What Federal Education Budget Cuts Mean for Edtech

Policy and Government

What Federal Education Budget Cuts Mean for Edtech

By Jenny Abamu     Apr 2, 2017

What Federal Education Budget Cuts Mean for Edtech

Selling an education technology product to public school districts in the United States has never been easy. Now it may be even tougher, with severe budget cuts looming over the education sector.

The President’s education budget proposal, which aims to cut $13 billion in education spending in the 2018-2019 school year, will have to go through both the House and Senate before it is approved. In its current state that’s highly unlikely, according to most budget analysts. The 2017-2018 school year budget will be a continuation of what was set by Congress under the previous administration. However, as Politico reported, documents have surfaced showing the Trump administration’s desire to cut an additional $3 billion from the 2017-2018 year budget. If Congress agrees, that will likely frustrate administrators who may have to wrestle with a last-minute curveball in their budgeting plans. On April 28, Congress will decide whether or not they want to continue the funding resolution as is or make changes for the upcoming school year.

“Everyone is reassessing funding sources and the stability of those sources going forward,” explains David DeSchryver, Senior Vice President and Co-Director of Research at Whiteboard Advisors, a consulting firm that specializes in education policy.

Dr. Jennifer House, a former school administrator, and the current president of RedRock Reports, an education budget consulting group, notes that for many district leaders, unexpected cuts to their upcoming school year budgets would be their worst nightmare. “A lot of schools want to make their technology purchases by the end of the year so that products come in time for the next school year and news of a possible $3 billion in cuts is devastating,” House explains. “This could really truncate a lot of decisions about buying technology, software or subscriptions.”

To survive shrinking school budgets education companies must, now more than ever, make a robust show of their product’s efficacy—something that few have been able to demonstrate convincingly. “Those organizations and partners that have evidence-based practices and a track record of success are more likely to be in a position to withstand any potential cuts that may come down the line,” DeSchryver predicts.

“Get some case studies really fast. I would not go into the system next year without some evidence of efficacy,” House advises. That should be done before April and May when schools usually start preparing the next year’s budget plans. “Make it more of a solutions sale than a hardware sale,” she says. For example, if an administrator wants to boost STEM scores, it is important for an entrepreneur to identify and map out a way that the school can reach that goal. House also believes that entrepreneurs can align their offerings to student achievement goals set by the Every Student Succeeds Act.

Another strategy that House suggests is “bundling”—meaning if the federal government is cutting professional development funding, it would be wise for companies to offer educator professional development supports in conjunction with their core services. “If I were a company selling curriculum solutions, I would bundle it with professional development, or English Language instruction, that way you are able to tap into other grants offered in Title I or Title II,” House says. “Emphasize to administrators how your professional development offering will achieve the goals of a particular title fund,” she continues. This bundling technique can also be used to tap into grants offered by groups outside of the Department of Education like National Science Foundation, whose funds support many STEM education initiatives. However, the technique depends on an entrepreneur’s ability to identify such buckets of money.

One place a large bucket of money may be found is charter schools. The president’s budget proposal adds $1.3 billion in funding to the institutions. Though some charter school CEOs came out with an op-ed questioning the administration’s school-choice budget promotion strategy, House believes charters are a solid investment for entrepreneurs. “If you are building new charter schools you need new hardware, new instructional materials, and new school supplies. They have to train new staff, and that’s a great target for edtech companies,” she explains. She also warns that entrepreneurs giving attention to charters shouldn’t be done at the expense of reaching out to traditional public schools.

For entrepreneurs hoping to provide curriculum for new skills, such as coding, the proposed budget cuts are particularly worrisome. Hadi Partovi, CEO of Code.org, a nonprofit that provides these programs to schools, is concerned. “Whenever we work with the schools to train their teachers in computer science, the understanding is that the teachers will then lead their own professional development projects,” explains Partovi. “In the long run, the rate of the change to add computer science in the schools depends on well-funded professional development programs.” His organization is currently training teachers in over a hundred school districts. Although Code.org is entirely funded from philanthropy, he worries about the sustainability of such work without federal support.

Like his peers, Partovi is watching Congress closely, as he notes that presidential proposals typically have little bearing on what truly happens. “When Obama, proposed the four billion dollars spending bill, just for computer science, what actually happened was zero dollars,” he explains. Trump’s appointment of Betsy DeVos as education secretary was interpreted as a win for education technology by some analyst, but his America First budget proposal does not reflect any specific take on edtech. “It is best to wait and see,” Partovi says.

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