An exchange of emails around the Tennessee study of Supplemental Educational Services with Education Industry Association Executive Director Steve Pines and co-author Steve Ross over the last two days, some of which was posted earlier, has convinced your editor that SES providers have a serious problem on their hands, face a real dilemma, and should be making some tough choices. But also, there is a way out.

The problem:  It is increasingly unlikely that most SES providers will be able to demonstrate improvements in student performance on the tests states use to demonstrate Adequate Yearly Performance that are both educationally and statistically significant. Researchers seem to believe that the influence of SES programs on student test scores is likely to be barely perceptible and that it will take huge sample sizes to demonstrate even that level of impact. Your editor believes it would be possible to show more promise if SES providers make a concerted effort, but doubts many will make the effort in the time available before reauthorization. This places SES providers and their trade group (Education Industry Association) on the horns of a dilemma.  

(If you are an SES provider who has credible studies showing promise of improving student performance - PLEASE bring them to your editor's attention for placement and discussion on edbizbuzz and in New Education Economy®.)

The dilemma: Under NCLB, students receive SES services when their schools are identified as "in need of improvement" for their second year. The rationale for offering tutoring to the students from these schools is simple. The schools have “failed” to bring the students up to proficiency on the state tests; we don’t want to leave them behind; maybe tutoring will get them where they need to be. A market in SES gives parents the choice they need to get a good match of providers and children.  If tutoring does not have this effect - if it does not raise student performance on state tests, the student is still left behind. In short, if this is generally true across SES providers, the SES program doesn’t make sense.

Some researchers, and at least one communications consultant to the Education Industry Association, have argued to your editor that SES programs have other values, including motivating students or just giving them extra attention. Others have argued that tutoring services might have a more significant influence on test scores if they were closely tied to teachers in the classroom. These might be true, but they are not the basis of the SES program authorized under NCLB. 

So, SES providers face a choice.

Choice One: Maintain current course and speed. So far, SES providers have implied that SES programs will increase student performance. They have argued that they have not been able to demonstrate this yet because so many other factors are at play (another way of saying the effects of SES are small); because districts haven’t cooperated; and because the firms and programs haven’t been in the field long enough to show what they can do.

If the Tennessee study of SES providers demonstrates anything, it is that these arguments are becoming less credible protests in the face of disappointing results with each passing year – this study has gotten at programs' barely perceptible impact on test scores; it has access to all the data needed from districts; and every year is another year in the field. Continuing on this path implies increasing evidence of at best a barely detectible effect on student performance across the vast array of providers.

To get a sense of the direction of SES implementation by the states (as opposed to merely your editor's opinion), consider the following excerpt from Delaware's May 3 RFP for SES providers for School Year 2007-2008, drawn from our weekly work to identify grant and contract RFPs for clients of K-12Leads and Youth Service Market Report:

"The Delaware Department of Education, in cooperation with the applicable school districts, is required to monitor the quality and effectiveness of the services offered by approved providers and to withdraw approval from providers that fail for two years to contribute to increasing the academic achievement of students to whom they provide services or fail to meet any of the other eligibility requirements or assurances."

State education agencies - none of which is particularly happy to have NCLB's accountability for AYP, or the SES sanction, shoved down their throats - can be counted upon to hold SES providers no less accountable for student performance than they do their own schools. Were the Tennessee SES study a Delaware study, SES providers in that state would have literally one year to make their case. Your editor considers this something of a wake up call.

Maryland has adopted a similarly high standard of performance in its most recent RFQ for SES providers "specifically designed to increase the academic achievement of eligible children on the academic assessments required under NCLB Section 1111 and to attain proficiency in meeting the State’s academic achievement standards."
If the future of SES is decided on "the merits" - demonstrated improvements in student performance, thus endeth the program.  And with it much of an industry that depends on a single federal funding stream. Alternatively, if it is decided on politics, adversaries of SES and NCLB will never stop pointing out the “double standard”  of holding schools accountable for student performance, but then taking money from those schools and giving it to private providers in general and SES providers in particular who need not show that they can raise student test scores. Hillary Clinton’s equating of SES providers and Halliburton will become a common cry of Democratic contenders for the presidency. Who will be the champions of SES then? Ted Kennedy? George Miller? This seems doubtful. And neither prospect can look particularly inviting to investors.

(Other school improvement providers' please note: Because the opponents of SES firms are no more friendly to EMOs or curriculum providers or professional development firms changing current practices, this kind of debate threatens to drag the entire school improvement industry into a no-win contest.  Most who have been in this industry since the 1990s are well aware of the impact Edison's ups and downs had on their own businesses. Imagine the impact on your firm of an entire sector's demise - or just a huge controversy over its value to society. Your editor would argue that this would not be the most favorable backdrop for, say, an effort to attract mezzanine investors or to negotiate a sale of the enterprise to a major publisher.)

Choice Two: Start shifting the conceptual basis for SES. If the best prospect for tutoring having an impact on student performance is when it is closely tied to the classroom, many providers would also rather work for the district as a contractor than compete against it under SES. Indeed, this “pull out” educational model was the business model adopted by Sylvan Learning Systems' Contract Services Division for targeted Title I programs in the top 50 school districts long before SES was thought up. It was pretty successful against business and academic criteria.

A new SES program might have some of the features of the old Comprehensive School Reform Demonstration Program. Grant funds would be "fenced off" from Title I for districts with students not demonstrating proficiency in schools on the verge of “in need of improvement.” Districts might propose to use grant funds to involve one SES provider to maximize the strength of ties between student, classroom teacher and tutor, or multiple tutors to get more of the benefits of parental choice. The competition for grant funds presumably would improve the likelihood of "supportive operating environments," allowing the tutoring firms to focus on product development and refinement, including a better understanding of the kinds of programs best suited to different kinds of students.

Such a program would be smaller than the potential spending under today’s SES provisions in NCLB. But, as a practical matter, the market might be just as big and better concentrated - and perhaps more profitable, if for no other reason than marketing/customer acquisition costs would drop significantly. It would also be accompanied by ongoing research and evaluation at the provider and school levels. Rather than killing off an idea that doesn’t seem to be ready for prime time, it would allow the most promising SES programs an opportunity to survive and grow.

The downsides of this option are several. 1) SES providers will have to admit they are not ready for prime time, and they may not be able to muster sufficient political support for a transition to the new approach in a reauthorized NCLB. 2) When "the client" moves from many parents to one district, the market becomes a "winner take all" game and many providers will perish. 3) The ongoing research requirement will kill off more because districts will still be looking for the provider "best able/most likely" to improve student test performance. 4) Potential losers will try to prevent potential winners from making the move to the R&D program option, splitting the SES community.

The Way Out. Still, your editor would argue that something like this approach is probably the best hope for SES providers and the SES segment of the school improvement industry overall. Current course and speed basically leads to a demonstration of failure. Moving towards the second choice puts the program in the "R&D" category where failures of performance are more tolerable as a means of long-term program improvement. Making the funds for SES available to districts puts them in control of SES providers, where they seem more comfortable and maybe even supportive of the SES idea.  (They seemed highly responsive to Sylvan way back when.)

Still, if it is a choice to be exercised by SES providers, they'll need to start laying the groundwork for the R&D option now. Your editor doubts it is the kind of option that could be developed at the last minute of NCLB reauthorization because SES providers conclude that SES opponents have a good chance of killing their program in its present form. That will be far too late.

This really a simple matter of insurance. To get a crude sense of the risk premium worth paying against the loss from termination of the current SES program, a prudent management team or board of directors would multiply 1) the probability that the Tennessee study is the warning your editor has claimed by 2) the amount of revenue at stake from this single federal program, and act accordingly. The threat is not "zero" (and even one percent of a few billion is a pretty big number, and it remains a big number even after we decide to use grosss margins or net profit instead of gross revenues), so prudent managers would begin to allocate resources, lay out a contingency plan, and start taking joint actions to develop the R&D program option "just in case" future events tend to confirm that the warning is in fact correct.  Only the imprudent manager would do precisely nothing.
This takes us back to long-term thinking, planning and collective action. As with student outcomes, this is an area where SES providers have proved weak as an industry segment. There are a handful of SES CEOs with the right set of skills and motivations to move their peers to develop the R&D program option: Alan Carter at University Tutors (correction: University Instructors) and Gene Wade at Platform Learning come to mind immediately, but there are several others. Even though they are awfully busy with theor own challenges, If they view the Tennessee study as possible strategic warning of the leading edge of something that threatens the whole sector  - and so their firms, they will act. The question is, will they recognize the Tennessee study as the sign of such a potential or, like EIA Executive Director Steve Pines, will they decide it's "just another study"?