Mostly lost among all the stimulus action last week was a letter Secretary Duncan sent to the states (pdf) on some No Child Left Behind regulatory issues. The administration didn’t roll back the Spellings graduation rate requirements or make other radical changes. I would have preferred a more aggressive push on public school choice for students in low-performing schools, perhaps even with required audits about whether potential receiving schools actually have space or not rather than a walking back of the pressure there and the “n” size regulation isn’t helpful, but the sky isn’t falling. It barely even registers on Petrilli’s gadget. It’s mostly innocuous stuff.
Unless you’re in the tutoring industry that is.
There is a lot of chatter about what’s next for the “supplemental educational services” or SES tutoring industry when No Child Left Behind is reauthorized. Duncan’s new regulation means he’ll ease some requirements around the program and is going to waive some of the requirements that pertain to SES for stimulus funds. That makes sense since those funds are big one-time shots of money that the states couldn’t reasonably spend on tutoring anyway. But, the regulatory change seems to indicate trouble for the program longer term.
So, the short answer to what’s next is that it’s not an industry I’d invest a lot in (even if I could, ES has a policy precluding ES personnel from investing in for-profit education ventures) for a couple of reasons. First, the business model of requiring public school districts to help competitors for resources set up shop is completely screwed up (that’s a technical B-school term). That creates an internal tension in the program that can’t be fully resolved no matter how much regulatory pressure is brought to bear. There are fixes for that (pdf) but not a lot of political appetite to make them.
Second, quality within the SES industry is really mixed and has been all along. At the same time, there are not yet good cues to help parents or policymakers differentiate among good providers and lousy ones. That’s why in most states pretty much every provider that is not run by a felon or completely in financial disarray and has at least one employee who owns a suit can get approved to provide services. And it’s a chaotic space with insuficient information so it’s hard for parents to make good decisions.
And third, in his letter Secretary Arne Duncan said that he’s going to allow school districts that are not making “adequate yearly progress” or AYP under the No Child law to nonetheless provide tutoring services to students themselves if they want to, something currently prohibited. Under his proposal states can refuse them, but state boards of education that, regardless of service quality, are going to choose for-profit vendors over local school districts are few and far between. That’s too bad though because there is a big difference between allowing a district like Chicago that might not be making AYP but can nonetheless bring real capacity to a problem to provide services and allowing a district with say 6 schools, all of them lousy, to do the same. In other words, absent the politics and lack of attention to quality that exists today, Duncan’s proposal makes a lot of sense.
Without a real change in the path we’re on it looks like the current marketplace will change in the wake of the new law and SES providers will have to either market directly to parents who will be paying the entire cost out of pocket or to school districts for contracts. So, if I owned an SES company, what would I do?
First, I’d decide whether I want to be acquired by a larger company and just get out of the business or whether I want to try to make it in the post-NCLB environment. If the latter I’d go after the talent that will be available as the industry shakes out and I’d make sure I could make a good empirical case to school districts about quality of service. And if I were a good provider I’d be trying to partner with other good providers to come up with some standards for quality and some sort of accreditation process that actually has teeth. What’s out there now doesn’t.
And if I were an industry leader I’d partner with some others to make the case to lawmakers that some aspects of this should be kept in place – albeit with some changes to address the issues above. It’s hard not to think that if this were a federal subsidy for suburban kids to take violin lessons or play lacrosse there would be riots if Congress went anywhere near it. Done well SES can help low-income students with academics, but the quality providers have been too quiet and now don’t have a lot of time left to make that case.