Can vendors help our schools?

View this email in your browser

A timely update from the Edunomics Lab at Georgetown’s McCourt School.

Can vendors help our schools?

Some 80-90% of all public school funds is spent on salaries and benefits for employees. That leaves only a small slice of public ed funding to spend on procurement contracts for purchased services, tools, textbooks, after-school care, and more.

And yet optimism around the ed vendor space is running high.

Some of the bigger ed philanthropies see vendors as better positioned to innovate, iterate, and use capital and data to build and implement more effective solutions. The idea is that schools will be more successful when they tap improved curricula, tech tools, tutoring systems, teacher supports, talent developers, engagement platforms, and so on.

Investors are bullish on what they see as a $7 trillion worldwide market ripe for being transformed by technology.

Sure enough, the ed purchasing market has seen unprecedented growth in sales over the last few years. By our calculations, U.S. school districts have added $40-$60B in new spending on vendors since 2021.

But there are headwinds. District purchasing is about to take a nose dive. The increased procurement spending was fueled by federal relief funds. That tank will be emptied by September.

LAUSD’s own budget shows that spike and subsequent fall. Nationwide, we expect procurement to fall below 2019 levels. When funds are tight, districts prioritize labor investments at the expense of recently added procurement.

What about vendors with proven value? Still not safe. Frustratingly, efficacy can be a secondary concern when funds are tight. If history is any guide, new sales will stay low for a few years until labor costs shrink with staff attrition.

Those looking to sell to districts should learn to scan a district’s financials. A few districts still have ESSER to spend.

Otherwise, one hint: if the district isn’t hiring, they’re likely not buying. Probably best to avoid the big urban districts with enrollment declines.

Better bets: Districts with lower levels of poverty, since they got fewer relief dollars and are less impacted by the fiscal cliff. Districts with growing enrollment will also have money. And states with strong revenues.

A longer-term challenge is that the market doesn’t work well. Buyers lack information. Vendor selection can hinge on who you know. Procurement processes are clunky. Price and value are rarely weighed together. And purchases aren’t regularly monitored for impacts.

District purchasing is ripe for reform.

We’ll tackle procurement, tradeoffs to sustain what’s working, and more in our September cohorts of Georgetown’s Certificate in Ed Finance. Each cohort of over 100 includes a mix of those from districts, states, advocacy, media, nonprofits and vendors. Register here.

In case you missed it:

Our 30-min recorded webinar on state by state ROI for math and reading tackles a big question: Can schools deliver improvement without new money?

We’ve been talking with P olitico, The Hill, The 74, Bloomberg, and Christian Science Monitor about the financial realities facing districts. As Marguerite told the Pittsburgh-Post Gazette, districts need to look ahead at what's coming down the pike. “Multi-year budgeting has never been more important than right now."

Connect with us on X: @MargueriteRoza, @EdunomicsLab

Did someone forward you this newsletter? You can sign up here.

Edunomics Lab is a Georgetown University research center exploring and modeling complex education finance decisions to inform education policy and practice.

Please do not "Unsubscribe" if this email was forwarded to you, as this will unsubscribe the original recipient.

This email was sent to <<Email Address (Required)>>
why did I get this? unsubscribe from this list update subscription preferences
Edunomics Lab · 1700 Westlake Ave N. · Suite 200 · Seattle, WA 98109 · USA