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The E-Rate Program: Three Pivotal Issues for Education Companies

the e rate program three pivotal issues for education companies
market trends 02242021 960517256 02 02

Many school systems applying for E-rate funding this year are focused on a new set of needs, and their shifting priorities have implications for ed-tech companies.

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Pennsylvania Governor Pitches School Funding Overhaul

pennsylvania governor pitches school funding overhaul
FILE - In this Nov. 4, 2020, file photo, Pennsylvania Gov. Tom Wolf speaks during a news conference in Harrisburg, Pa., regarding the counting of ballots in the 2020 general election. Facing a deep, pandemic-inflicted budget deficit, Gov. Wolf will ask lawmakers for billions of dollars funded by higher taxes on Pennsylvania’s huge natural gas industry for workforce development and employment assistance to help the state recover. (AP Photo/Julio Cortez, File)

A number of governors have called for boosting education spending for the coming year’s budget, betting that the economy will lift their states’ revenues. Pennsylvania Gov. Tom Wolf has proposed an ambitious increase of his own, one that hinges not on economic conditions, but rather an overhaul of how the state funds schools.

The second-term Democrat says his plan would result in $1.3 billion more in aid flowing to K-12 schools across the state, through a combination of tax increases and a reworking of Pennsylvania’s school finance system.

Even strong supporters of the plan, however, say it faces tough odds in the state’s Republican-controlled legislature, at least in its current form.

The core of Wolf’s proposal is a change to the method through which Pennsylvania funds schools. The state currently has a funding formula that was designed, in theory, to support underfunded districts. But only a small portion of the overall money flowing to K-12 systems, about 11 percent — by the governor’s estimate — goes through the formula, and the remainder is allocated separately, through a method that school officials say is tethered to antiquated school enrollment counts.

Wolf’s proposal would route all of the state’s basic education funding, which now stands at $6.2 billion per year, plus an additional $200 million he’s proposed for next year, through the funding formula.

The governor says the existing funding approach has punished tax-poor school systems and does not allow most of them to account for changes in enrollment and other costs that have spiraled over time. He has vowed that “no school will lose a single dollar” in state resource as a result of the change.

But it would require new revenue, and Wolf is calling for an increase in the personal income tax from 3.09 percent to 4.49 percent. It would shift the tax burden away from lower-income earners and increase them on those with higher pay, by adjusting exemptions.

“Pennsylvania’s school funding system is unfair to students, teachers and communities,” Wolf said in a statement. “The state still largely funds schools based on student enrollment from 30 years ago, which underfunds growing districts from our small towns to our big cities. My common sense plan restores fairness to school funding to ensure every community can provide the quality education students need to succeed in life.”

Eye on Personnel

GOP legislators, however, appear to be lining up in opposition to Wolf’s plan, arguing that it will hurt businesses and a state economy attempting to recover from the pain of COVID.

“The pandemic hit Main Street. More than anyone else they had to deal with the governor’s draconian shutdowns and now he wants to put more burden on them the largest tax increase in Pennsylvania history,” said Republican Senate President Pro Tempore Jake Corman, according to the Tribune-Review.

“The mom-and-pop stores will bear the brunt of this proposal,” Corman said. “Small employers and middle-class families are what drive economic recoveries. Governor Wolf has put yet another target on their backs.” 

Mark DiRocco, the executive director of the Pennsylvania Association of School Administrators, said he did not expect Wolf’s proposal to make it across the finish line in its existing approach, despite Republican opposition.

“This has been an historic ask, and we don’t know where it’s going to go,” DiRocco said.

But many of his organization’s members – mostly top K-12 district administrators – are convinced that a change in the funding system is long overdue. Many districts across the state struggle to keep up amid a raft of costs that rise, year after year – in serving populations such as special needs students and English-language learners, and in shifting enrollment. The current funding scheme, he said, does little to help.

Emergency federal aid to schools, the latest round of which was signed into law by former President Donald Trump in late December, has bolstered Pennsylvania’s districts, and so would additional aid proposed by President Joe Biden if it comes through, he said.

But much of that aid has supported one-time purchases, such as COVID-related safety equipment and laptops. Changing the funding formula would get at districts’ underlying, core expenses, particularly around paying for personnel, said DiRocco. His organization’s 900 members say they have a particular need for mental health specialists, such as school psychologists and counselors, as well as staff who can address learning loss.

Wolf’s plan “starts the conversation,” he said, “and most of our members want to be part of that conversation.”

Photo: Pennsylvania Gov. Tom Wolf at a news conference in November, by AP Photo/Julio Cortez.


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An Inside Look at the Texas Education Market

an inside look at the texas education market
EdWeek Market Brief special report -- Inside the Texas Education Market

Texas, which has more than 1,200 school districts serving 5 million students, has long been seen by education businesses as providing particularly bountiful opportunities, because of its size, the role that the state plays in decision-making around curriculum, and its relatively large districts.

In a new special report, EdWeek Market Brief helps its members make sense of the sprawling market, through in-depth reporting, research, and analysis.

The core of the report is built on hours of interviews our editorial team conducted with district administrators from across the state, delving into their school systems’ academic and spending priorities over the next year, how they’re responding to the chaos wrought by COVID-19, and what’s next.

Those interviews form the basis of Brian Bradley’s top story, as well as a “District Voices” section in
which we let our readers hear directly from Texas K-12 officials about their hopes and concerns.

In addition, we present the results of state-specific surveys of Texas district officials conducted by the EdWeek Research Center on K-12 systems’ biggest priorities, and what they expect from companies.

Many common themes emerge — around devices, connectivity, state mandates squeezing local needs, and about pandemic-era priorities that will carry well into the future.

This report is the first of a three-part series that EdWeek Market Brief is producing on key state markets, to be followed by breakdowns of the state of play in California and Florida.

The first installment features insights from our detailed interviews with Texas superintendents, deputy superintendents, district chief financial officers and other decision-makers. They describe a market in which districts’ academic and budgetary plans have been re-set by the pandemic, creating a new order of buying needs and goals in some areas, while reinforcing their commitment to existing strategic plans in others.

One Texas district official we interviewed said she did not expect the budget pressures her K-12 system is facing to abate anytime soon.

The “budget is bleeding,” she said. “We’re going to try to cut back where the least amount hits the classroom.”

Even so, her district, like many is now looking for products and strategies to address the anticipated learning loss that has come about since last spring.

“We have to get back in the groove” she said, “and try to reach out to those students and get them on board, improve the student outcomes, prepare them for college and career and military readiness.”

Another Texas district official spoke about the pandemic has increased his district’s hunger for online learning for the foreseeable future. We will “continue [to look for] curriculum and all the programs for virtual learning for however long we have to do that,” he said.

“Unfortunately, there’s no end in sight right now.”

The report offers critical insights on many issues affecting the Texas market, including:

  • New survey data about where Texas officials expect to see their district spending the most or least over the next year, in areas such as social-emotional learning, curriculum, PD, learning management and student information systems, and parent-communication tools.
  • Data on the mix of districts engaged in remote, hybrid- or in-person learning across the state.
  • Interviews and survey data on the impact that the historic state education law, House Bill 3, is having in district spending plans over the next few years.
  • Intel on which sources of funding – federal, state, local, and grants – districts expect to increase or decline over the coming year, and how that movement will affect their spending ability.
  • The voices of Texas district leaders, talking about their spending plans, the pressures they face, how COVID has reshaped their work, and what they need from vendors, in their own words.

And more.

EdWeek Market Brief members can download the full report here.


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Election Results: A Muddled Picture for K-12 Funding and the Education Industry

election results a muddled picture for k 12 funding and the education industry
Democratic presidential candidate former Vice President Joe Biden speaks to supporters early Wednesday, Nov. 4, 2020, in Wilmington, Del. (AP Photo/Andrew Harnik)

This year’s election appears to offer mixed results for the nation’s school districts–and for the companies and organizations that serve them–judging from results that are still rolling in.

The overwhelming amount of attention has focused on the U.S. presidential race, where Democrat Joe Biden and incumbent Republican Donald Trump were locked in a process that could take days to resolve because of the narrow vote margin and the slow pace of counting in many vote-rich precincts in key states.

But there were also many key elections and ballot measures in play at the state level, with big implications for K-12 policy and funding.

Check back here for updates as they come in.

A White House Race That Could Sway K-12 Budgets

The battle to control the presidency appears to come down to a few key states, including Pennsylvania, Michigan, Wisconsin, North Carolina, and Georgia.

Biden appeared to notch a key victory on the electoral college map when he flipped Arizona from GOP to Democratic control. If he were to win some combination of Pennsylvania and another state in the upper Midwest, it would appear to give him the 270 electoral college votes necessary to win.

Trump appeared to be poised to contest the vote-counting process in those states, as Democrats make gains in tallies conducted overnight and today. The Republican incumbent made false claims overnight about election fraud and vowed to challenge the results in court.

President Donald Trump speaks in the East Room of the White House, early Wednesday, Nov. 4, 2020, in Washington. (AP Photo/Evan Vucci)

If elected, Biden has vowed to greatly expand funding for schools–which has risen under Trump–by channeling new money into Title I and other major federal funding sources. (See Brian Bradley’s pre-election breakdown of the issues at stake.)

Education advocates also see the potential for new federal funding for after-school programs and other needs, if Biden wins.

The party in control of the White House also controls the leadership of the Federal Communications Commission. Ed-tech groups believe a Biden victory would lead to more funding and policy changes that are more favorable to creating new flexibility with the E-rate program, which supports internet connectivity in schools.

Congress: More Gridlock Ahead?

Either presidential candidate’s ability to set the education agenda and funding levels also rests in large measure on who controls Congress. Democrats, who kept a majority in the U.S. House of Representatives, had hoped to wrest a majority in the U.S. Senate from Republicans.

But Republicans appear to have fought back challenges in several key races, including Iowa and North Carolina. Some analysts on Wednesday were predicting the results would lead to a 50-50 split in the Senate, raising fears of an even greater degree of gridlock and partisan rancor than exists now.

Many school groups are hoping that Congress will eventually deliver billions of dollars in additional emergency aid for school districts, which have been coping with new financial costs and the continued likelihood of declining revenues caused by the pandemic.

State Legislatures and Key Ballot Items

A total of 6,000 legislative seats in 44 states were up for election on Tuesday. State legislatures and governors typically play a key role in shaping K-12 policy and spending, since states contribute a much bigger share of funding to schools than does the federal government.

Many of those results are still rolling in, according to the National Conference of State Legislatures.

EdWeek Market Brief is watching the results in several states, including Michigan, which is controlled by the GOP; Colorado and Nevada, which are controlled by Democrats, and Minnesota, which is split.

But as of Wednesday mid-day, the results of those races had not been called.

Education advocates are hoping to channel new funding into K-12 through ballot measures, which would most likely have an impact on districts’ ability to spend on new products and services.

Early results on Wednesday suggested some of those high-profile measures were on their way to victory, while others were on the brink of defeat.

  • California Proposition 15. While pre-election polls had shown that California voters were narrowly in favor of Proposition 15, results from election night indicated that the ballot measure was poised to fall short of passing by a slim margin. The state’s election tallies, which were not yet final, indicated Wednesday morning that a bare majority, 51.7 percent, of voters rejected the ballot measure, while 48.3 percent of voters approved it, out of a total of about 11 million votes cast. State officials said 94.5 percent of the state’s precincts had partially reported results, and that totals could change during the canvassing period.
  • Arizona’s Proposition 208. The measure would create a 3.5 percent income tax surcharge on taxable income above $250,000 for an individual or $500,000 for those filing jointly. All of the new money would go to K-12 education, with half of it meant to create new positions for teachers and classroom support personnel, and boost base compensation for teachers and classroom support personnel. The results, so far, show the measure passing with just over 50 percent of the vote.
  • A Colorado ballot item that created a tax on various nicotine products and devoted the money to schools has been approved by voters, the Denver Post reports. The measure would raise taxes by nearly $300 million annually, according to estimates. The money would help support preschool and rural schools, among other needs.

Check back on this post as election results are confirmed in the days ahead.

Photos: Democratic presidential candidate Joe Biden speaks to supporters early Wednesday, Nov. 4, 2020, in Wilmington, Del. (AP Photo/Andrew Harnik). President Donald Trump speaks in the East Room of the White House, early Wednesday, Nov. 4, 2020, in Washington. (AP Photo/Evan Vucci)


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A Key Election Issue for the Education Industry: California’s Proposition 15

a key election issue for the education industry californias proposition 15
California Proposition 15

At a time when school districts across the country are desperate for funding, California’s Proposition 15 would seem poised to do its part to help schools in the state in a major way.

The ballot measure, which state voters will vote up or down tomorrow, would raise taxes on commercial and industrial property, by assessing them based on their market value, not purchase price.

Estimates of how much new money the ballot item would channel to schools vary.

But the California Legislative Analyst’s Office has said it would eventually would raise taxes by between $7.5 billion and $12 billion per year. Some of the money would be offset by new costs, such as a decrease in personal and corporate taxes, which would leaving $6.5 billion to $11.5 billion annually. Of that amount, 40 percent would go to schools and community colleges — mostly based on how many students they have, says the LAO.

The measure is likely to have implications for companies and other organizations in the key state education market, if districts end up with new running room to pay for programs and products.

The measure simply needs win a simple majority of votes from Californians to take effect. Recent polls have shown that more voters favor than oppose it, albeit narrowly. A poll released late last month by the nonpartisan Public Policy Institute of California found that 49 percent of voters back the measure, and 45 percent are against.

Here’s how public opinion has changed from September to October:

California Proposition 15

Democrats and younger voters tend to back the measure much more strongly than Republicans. Less than half of homeowners approve of Proposition 15, the PPIC found.

(The graphic above also alludes to Proposition 16, a constitutional amendment that would repeal Proposition 209 and allow the reinstatement of affirmative action programs in public education and employment, within certain bounds of the law. The measure has been shown to have limited support in polls.)

Proposition 15 measure reflects a turn away from Proposition 13, a ballot measure approved in 1978 that put caps on residential and commercial property, said Mark Baldassare, PPIC’s president. Proposition 15 does not change residential property taxes.

One of the distinctive features of the proposition, he added, is that voters are not being asked to directly change how much they’re taxing themselves and their homes, because the ballot item focuses on commercial property. In that sense, he said, there’s been “nothing like it” in California’s recent ballot history.

“The polls here have been remarkably consistent – voters are divided,” Baldassare said.

For a broader sense of sense of the issues at stake for the education market in the 2020 election, please see EdWeek Market Brief’s recent breakdown by Brian Bradley. He writes about ballot measures, and the impact of races at the state and federal level.

Image by Getty


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