| 摘要 | In the summer of 2002, Martha Fritchley was leafing through the Yellow Pages in search of tutoring companies. It had been about six months since the No Child Left Behind education reform bill had become law, and one of the bill’s provisions required schools that failed repeatedly to offer their students outside tutoring. An Assistant Superintendent for the Hall County School System in Georgia, Fritchley needed to enlist companies to tutor children in four schools in her district. She was particularly interested in finding an in-home tutoring company, and she bumped into the local franchise of a company called Club Z.
Fritchley called the franchise’s owner, Scott Morchower. While Morchower hadn’t heard of the new federal law or its tutoring provision, he met with Fritchley and was immediately hooked on the idea. Morchower called several nearby districts and offered up his services, too. In Forsyth County, he became the sole provider of tutoring services for the county’s 75 struggling students in the 2002-2003 academic year. Some of those students jumped as many as three grade levels. Few parents in Hall County chose to sign their children up for the federal tutoring program that year, but 14 enrolled with Club Z the following year.
Under the No Child Left Behind Act, these tutoring services, known as “supplemental educational services” in edu-speak, are paid for by school districts with part of the education money they receive from the U.S. Department of Education. Georgia was among the early states to implement this program. Most states are just getting on board in the 2003-2004 academic year.
This nascent marketplace has all the components of a high-school melodrama–there’s the popular crowd, the bullies, the over-achievers, the earnest do-gooders, and the geeks. (The leading roles are played, in order, by: large, corporate tutoring providers; school districts; smaller national providers; local, largely non-profit, organizations; and online tutors.) But without a chaperone in this new, free-market niche in public education, it’s been a schoolyard free-for-all–with muddled results. This chapter offers an initial assessment of the new marketplace that is emerging in response to the federally-funded tutoring program.
“The results we came out with were awesome,” says Morchower, whose national parent Club Z is among the small, national over-achievers. So awesome, in fact, he worked himself out of a job–at least in Forsyth County. All the schools in Forsyth County leapt right off the failing schools list, so their students were no longer eligible for tutoring services. In the 2002-2003 school year, students in the supplemental services program made up 20 percent of his business, and Morchower figured that in 2003-2004 they would account for 40 percent. No so. As of Fall 2003, students in the program again made up 20 percent. With such an unpredictable volume of clients, how should Morchower factor children from the federal program into his business plan? “I wish I knew,” he says. “That’s the $10 million question.”
By some estimates, it’s actually the $2 billion question. That’s how much money some tutoring providers say could be up for grabs in this new federally-funded marketplace. But so far, only an estimated 2 to 3 percent of eligible students are electing to participate.
The supplemental services program is perhaps the federal government’s largest free-market experiment going on in education. So far more than 1,000 tutoring providers have signed on to the program. But market uncertainty, combined with an enormous variance in school districts’ administration of the new federal law, has produced some extremely rocky terrain for these tutoring providers. While most providers maintain an optimistic if-you-build-it-they-will-come mindset, the unevenness of parent participation and program implementation is causing significant anxiety among providers.
In the Beginning
Just days after his inauguration, President Bush sent Congress his bill to reauthorize the Elementary and Secondary Education Act, which he called “No Child Left Behind.” The reauthorization was long overdue because a politically polarized Congress hadn’t been able to produce a bill during the 2000 election year. To cut past partisanship, Bush convened a meeting with four key members of Congress–two Republicans and two Democrats, including Democratic stalwart Sen. Edward M. Kennedy of Massachusetts–for a meet-and-greet photo-op at a public school in Washington, D.C. While Bush’s No Child Left Behind bill ultimately proved bipartisan, it was the product of many ideological compromises. Now that the bill is in its implementation phase, it’s become painfully clear that those compromises made elements of the bill like the supplemental services program overly-complicated, confusing, and perhaps unworkable.
The No Child Left Behind bill required testing in reading and math for children in grades 3 through 8. Schools whose test scores showed their students couldn’t make adequate performance from year would be labeled “failing,” or more gently, “in need of improvement.” In their first year under that label, schools would receive an infusion of cash to help them make improvements. But schools that failed for two years in a row would have to allow their children to transfer to higher-performing public schools. And students in schools that failed three years straight would be eligible for an “exit voucher” worth about $1,500 to seek outside tutoring. Knowing that schools hated losing money more than just about anything, Bush figured this exit voucher could both punish a school for poor performance and give a struggling student another shot at learning the basics–with the benefit of being a conservative crowd-pleaser as a version of school choice.
During his campaign, Bush had proposed that students in schools that had failed for three years be offered vouchers to attend a private school. His decision to pare back that measure to cover only tutoring was a concession that the political climate wasn’t going to accept full-fledged vouchers. Even Bush’s centrist Democrat allies had sent early signals that vouchers were a no-go. The White House’s hope was that the tutoring voucher would be a sufficient sanction for failing schools because school districts had to pay for that tutoring out of the federal money they’d otherwise use in-house. He also hoped the outside tutoring would give students in struggling schools an educational opportunity beyond what they’d otherwise be able to afford, which might also make small inroads for the school-choice movement.
Bush and his aides weren’t sure how this downsized voucher would sell on Capitol Hill. But he’d made it clear he wanted to work with the Democrats on this bill. In an early meeting with two senior White House aides, Sen. Kennedy tossed out the possibility that he might support what was then being called a more politically palatable “supplemental services.” Once they recovered from the shock of Kennedy’s offer, White House aides huddled with Republican Senators to craft the provision.
It took several attempts to construct a measure that Kennedy’s team would accept. Anything that allowed parents to receive money directly from the federal government for tutoring was out because Democrats felt it looked too much like a voucher. Eventually, lawmakers modeled the provision after the Reading Excellence Act, which put several layers of government between Washington and parents. While typical of the kinds of compromises struck in Congress, it didn’t make for a terribly user-friendly program. “Most education proposals start off from a very practical standpoint, and when they go thru the bipartisan sausage maker, they become impractical because each side gets its two cents,” one Senate Republican aide involved in the negotiations. Supplemental services was no exception.
Under the supplemental services program, states first approve a group of tutoring providers based on state criteria. Then, districts draw up their own contract with a subset of those providers. (Districts, themselves, can also be providers.) The contract spells out what services will be available, such as how many hours of tutoring they will provide for the district’s set offering price. Districts then notify parents of their options. Parents must then enroll with the provider of their choosing. Meanwhile, tutoring providers try to be in the right place at the right time to take advantage of new business opportunities.
The bill’s funding requirements give school districts great leeway in deciding how much of their federal money they would spend on tutoring. The amount of tutoring money each child receives for supplemental services varies from district to district. It can be anywhere from $700 to $2,000 per child. There were several reasons for this variance.
First, the new law requires each district to spend no less than 5 percent of the money it receives from a section of the federal Title I program designated for educating poor children. This works out to anywhere between $37 million in a large city like New York to a few thousand dollars in small districts.
Second, the bill requires districts to set aside 20 percent of that pot of Title I money for all “school choice” costs, which includes money for transporting children who take advantage of public school choice as well as paying for tutoring services. Ultimately, school districts decide how much money they really want to spend on the tutoring program, so long as it falls somewhere within this broad range of 5 to 20 percent of the money it received to educate poor children.
Third, whatever money goes unspent, due to lack of demand, districts keep. It’s important to keep in mind that districts see the requirement to spend money on outside tutoring as a sanction.
With so many responsibilities to delegate and so many ways to interpret funding requirements, there’s significant confusion over what the supplemental services provision really mandates. When a small number of states threw their hat in the supplemental services ring in the 2002-03 academic year, a host of problems came to light. States established very short deadlines for providers to get their seal of approval. School districts applied in droves to be providers, which set up a potential conflict of interest when district officials were responsible for both administering the supplemental services program as a whole and promoting their own district-run program. Providers found it impossible to predict how many students they might have. And parents largely ignored the program.
As this year’s program revved up with nearly full participation from the states, only a few of the previous year’s problems were addressed. For the most part, states have smoothed out their approval process, and there are some early indications that a few more children may be taking advantage of the program. But most of the implementation problems still await solutions.
The New Marketplace: A Snapshot
Before the No Child Left Behind Act, the marketplace for tutoring services was dominated by private tutoring businesses, which largely served well-off suburban children whose parents wanted them to get a leg-up on their peers. This market, known as the retail tutoring market, was about $2 billion strong, according to Educate Inc., a national tutoring company formerly known ad Sylvan Learning Systems. In the retail-tutoring marketplace, half of the tutoring providers were small local companies and individuals offering tutoring services and the other half was made up of regional or national providers, like Sylvan Learning Centers. In addition to the retail tutoring market, there was also a small, informal effort by companies like Sylvan Education Solutions to promote public-private partnerships in tutoring, but it wasn’t a well-defined marketplace.
The No Child Left Behind Act created a marketplace for publicly-funded tutoring, but it’s been difficult for providers or the government to get a handle on its scope because the program is new and has so many moving parts. At this point, federally-funded tutoring represents a small and scattered marketplace with significant growth potential. In the early days of this program, there’s been an explosion of tutoring providers–numbering more than 1,000 nationally. The biggest players are large tutoring companies and school districts. Still, what we do understand about the market is far outpaced by what we do not.
Much of this interest is driven by the potential money involved. The total market size could be as large as $2.4 billion and serve as many as 1.5 million children, according to Sylvan Education Solutions, which has perhaps kept the closest tabs on this marketplace. Still, in the 2002-2003 school year, only an estimated 30,000 to 40,000 children took advantage of the free tutoring, according to Sylvan. While 2002-2003 only represented a partial implementation of the program, many providers worry that this year’s numbers won’t shape up much differently because, by and large, parents still don’t know about the program.
On the providers’ side, at my last count in October and November 2003, there were close to 1,030 different tutoring providers approved to operate in the country. Because more than 60 national tutoring companies are approved in multiple states, a tally of the number of providers approved in each state produces a national total of more than 1,450.
The Education Department has been tracking the total providers in each state. As of October 2003, 70 percent of those providers were private, which include 2 percent faith-based and 13 percent online providers. Another 24 percent of those providers were part of the public school system. Meanwhile, just 2 percent were affiliated with universities and another 4 percent couldn’t be categorized. (Source: The U.S. Department of Education.)
The Department has also found enormous variance in the kinds of providers within a given state. Depending on the state, public schools might represent anywhere from zero to 80 percent of the providers. Online providers could be anywhere from zero to 47 percent of the options available to students in a given state. Religiously-affiliated providers range from zero to 13 percent of the providers offered in a state and universities represent between zero and 20 percent in a given state.
There is also significant variation in the number of providers approved in a given state. In my count at the outset of the 2003-04 school year, they ranged from nearly 150 in Georgia to zero in Florida and appear to have only a mild correlation with the state’s overall school age population, which is largest in California, followed by Texas, New York, and Florida. There also appears to be no major relationship between the number of approved providers in a state and its test scores–one might expect that states with the lowest test scores have the largest number of providers. Statistical correlations showed a very weak relationship between poor reading scores and the number of providers available in a state and a negligible one with math scores.
The number of providers in a state may track more closely with the states that have the largest number of schools that have been designated as failing for three or more years, which according to the American Institutes for Research, number around 2,400 schools. It and has not been able to get numbers for every state, but Georgia appears to lead the pack with more than 400 such schools and California has around 300. So far, Florida claims to have no schools that have failed three years straight. AIR has a research contract with the Education Department.
A caveat: Supplemental services statistics should be taken only as an estimate. All statistics on this program leave out at least four states–Florida, Maine, Nebraska, and Wyoming–which have yet to approve providers or have yet to compile their lists. The total number of providers fluctuates because the state lists of approved providers change constantly, and not all states are diligent about updating their lists. Plus, for providers, making the state-approved list is only the first step. Just because a provider is approved in a state, doesn’t mean it has significant, or any, market penetration in that state.
Additionally, this numbers crunching revealed much about what we don’t yet know. As of Fall 2003, some surprisingly basic information falls into the “what we don’t know” category. Here are a few:
There are no firm numbers on the total number of children eligible for supplemental services. Similarly, as of Fall 2003, neither the Education Department nor providers had a real sense of how many children were likely to enroll in the coming year.
As for cost, there’s been no calculation of how much the federal government spent last year on supplemental services nor is there a sense of how much it will spend this year.
No one is counting new private providers–those who started up solely because of the supplemental services program. Anecdotally, one could conclude that there are some, but they don’t currently seem to be a major component of the total providers because start-up costs are significant, and the return on investment is difficult to predict.
There is no national tally of what proportion of children enroll in district programs versus other kinds of programs. Policy makers need one to help untangle important questions around districts that wear two hats–as an administrator of supplemental services and a tutoring provider.
Any good market analysis should tackle market share, but such an analysis isn’t possible yet because there’s no listing, nationally, of how many students are actually being served by a given provider or type of provider. Right now, the only way anyone can guess at market share is by counting the number of states in which a provider has been approved, which only offers the vaguest sense of market share.
It’s understandable that there are many unanswered questions about this marketplace because the policy and practice are both very new. In discussions with researchers at institutions like AIR and WestEd, non-profit research groups evaluating supplemental services for the Department of Education, it appears that most research is currently focused on case studies of districts to begin to untangle questions of the best way to implement the new law. Implementation studies are important, but so are examinations of the marketplace, which will shed considerable light on the strengths and weaknesses of this new policy.
Five Types of Providers
As this new marketplace evolves, five major provider cliques are emerging: 1) large for-profit corporations; 2) school districts; 3) smaller for-profit firms; 4) non-profit community-based organizations; and 5) online companies. At this point, large corporate providers and school districts seem to be ruling the marketplace. Their shares are likely to increase as the program matures because both types of providers have the greatest ability to both scale-up and scale back with market demands.
The Popular Crowd
Jeffrey Cohen was following the supplemental services program long before it became law. As president of Sylvan Education Solutions, a subsidiary company of Sylvan Learning Solutions, Cohen saw enormous potential for expansion under a federally-funded tutoring program because it mirrored what he’d already been doing for 15 years–partnering with low-income schools to bolster their academic program.
With their brand-recognition, snazzy ads and glossy brochures, large corporate providers are the popular kids. While roughly 6 percent–around 60 of the more than 1,000 providers nationwide–could be considered national corporate providers, there are only a handful of real players in this category. Still, this small, elite group appears to have the greatest potential to garner a large market share because many of the companies in this category are approved in 20 to 30 states. Large corporate firms like Sylvan have been providing elementary and secondary tutoring in some form to paying clients–both parents and schools. So, these companies are well-positioned to scale-up their business without enormous start-up costs and they can take advantage of a growing, if unpredictable, market. (Source: American Institutes for Research and original reporting)
“We see the supplemental services legislation as an affirmation of what we’ve been doing,” Cohen says. Sylvan’s business model in this new marketplace is largely the same as it has been, with one exception: while Cohen deals solely with schools in his regular business, under supplemental services, he must get approved by the state, contract with a district and then sell his product directly to parents. He tries to work with the school district to allow Sylvan to offer its tutoring at schools, but when that’s not possible, he tries to find a location nearby. Prior to the supplemental services program, Cohen’s company was working with about 900 schools–about 100 of which were public.
Cohen says the supplemental services program offers him two opportunities: 1) to reach many more children, whose schools would not otherwise pay for Sylvan’s services; and 2) to build relationships with schools districts, which could lead to further business outside the supplemental services program.
At the beginning of the 2003-04 school year, Sylvan was approved in 29 states and was projecting it would serve between 15,000 to 20,000 students that year through the supplemental services program. In the 2002-03 year, Sylvan served 6,000 students, and it charges anywhere between $40 and $80 an hour. In the coming years, Cohen says his supplemental services enrollment will be in the “tens of thousands” and down the line, it could double his pre-supplemental services enrollment of 70,000 students. So far, though, Sylvan remains in investment mode. “The first year, the program certainly wasn’t profitable,” he says. But his strategy is to ensure that he’s in operation in as many locations as possible so his company is poised to take advantage of new business as parental demand picks up. And sees at least a 10 percent profit margin in its future.
Sylvan’s is not the only business model among large corporate providers, and given the potential market share for large corporate firms, it’s worth considering a few others. Princeton Review, which is now approved in 26 states, has taken a school-based tact in which it negotiates with districts in the hopes of becoming a district’s or school’s sole provider. “We’re looking to partner with districts that are actively interested in supplemental services,” says Rob Cohen, executive vice president of the company’s K-12 division. “I don’t look at this as a retail business, like putting up billboards on the highways. I’m looking for districts to call us up.”
Rob Cohen’s hope is that he can avoid some of the headaches of working with school districts that are dragging their feet in implementing the program by simply not working with them. In the 2003-04 school year, Princeton Review anticipates anywhere between 2,500 and 10,000 supplemental services students. Within the next few years, Rob Cohen says his company could be serving as many as 10,000. And he says ramping up to take advantage of the supplemental services program hasn’t required a great deal of expense because Princeton Review has 500 locations throughout the country through which it can run supplemental services along with its other offerings. “I believe we’re running supplemental services, on a marginal basis, profitably today,” he says. And he’s projecting 50 percent growth in the next few years.
A third strategy among big tutoring companies–popular with retail tutoring companies that operate from a storefront like Huntington Learning Centers–is to continue just as they have been doing. These companies work to get approved by the state, contract with the district, and then open their doors to children with money from the supplemental services program. Transportation to these tutoring centers, which are often located in suburban strip malls, is up to the parents.
Prior to the supplemental services program, Huntington had outlets in more than 230 locations around the country. In the 2002-03 academic year, Huntington served 500 supplemental services children. In the 2003-04 year, Russ Miller, Huntington’s vice president for new business development, estimates an enrollment of more than 2,000. In a few years, he says that number could grow to 10,000. But the biggest challenge facing companies like Huntington, says Miller, is getting students to come. Huntington is evaluating two new options for reaching supplemental services students. One would establish centers in urban areas. The other would partner with schools, much the way Princeton Review is, to make the school a kind of learning center.
One player in this category has surprised the competition with his slow its been to get in on this new marketplace: Edison Schools. Edison is a national school management company, and many large firms expected it to be a big player. So far, it is only approved in nine states—about a third the number of its big corporate competitors. Edison’s strategy is much like Sylvan’s, but Edison got a later start than its competitors. After a yearlong research effort, Edison began marketing itself as a tutoring provider in late-Spring 2003. Still, at the beginning of the 2003-04 year Joel Rose, a vice president at Edison who heads up Edison’s supplemental services division called Newton Learning, projected an enrollment of 5,000 to 10,000 supplemental services students.
Edison is among the companies with the most to gain from a successful supplemental service program because its core business depends on building relationships with school districts. At this point, like his corporate comrades, Rose attributes his company’s sluggish start to low parental participation and the unpredictability of getting selected by those parents that do participate. “Are we going to get half the school’s population? Ten percent of the population?” he says. “It depends on who’s got basketball practice and what other programs are going on at the school.”
The Bullies
John Liechty knows a market when he sees one. At the beginning of the 2003-04 school year, 186,000 of the nearly 750,000 students in the Los Angeles Unified School District were eligible for supplemental services. As the associate superintendent for extended day programs, Liechty sees tutoring as his district’s “lifeblood,” and he’d like the keep the money designated for it in the district. He also sees the program as a chance to tap new ideas from private companies and incorporate those ideas into the classroom. So, he applied to the state to be a supplemental services provider, and they designed a Saturday school program that would contract out the curriculum and teaching to private providers.
With their ability to be a provider and control the district-wide funding all supplemental services districts have an enormous amount of control over the tutoring options available. That level of control certainly offers up the opportunity for districts to bully other providers, and their wielding that power in both obvious and subtle ways. While each district’s reach is limited in scope, school districts, as a group, are becoming major players in this new provider marketplace. Of the more than 1,000 providers nationwide, about one-third are school districts or other public-school providers. Some districts, like Los Angeles, use their provider status to contract with private providers. Others, like Toledo Public Schools, have opted to develop their own program.
In Los Angeles, the district tutored about half of the 13,000 students who signed up for the supplemental services program in Fall 2003. The district’s main role is to provide administrative support and transportation services–and facilities. Liechty is responsible for running the district’s tutoring program and for administering the supplemental service program that includes 26 different providers (of which Los Angeles Unified is only one) that have established contracts with the district.
Each of the district’s six tutoring centers is run by a different company, like Kaplan or CompassLearning. “Each one of those centers becomes almost a lab,” Liechty says. “I’m looking for everybody and anybody to partner with.” Liechty says the benefit of this arrangement is that the district can exercise more quality control and can bargain down the price. Liechty hopes to double his enrollment in the next several years to between 20,000 and 25,000. He also needs to figure out how to turn a profit. So far, he’s operating with net losses, which he estimated at somewhere between $40,000 and $400,000.
Smaller school districts may be on an even steeper learning curve. When Toledo Public Schools saw it might lose a lot of federal money, it decided to adapt its successful summer school program into an after-school course for supplemental services students. The program, says Georgianne Czerniak, a literacy support teacher with the Toledo Public Schools’ Reading Academy, offers “an opportunity for the district to offer the service with trained teachers and to keep the money in the district.” The summer school program posted great results: more than half the students gained grade-level proficiency after six weeks of classes 10 hours a week. The tutoring program is only three hours a week for six weeks because that’s all they can currently afford to do with the $1,500 per student they receive under supplemental services. Calculating readers will note this works out to $83 an hour. Czerniak is struggling to find a business model that works.
In Fall 2003, the plan was to offer primary and intermediate reading sessions for groups of 10 students at a few locations around the district. But only 23 students signed up for the Reading Academy. (A total of 133 students enrolled district-wide a supplemental services program of the 1,544 eligible students.) She then discovered that every parent wanted their child’s tutor at their school and scattered her program throughout the district with three or four children to a tutor. Another unanticipated cost was paying for an on-site administrator. The administrator’s union forced the district to require that an administrator be paid to supervise the program.
Czerniak says her best chance to keep her program alive is to boost enrollment. She’d like it to reach 150 students in the next couple years, so she hopes to enlist her fellow teachers in her effort. Unlike Los Angeles, Toledo’s administrator for the supplemental services program has gone to great lengths to distance herself from the district-run program. But Czerniak talked her administrator into allowing her to tag along as the administrator tours classrooms this winter to educated teachers about the supplemental service program as a whole. Czerniak will have a few minutes to sell the Reading Academy to the teacher, so the teacher might recommend the Reading Academy during parent-teacher conferences. “We’d like it to be a money-making venture for us, too,” Czerniak says. “I don’t know what kind of profit we’re going to make. We may even lose money this time around.”
The Over-Achievers
Mark Lucas was skeptical about the opportunities he would see in the new federal tutoring program. As the CEO and founder of Club Z’s national operation, he wasn’t sure the federal money would every reach the pockets of for-profit providers. But when some Club Z franchises like Scott Morchower’s were awarded contracts, Lucas’ royalties increased tenfold, and that got his attention.
Meet the over-achievers, the entrepreneurs, the class presidents. Club Z is one of a number of smaller, national corporate players, who are less established, but have an opportunity to tap into an important market niche: parents who want the reliability of a national company but the feel of a local tutor. It’s difficult to gauge the proportion of the marketplace currently held by this group, but it’s small–probably no more than 1 percent of the total number of providers. Still, this group has a potential to claim a fair share of the marketplace.
Launched in 1995, Club Z’s claim to fame is that it offers in-home tutoring. Across the country, Club Z’s regular program serves 50,000 students a year. And after Lucas saw the surge in royalty checks, he decided the whole company should get involved |
