John F. Hood, President

MCH, Inc.

On March 7, 2009 U.S. Secretary of Education Arne Duncan announced that: “$44 billion in stimulus funding from the American Recovery and Reinvestment Act (ARRA) will be available to states in the next 30 to 45 days.” I might be crazy but that sounded to me like $44 billion would be at the states by April 21 at the latest. Well, guess what? It’s not.

I have advocated being in front of your customers so when the money hits you will be “top of mind”. As I have followed up with clients, none yet have been able to attribute sales to ARRA funding. Needless to say, this is very frustrating as all press releases speak with a sense of mission and urgency. In a March blog, I quoted from the press release above. I also noted that some exhibitors at NSSEA (education publishers and manufacturers at the National School Supply and Equipment Association conference which I had just attended) seemed skeptical about ARRA funding and the windfall headed their way. Guess who was right? The skeptics!

I have just reviewed a spreadsheet “Spending Reports by Program, April 24, 2009″.

This report shows that about $18 billion of ARRA money is available and obligated at the Department of Education. However, the amount distributed, the outlays, are about $350 million or 2%. To be technical, the press release said $44 billion “would be available to the states”. As of April 24th, $18 billion is available – available but not yet provided.

Of the $350 million that has moved beyond the Department of Education, 88% is for student assistance in the form of Pell grants. Below are outlays for the programs we have been watching:

• Title I (Aid for the Disadvantaged) $0.00
• IDEA (Special Ed) $1,400,000
• State Stabilization $0.00

In other words, virtually nothing!

On a more positive note, the Department of Education has released guidelines for the proper use of these funds. See Using ARRA Funds to Drive School Reform and Improvement. While there are program limitations with Title I and IDEA, the guidance document notes that the state stabilization funds (the largest of the funds) may be used for all the examples listed. Here is help on determining how well your products fit with the wishes of the Department of Education.

So when will the money hit the street? I don’t feel qualified to answer. However, the spreadsheet available at the link above is quite clear and will be updated periodically. We will keep an eye on it; you might want to also.

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!