The private tutoring industry, which has flourished under the No Child Left Behind Act, has been hit hard by federal waivers that have eased key provisions of the law.
Those waivers, granted by the U.S. Department of Education to most states and a group of California districts, allow school systems to avoid the NCLB mandate that they use 20 percent of Title I funds for after-school tutoring and transportation for school choice to eligible students.
Many for-profit providers of the tutoring, known in the NCLB law as supplemental education services, have had to pursue new K-12 revenue streams, or even close their doors, as federal funding funneled through affected school districts is being reallocated for other purposes.
At its peak several years ago, tutoring services were provided by about 2,500 companies and other organizations that had received state approval to work with students, using money allocated to improve students’ academic performance, according to Steve Pines, the president of the Education Industry Association, based in Vienna, Va.
Today, he estimates, the number of providers has dropped by 50 percent.
In its heyday, “SES was the rocket fuel that helped ignite a new wave of entrepreneurism,” Mr. Pines said, noting that about half of the state-approved providers are businesses. Others are a mix of districts and community- and faith-based groups.
The earmarking of SES funding was “a very good thing for the industry, and the kids who before didn’t have the benefit of those services,” he said.
But when Title I dollars started to be freed up after the first waivers were granted in February 2012, SES providers ranging from large, publicly held companies to small “mom-and-pops” needed to adjust.
“The marketplace spoke. It said the strong and agile will survive, and others, unfortunately, have not,” Mr. Pines said.
The latest bad news for the SES industry came Aug. 6, when eight school districts in California, representing an estimated 50,000 students eligible for tutoring, received a one-year NCLB waiver from the U.S. Department of Education. The districts, collaborating as the California Office to Reform Education, or CORE, now have the authority to decide how to spend up to $150 million in funding, some of which had been earmarked for supplemental education services.
As of Aug. 15, the Long Beach, Los Angeles, Oakland, Sacramento, and Sanger districts plan to discontinue paying providers for after-school tutoring programs, according to Hilary McLean, a spokeswoman for CORE.
Already, 40 states and the District of Columbia have received NCLB waivers. Maine, the most recent state, was granted its waiver last week. An Education Week analysis showed that very few states included supplemental education in their waiver plans.
In the Sacramento school system, where the waiver freed $3.1 million in funding from having to be spent on SES, Superintendent Jonathan P. Raymond said gaining that flexibility was “our hope and desire from day one.” His complaints with the SES system: “A general sense of poor accountability for student outcomes, a lack of oversight, an inability to have any real role in the selection process [for providers], and no alignment with what our children are learning during the day.”
Mr. Raymond plans to consult with educators, students, parents, and providers about how to boost student achievement. He does not rule out contracting with outside tutoring services. “But the rules of engagement will be different,” he said. “We get to decide who we’re going to work with, when we’re going to work with them, and how.”
The American Association of School Administrators wants Congress to reauthorize NCLB and has opposed waivers. But Noelle M. Ellerson, the assistant director of policy analysis and advocacy for the Alexandria, Va.-based organization, also said the waiver process is giving districts the flexibility to make spending decisions that best suit their needs. The association plans to closely monitor how the waivers influences’ districts Title I spending decisions.
For many districts, “that 20 percent set-aside and mandate for SES is problematic,” she said.
The SES bust unfolding across the country contrasts sharply with the boom that occurred after No Child Left Behind was signed into law in 2002. Funds available for the tutoring services grew 45 percent from 2001 to 2005, according to author Patricia Burch, who published those statistics in her 2009 book, Hidden Markets: The New Education Privatization. She said more recent statistics have not been compiled.
Providing SES is one of the interventions required when schools consistently fail to make adequate yearly progress under NCLB. The mandate is one of the prime drivers prompting states to seek the waivers, particularly since districts received no money to oversee providers’ out-of-school practices.
The services can be delivered by a tutor, online, or in a blended approach that combines online and in-person instruction. A formula determines the annual amount a child in a given district can receive. For example, a student who is eligible to receive $1,800 worth of tutoring in a given year will get three times as many sessions from a provider charging $30 an hour than from a provider charging $90.
That difference is significant, because ongoing federally financed studies of SES in five large districts concluded that students, under optimum conditions, can show academic gains with about 40 hours of tutoring, according to research by principal investigator Carolyn Heinrich, a professor of public affairs and economics at the University of Texas at Austin, and Ms. Burch, a policy analyst and associate professor of education from the University of Southern California, in Los Angeles.
For the larger companies in the SES market, the waiver fallout will be “a blip,” Ms. Burch predicted. She said they already have moved into other market segments based on the new common-core standards and digital forms of instruction. “They’re not going to go away,” she said.
But for smaller providers, transformation or cessation of business is already underway. “A lot of providers are just saying there’s no money in this,” Ms. Burch said.
A number of privately owned SES providers told Education Week that they’ve had to identify new streams of income, and change the kinds of services they provide.
Jim Popp, the president of Richmond, Va.-based University Instructors Inc., said SES came along well after he started his business as an after-school support program in 1994. The 139th-fastest-growing company on the Inc. 500 list in 2006, University Instructors’ SES business grew to make up 40 percent of the company’s revenues.
Then, Mr. Popp saw that the marketplace was becoming overcrowded, district leaders were expressing frustration with providers and regulations, and he decided it was a good time to find new ways to collaborate with school systems, instead of providing SES.
Today, Mr. Popp said, he has replaced all of University Instructors’ SES revenues, as his company has become a “direct to schools” provider of interventions for students during the school day, professional development, after-school programs, and educational summer camps.
University Instructors is also in its second year of a contract with the state of Virginia to provide an online tool that helps manage educational consultants throughout the state. The company has also diversified to help online-content providers ensure that teachers are using the providers’ programs correctly in schools.
While policymakers, and researchers like Ms. Heinrich and Ms. Burch evaluate the effectiveness of the SES providers that remain in the market, they also are looking for examples of what works.
Federally funded researchers, for instance, have found strengths, but also many shortcomings in how SES providers choose to deliver services in online and in-person environments, they noted.
In one large, urban system Ms. Heinrich and Ms. Burch studied, as many as 88 percent of eligible students were receiving SES solely through online tutoring, rather than in-person instruction. Other SES providers seemed to have little grasp of challenges they would face such as limited Internet access in out-of-school environments, they said.
Under NCLB, states and districts were expected to oversee SES providers, but received insufficient aid to do so. When problems arose, districts lacked funds and authority to respond.
“Districts couldn’t do much to discipline the market,” Ms. Burch said. “I hope we’ve learned from that.”
Coverage of the education industry and K-12 innovation is supported in part by a grant from the Bill & Melinda Gates Foundation. Education Week retains sole editorial control over the content of this coverage.
A version of this article appeared in the August 21, 2013 edition of Education Week as Tutoring Firms Hit Hard Times In Waiver Era