K-12 school funding outlook: Behind the numbers

The American Association of School Administrators (AASA) just published the latest in a 3-yr series of surveys on the impact of the recession on school districts.  More than 500 administrators, mostly superintendents, responded.  Behind the political elements to be expected in a report from a lobbying organization, there’s food for thought about how districts are allocating their dollars – and how they think they’ll allocate them in the future.

First the overall funding picture.  Any good news there was, is over.  The only good news is: the bad news is not getting worse as fast as it was.

  • Bad news: Federal ARRA funding will be totally spent this year, and that’s been the main prop for district financing since 2008.
  • “Good” news: On the state/local level – where 90% of the money for schools has always come from – budget shortfalls so far are projected at “only” $44 billion for the next fiscal year, compared to more than $500 billion total for the past four years.
  • Good news: State revenues increased 8% in the past year
  • Bad news: At that rate, it will take till 2019 to get back to pre-recession levels.
  • And the rate was 8% only because revenues were recovering from such a low level – states haven’t sustained that high a rate since the 1960s.

So no matter what happens to federal education spending in this election year, the underlying funding for schools will, at best, not get better any time soon.  Even more importantly, educational decision makers don’t think it will – and think it may get worse.  What does that mean for educational marketers?

One thing it means is that top-level buyers are just plain distracted.  80% of their budget goes to staffing, and they’ve devoted a lot of effort to avoiding layoffs, for both political and practical reasons.  In 3 years of budget distress and concern, districts have cut only 5% of positions, and only about half of those have been through dismissals.  Conserving staff like that hasn’t been easy.  So buying educational material has not been top of mind.  At least 50% of superintendents deferred textbook purchases, reduced instructional materials, and deferred technology purchases last year, and more are planning to this year.

Administrators always hunker down in times of funding uncertainty, and defer even purchases they know sooner or later they’ll have to make.  Eventually, for instance, they will need new textbooks, supplemental material, and technology.  But they’ll delay as long as they can, or until finances look like they’re getting better.   At the very least, that means the remainer of this school year, and into next year till after the election at earliest, we’ll have to make pretty compelling cases for the added value our products will provide.

And that means, among other things, that this is a good time to be mainline.  Unless you have a product that clearly has unique appeal to a particular dedicated stream of funding – accessibility to special ed students, for instance – the wider the usage, the better.  Superintendents are cutting summer school (approaching 30%), interventions (approaching 35%), and instructional initiatives (approaching 50%), even closing or consolidating schools (a third are at least considering it).  This is not a time for niche marketing.  It is a time to be comprehensive.  Also, work on extending usage of adopted products to more educators and more schools, and keep demonstrating effectiveness as broadly as possible.

But don’t give up.  Materials that work for a large number of kids, and help teachers cope with new challenges, will still be needed.  When districts settle into the “new normal” they’ll be buying again.  But it will not be easy, or quick.

Mike Baum, Sophia Consulting LLC

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About mhbaumk12

Mike Baum has 40 years of experience with all types of direct marketing, has run several companies, spent 25 years as a consultant in franchising and in K-12 education, and currently helps companies find solutions to growth challenges.
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One Response to K-12 school funding outlook: Behind the numbers

  1. Pingback: “The new abnormal” in K-12: Tactics are more important than ever | Mike Baum's Edbiz

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