Posts from — March 2009

John F. Hood
President, MCH, Inc.

School districts across the US are beginning to understand the avalanche of money headed their way. A front-page article in the New York Times on Sunday, March 22, entitled “Some Rich Districts Get Richer As Aid Is Rushed To Schools”, discussed the impact of the $80 billion on a number of school districts.

Congress decided to use existing funding formulas to allocate the money, and the states and school districts now know how much they will get. While $25 billion is targeted by poverty level (Title I or NCLB) and to students with disabilities (IDEA), about twice as much, relatively speaking, is untargeted. This is the state stabilization funding, which benefits all school districts. And the formulas used for this money reward school districts that spend more with more money than districts that spend less. This money is intended to preserve educational jobs. Where jobs were in jeopardy, jobs will be preserved. But in states and districts where jobs are not at risk, the money is a gift, and may be spent the way the districts want to (for legitimate educational purposes).

So here’s the point. $25 billion is going to schools with disadvantaged students (NCLB money) and for students with disabilities (IDEA money). These funds will be spent on salaries and educational products and services that are tailored for these special needs. The companies who benefit will mostly be a relatively narrow group that specializes in these markets. But twice as much money will be distributed much more broadly and will be spent on a much more general or unspecialized products. Here’s the real opportunity for B2B marketing companies.

For example, according to the NY Times article, the Uinta County District 1 in Evanston, Wyoming “has enjoyed years of growing budgets. Students attend new or updated schools with plenty of computers; high-tech smart boards have replaced blackboards.” This district will receive $1.5 million in stimulus money. According to the superintendent, Dr. Bailey: “Out of the blue this money has dropped in, and it’s kind of a distraction.”

Your opportunity is to help Dr. Bailey and others like him get rid of his distraction.

Here’s an example of a company that “gets it”! An article in the Kansas City Business Journal caught my eye. Suzanna Stagemeyer headlined her article as follows: “Businesses aim talent at stimulus”. After reading the entire article, I would have to say that ICOP is truly being proactive and realizes that there is a small window of opportunity to capitalize on part of the millions of dollars in stimulus funding for law enforcement agencies.

ICOP provides “innovative, mission-critical security, surveillance and communication solutions” to both the private and public sector. As soon as the stimulus package was passed, the ICOP team was busy identifying grant opportunities contained within the legislation. They followed up their research by helping their customers and prospects understand how to utilize the funding to purchase ICOP products.

ICOP understands that taking advantage of funding opportunities could mean the difference between a so-so year and a great year.

Ms. Stagemeyer also visited with Eco-Fit Lighting – LED streetlight replacement funds and Rhythm Engineering, traffic control systems that use artificial intelligence. Both are Kansas City area start-up companies that are positioning themselves appropriately.

So what have you been doing? We’d love to hear your stories about how you’re positioning your company to take advantage of stimulus funding opportunities. Post a comment today!

John F. Hood, President
MCH, Inc.

I just attended NSSEA, the National School Supply and Equipment Association, annual meeting. I’ve known a number of the exhibitors (manufacturers and publishers for the most part) for many years and spent some time “schmoozing” to take the pulse of the industry.

1.  Recent sales were off for most. In fact I can’t think of an exception.
2.  Expectations for the show were modest as dealer attendance was down. This show is where educational retail stores and catalogers stock up on merchandise for the coming school year.
3. Most were very pleased with their results at the show as the dealers who did attend were seriously buying.

But there was one thing I did not understand. The exhibitors were skeptical about the stimulus funding and seemed unaware of the potential positive effect of the billions of dollars being injected into K-12. And being unaware means they are going to be unprepared for the windfall. For sure they will all benefit. The question is whether they are going to benefit as much as they could have.

To quote from the Department of Education “Official Guidance” of March 7, 2009:

“about $44 billion … will be available to States in 30 to 45 days for distribution to school districts to avert layoffs … and program cuts. … An additional $49 billion … will flow within six months.” That adds up to $93 billion before September 7th 2009.

Let’s put that in perspective. Note the following statistics from the “Digest of Education Statistics, 2008″ published by the Department of Education: The expenditures of elementary and secondary schools are expected to total $631 billion for 2007-08. After adjustment for inflation, expenditures for elementary and secondary schools rose by an estimated 33 percent between 1997-98 and 2007-08.

$93 billion in increased funding in 6 months is a 15% increase over the whole year. This in an industry that has grown 33% after inflation in the last ten years. This is a growth industry where growth is exploding, if only temporarily. Here’s where the beef is!

So should you be skeptical? Maybe. But only skeptical about what the money might accomplish. Because the money will be there. And it will be spent. The first of the 4 guidelines in the Official Guidance is “Spend funds quickly to save and create jobs.”

It’s time to make sure your school and district customers and prospects think of you when the money gets in their hands. Be proactive!

The Department of Education has released an official guidance document that sets forth the principles governing use of the funds as well as when and how funds will be disbursed.

Before March 29, 2009, the Department of Education will release to states:

• 50% of ESEA Title I Part A Grants to Local School Districts ($5 billion)
• 50% of IDEA Part B State Recovery Grants and IDEA Preschool Recovery Grants ($5.8 billion)
  States should make these funds available to school districts by the end of April, 2009.
• A minimum of 50% of IDEA Part C Grants for Infants and Families ($250 million)
• A minimum of 50% of Vocational Rehabilitation State Grants ($270 million)
• All funds for Homeless Education ($70 million)
• 40% (or $40 million) of the Impact Aid Construction funds
• $52.5 million of the $140 million for Independent Living Services.

The Department of Education is providing streamlined applications for use by states in applying for the initial 67% of the State Fiscal Stabilization Funds. After “approvable” applications are received by the federal government, funds will be released to the states within 2 weeks.

The guidance document also includes a list of funds that will be disbursed on July 1, 2009 and in the fall of 2009.

Scanning headlines today can either make you worried or hopeful depending on what you’re most concerned about. The Washington Post reported today that President Obama’s budget would require the federal government to hire tens of thousands of new workers. With a combination of increased spending and retiring baby boomers, the federal government will probably remain the brightest spot in the employment sector for the next year or so.

The Department of Veterans Affairs is estimating it will hire more than 17,000 employees by the end of 2009. The Social Security Administration may receive a 10% increase that will help fund hiring front-line and field staff.

In the healthcare sector, funds are already starting to flow. President Obama released $155 million of ARRA funds that will support 126 new health centers. Although this is a small allocation, it’s a good indicator that agencies are abiding with the President’s goal of quick disbursment of funds. Click here to see the state-by-state funding distribution and job growth projections.

Federal agencies are to begin reporting tomorrow on the use of funds so we’ll be watching the news closely.