Stop Freaking Out about Ed-Tech Funding

Market Insight
By: 
LeiLani Cauthen, CEO & Publisher

Companies and schools have been saying they’re “worried” about the future of Education because of budget-slashing happening at the Federal level.  Let’s stop freaking out, because really, the Federal total coin in the game is a very small percentage for K12. The Federal Department of Education itself cites the still-true-today general structure of funding, where it comes from and how significant it is:

 “The structure of education finance in America reflects this predominant State and local role. Of an estimated $1.15 trillion being spent nationwide on education at all levels for school year 2012-2013, a substantial majority will come from State, local, and private sources. This is especially true at the elementary and secondary level, where about 92 percent of the funds will come from non-Federal sources.

That means the Federal contribution to elementary and secondary education is about 8 percent, which includes funds not only from the Department of Education (ED) but also from other Federal agencies, such as the Department of Health and Human Services' Head Start program and the Department of Agriculture's School Lunch program.”

The truth is, the K12 sector had some really big bonus-round years with Stimulus funds, and never really had a dip in total spending like the entire rest of the economy because of it.  I remember back when the first big Stimulus fund went out and some States actually sent their bonus checks back thinking that they had been “double paid” by mistake that year.  There was so much money in the market at that time that it felt like a giant party for a while, although maybe not for everyone. Some Superintendents used the boogeyman of the Recession to close some schools and lay off some folks, but in many instances those schools had few students and it allowed some house cleaning and funds to be directed to other, new schools.  Such was the case in parts of Chicago and other areas, if memory serves. 

Right now, the economy has heated up in 2017, but has been going up by small percentages for years.  The States, with the exceptions of Massachusetts and Kansas, have gone into 2017 with slight increases in their tax revenues but are said to be holding their breath over the Federal shifts.  This doesn’t mean the money won’t be spent, or that right now, this year, Schools have stopped doing Ed-Tech. Far from it. 

As mentioned in our Mid-Year Market Briefing, the overall Ed-Tech Market is up, slightly, in digital curriculum software with specific bright spots being the immersive digital courseware part, and decently up in hardware and major systems.  Large numbers of schools are marching headlong into 1-1 initiatives. 

America still leads the way in Ed-Tech innovation, but is getting more competition globally by the day.  According to Market Watch, “Education technology is becoming a global phenomenon, and as distribution and platforms scale internationally, the market is projected to grow at 17.0% per annum, to $252bn by 2020.”

We need to all keep striving for greatness, at every level.  There is a long way to go yet. 

The transition to digital is becoming more real, everywhere.  This is great for students, great for the long-term relevancy of schools. 

You can stop freaking out now.

LeiLani is well versed in the digital content universe, software development, the adoption process, school coverage models, and helping define this century’s real change to teaching and learning. She is the author of the newly released book, The Consumerization of Learning.

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