Tutoring Services See Opportunity in New Law
The new federal education act promises to give children in chronically failing public schools new educational options, including federally financed tutoring services. That's good news for eligible children and their parents, supporters of the provision say. The nation's supplemental education industry is gearing up to share in their delight.
"We're in the business of providing educational programs to children who need them most, and to the extent the dollars just went up, we certainly feel that there is an opportunity for us from a business perspective," said Jeffrey Cohen, an executive with Sylvan Learning Systems Inc., the Baltimore-based leader of the private-tutoring industry.
The revised Elementary and Secondary Education Act, signed into law this month by President Bush, mandates that public schools deemed chronically failing make "supplemental educational services" available to students. Advocates of the measure envision that parents of eligible children will be able to turn to a variety of private companies and nonprofit organizations to help their children.
"We wanted to make sure parents had the chance to choose a Sylvan or a Kaplan, but also a faith-based organization or community organization such as the Boys or Girls Club," said David Schnittger, a spokesman for the Republican members of the House Education and the Workforce Committee.
Wall Street analysts who track the education industry say that the "No Child Left Behind" law will provide lucrative opportunities for companies involved in textbook publishing, test development and scoring, teacher training, and, not least, tutoring.
"We've heard the supplemental education provision jokingly referred to as the 'Sylvan clause,' " said Jeffrey M. Silber, a senior vice president with Gerard Klauer Mattison, a New York City-based investment bank that follows education stocks. "Sylvan is the number-one player in the tutoring market, and the law is just a huge windfall for it."
A Fall Start?
Sylvan operates 840 private tutoring centers in North America, most of them in suburban shopping centers. Fees can run into the hundreds of dollars for a series of sessions. The company also contracts with districts to provide supplemental services on school campuses, many at disadvantaged urban schools.
Mr. Cohen, the president of Sylvan Education Solutions, the company's public education contracting division, agrees that Sylvan is likely to benefit greatly from the new law.
"There will be a targeted stream of funding for supplemental services," he said. "We expect many more children from the public education system will have the opportunity to participate in receiving quality supplemental education."
And some observers believe that as early as next fall, some families will be able to take advantage of the law's tutoring provision.
A December report by the Republican staff of the House education committee concluded that children in some 3,000 underachieving public schools would be eligible for the supplemental services as of fall 2002. That's because schools identified as failing under terms of the 1994 Elementary and Secondary Education Act will immediately be subject to supplemental education and public school choice provisions of the newly reauthorized law.
"There are many schools that will qualify right away," Mr. Schnittger said.
But it is far from clear that the tutoring will begin by fall. The federal Department of Education must issue regulations implementing the program in greater detail. State education departments must come up with lists of approved providers who have "a demonstrated record of effectiveness in increasing the academic proficiency of students."
In addition, districts with failing schools covered by the law must enter into agreements with approved providers selected by parents. Parents themselves will not receive federal money to apply toward tutoring services.
"It's not clear to us how a lot of this is going to work," said Mr. Cohen of Sylvan. "The regulations should provide a lot of the logistical detail."
Sylvan is not the only company that stands to benefit from the supplemental education provision. Its main competitors in private tutoring centers also hope to participate. Huntington Learning Centers, an Oradell, N.J.-based chain with 225 learning centers, has recently gotten into the market for contracting with urban districts to provide tutoring in schools.
"We're very much aware of the new law," said Raymond J. Huntington, the co-founder and chairman of the privately owned company. "We think it represents a great opportunity for school districts and for the kids who are in danger of being left behind."
But the company, which is negotiating with the Philadelphia and Baltimore school districts to provide in- school services, is likely to dip slowly into the federal program, Mr. Huntington said.
"We think it has the makings of a great opportunity, but we have yet to fully grasp what the opportunity is," he said.
Kaplan Inc., the New York City-based test-preparation company, is also likely to pursue opportunities under the law. The company has grown in recent years from its core college test-prep courses to include Score! Educational Centers and Kaplan K12 Learning Services, which contracts with schools to prepare students for state assessments.
Last week, Kaplan acquired Achieva, a San Mateo, Calif.- based provider of online test-taking tools.
Marc Bernstein, the president of Kaplan K12, said that in the short term, his division would offer staff development and curriculum materials to community organizations providing tutoring services under the new law.
"In the future, we will begin to organize and implement after-school programs ourselves" to take advantage of the tutoring provision, he said.
The market for supplemental learning services has traditionally distinguished between tutoring, such as Sylvan's programs to help students improve their math or reading skills, and test preparation and college counseling, the arena of Kaplan and its main competitor, Princeton Review Inc., of New York City.
The tutoring provision would seem to cover test preparation, at least for state assessments. The law's definition includes services "specifically designed to increase the academic achievement of eligible children on the academic assessments required under [the ESEA's testing provision]."
John Katzman, the founder and chief executive officer of Princeton Review, said his company would not seek to redefine itself to garner federal tutoring dollars.
"For the kids who are failing in those schools, we're not the guys," he said. "We're not a remediation company."
But Princeton Review increasingly offers preparation for state assessments.
"There are plenty of kids who fail state tests by 3 percent, and it's because they just don't know how to take tests," Mr. Katzman said. His company might serve as a component for another organization offering services under the tutoring provision, he said.
Most executives said it was far too early to estimate how much the tutoring provision would add to their revenues or profits. Several said they had no compunction about making money through a federal program intended to help children learn.
"We're in business to make money," Mr. Huntington said. "What's nice about our business is that we can make money while helping kids."
Vol. 21, Issue 19, Pages 19-20