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The Silver Lining for Our Educational Economic Downturn

September 26, 2011 by Kevin Custer

Last year, Rita and I attended SIIA’s Ed Tech business forum in New York at the end of November, where I moderated an extremely interesting panel on “Post-Stimulus Funding Sources for Schools.” Though the economy has fluctuated somewhat in the months since, I think a lot of the take-home points from the panel are still relevant today. Dr. Richard Sims, the chief economist for the National Education Association told us that, in terms of the good news and bad news about what’s coming, he didn’t get the memo about the good news.  He shared with us six factors that economists look at to gauge when a recession might end, but this time around, there are a lot of “howevers” associated with those factors that make this recession worse. So what’s the bottom line for schools over the next three – four years? Anything from a 10 – 15 percent budget cut, in the face of continuing increases in the school-age population.

Despite that forecast, there could still be a silver lining. The reactors on our panel – Steve Abrams, director, BDC Venture Capital, Business Development Bank of Canada and Eileen Lento, Intel Americas’ government and education strategist – both felt that education companies are looking at overwhelming opportunities in the coming years.  No one will argue that things will need to be done differently. Salaries make up about 90 percent of school budgets, and, unfortunately, it’s inevitable there will be cuts in staff and cuts in pay. This helps explain why classroom sizes are projected to hit 30-35 students, erasing about 30 years of progress. However, this also sets the stage for new practices and technology that teachers will need to manage these new realities.  Savvy companies will have an unprecedented chance to help change the game and provide much-needed solutions to improve education in the face of challenging circumstances.

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