helps
> companies sell their products to schools. His advice: Keep your
> perspective, pay attention to your base business and be aware that No
> Child Left Behind might be replaced.
>
> “We know that George W. has only got a couple of years left,” Stimolo
> said. “Then what happens? Is that the end of No Child Left Behind? Did
> we spend all that money for nothing? That's the uncertainty we're
> dealing with.”
>
> Meantime, education companies say there is nothing wrong with being
> opportunistic.
>
> “The belief around the whole industry is, yes, we know we want to make
> money,” Subrizi said. “But we believe we're in a worthy cause.”
>
>
>
>
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