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Published in Print: September 6, 2006, as Leader in NCLB Tutoring Finds New Corporate Home

Leader in NCLB Tutoring Finds New Corporate Home

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Education Station—a leading provider of tutoring services under the No Child Left Behind Act—has been purchased by Knowledge Learning Corp., a Portland, Ore.-based company that runs several chains of child-care centers and provides after-school programs in 38 states.

The $18 million acquisition from Baltimore-based Educate Inc. broadens Knowledge Learning’s involvement in the tutoring market. The company was already delivering before- and after-school enrichment programs in 700 schools nationwide through its school partnerships division, and providing supplemental educational services under the federal law in five states through its Champions Tutoring Program.

Marcy Suntken, the president of the school partnerships division, said last week that Knowledge Learning had “found an outstanding strategic partner” in Education Station. “I think it’s a great union in terms of what we’ll be able to do.”

Since the NCLB law was enacted 4½ years ago, Education Station has delivered supplementary services to more than 80,000 students in 80 districts, typically working in schools with small groups of roughly six to eight students each. Approved in 32 states, the company is one of the largest private providers of such tutoring. Schools receiving federal Title I money that have not hit academic targets set by the law for three consecutive years are required to offer students free supplemental educational services, or SES.

Former Official’s Role

Knowledge Learning Corp., which owns KinderCare Learning Centers, Children’s World Learning Centers, and other chains, is a division of Mounte LLC, a Santa Monica, Calif.-based company whose chairman is Michael R. Milken, the former junk-bond financier. Mounte’s other investments include Nobel Learning Communities, a for-profit operater of private schools, and LeapFrog Enterprises Inc., an educational book and toy company.

Nina Shokraii Rees

The purchase gives Nina S. Rees, a former U.S. Department of Education official who joined Knowledge Learning earlier this year as vice president of strategic initiatives, greater involvement in the tutoring aspect of the NCLB law from her new perch in the private sector. As the assistant deputy secretary of the office of innovation and improvement, Ms. Rees oversaw the first few years of implementing the SES requirements of the law. She said last week that she plans to focus on the public-policy aspect of tutoring now that the congressional reauthorization of the law is nearing.

“It’s exciting to be on this end,” Ms. Rees said. “We want to be a permanent solution to the achievement gap.”

Both Ms. Suntken and Ms. Rees said they were also drawn to Education Station’s assessment model, which includes testing both before and after tutoring, as well as its parent-involvement approach, called Home Connections.

The Decision to Sell

At a Glance: Education Station

Headquarters: Baltimore

Employees: 4,483

Growth: Served about 2,900 students in its first school year, 2002-03. During the 2004-05 school year, served more than 30,000 students.

Services: Supplemental education services under the No Child Left Behind Act, supplemental reading and math instruction, supplemental special education, writing enrichment, test-taking strategies, and study skills.

Features: Typically provides tutoring to groups of six to eight students at school sites. Tests students before and after tutoring. Uses a parental-involvement approach called Home Connections.

Executives with Educate Inc.—a Baltimore-based company that also owns Sylvan Learning Centers and Hooked on Phonics—said last year that they were looking to sell off Education Station because the investment required to see financial growth in that division, a relatively small part of the company, did not fit well with its overall mission of serving consumers directly. ("Educate Inc. Puts Division Up for Sale," Dec. 7, 2005.)

In a press release, Jeffrey Cohen, the president of Catapult Learning, the division of Educate Inc. that included Education Station, said, “Growing Education Station into an industry leader has been a phenomenal experience, and I am delighted that we have found the single best home for the company.”

Tim Wiley, a senior analyst at Boston-based Eduventures Inc., a market-research firm, said that Educate’s decision to sell Education Station was probably “a reaction to specific market characteristics” within the company. Internal confusion can arise within companies offering both private tutoring to paying clients and free NCLB tutoring because of the “significantly different demographics,” he said.

Education Station was put up for sale after its revenues fell 4 percent in the third quarter last year, compared with the same period in 2004. Steve Pines, the executive director of the Education Industry Association, based in Washington, said the purchase gives Knowledge Learning a “marquee company” in the tutoring market. “It will make them overnight probably the leading brand in SES providers,” he said.

Both he and Mr. Wiley noted that the SES tutoring sector remains dynamic.

With only around 20 percent of eligible students taking advantage of the free academic help, Mr. Pines said, “we still have a lot of kids to enroll.”

Vol. 26, Issue 02, Page 5

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