PODCAST HIGHLIGHTS: Future of K-12 Education – Part II of Our Insights for Investors and Parents

Podcast: The future of K-12 Education

Baird’s Podcast Looks at the Impact of COVID-19 on K-12 Education

Baird continues its series of Podcasts with Part II of our discussion with Vanessa Webb and Chip Greene, the Co-Heads of Oliver Wyman’s Global Education Practice. In this edition, we focus on the K-12 school system and the impact the COVID-19 pandemic is having on schools, teachers, solution providers and families. 

Part I of this series of Podcasts on the education sector was focused on Higher Education.

Executive Summary

Vanessa and Chip discuss the current state of K-12 education, its reaction to the COVID-19 pandemic and consider what back-to-school might look like this upcoming Fall.

In mid-March of this year, the vast majority of K-12 schools physically closed and moved to remote learning for the remainder of the academic year. Generally, how well prepared was the K-12 school system? And how well did schools make that transition?

Candidly, not well, though in fairness, no one anticipated this pandemic, including administrator, teachers, solutions providers or parents. Among the biggest issues, the lack of one-to-one technology is probably at the top. Additionally, some districts delayed their restart to insure every child had a device. In other cases, siblings had to share devices and/or did not have the needed Wi-Fi.

Unfortunately, but not surprisingly, many of the biggest challenges affected the lower income kids. Not only were we dealing with the Digital Divide, but also with the related outcomes divide. And while you saw many teachers going above and beyond, many were not trained to teach virtually. Many parents also realized they were not good teachers.

With that in mind, what does a school look like this Fall?

Many administrators and districts are just now beginning to turn their attention to this. At this juncture, many do not have a clear idea of what this Fall will look like. Some States have or will publish guidelines, and the Center for Disease Control (CDC) has published some protocols, but they're very high level. In general, districts are on their own, and there is no playbook for them to follow.

Plans typically include social distancing and enhanced cleaning, but they are fairly vague. Today, we see a wide range of solutions being proposed. For example, Oklahoma is considering Saturday classes to deal with the social distancing. Other districts are looking at a wide variety of hybrid in-person and remote learning programs such as staggering in-person and virtual at-home schooling. Still others are leaving it up to parents to decide.

There are also complicated logistics around getting to and from school that may require buses operating at a reduced capacity and stagger arrival times. The other wildcard is teachers and whether they are likely to return to work as most are over 50 and fall into known risk categories.

Without a uniform solution, will we see different school districts running different protocols?

Absolutely. There are 14,000 school districts, and while we don't think there will be 14,000 different plans, there will probably be 15 to 20 models.

How has COVID-19 further exposed the Digital Divide in our schools?

For example, about 14% of households with school-aged children (9 million students) do not have internet access. And among children 3 through 18, 17% live in households (11 million students) without a laptop or a desktop computer.

Thinking about the education sector, it's behind most every other sector in adopting technology. There have points of acceleration over the past 20 years, such as the move to online year-end assessments, but COVID-19 is a significant catalyst. Districts are going to have to catch up. While we are likely going to see tighter budgets, there will also be a real push towards getting more devices, training, internet assistance, and a lot more assessments. It's a critically important issue, and if it isn’t addressed, we are going to have some massive issues, particularly in the lower income areas.

We often talk about the “Summer Slide.” How will schools make up for the lost knowledge this year? And how will schools know where their students are in their learning progression when school resumes?

That is a daunting challenge. All the work that we've done says that the attendance and engagement this spring was quite low. That there really was not widespread learning going on, and disadvantaged children were hit particularly hard. In short, there's a lot of ground that needs to be made up.

We believe there will be a focus on the basics – reading, writing, arithmetic and science, particularly for the early years. And there will be significant challenges in meeting each child where they are. We think the use of benchmark assessments and diagnostic tools will increase, as well as the use of supplemental instructional materials.

Looking at the big picture, public school budgets will undoubtedly be challenged. What are you hearing about operating budgets? And considering those challenges, which K-12 solutions providers are well positioned?

Most districts do think that their budgets will be hit in the upcoming year, so it's really going to be about prioritization. And digital elements that support curriculum are going to be a key priority, including devices and supplemental materials. For example, as eBooks that are linked directly to reading comprehension and provide personalize, at-home learning. We are also seeing Learning Management Systems (LMS) moving into lower grades, where they have not widely been used in the past.

High school credit recovery and the online courses are likely to get a lot more uses – and there's likely to be even more need going forward. In contrast, States may delay textbook adoptions in favor of more digital supplements and do-it-yourself curriculum.

Putting curriculum aside, there will be increased needs around the school websites, school messengers, and school safety. Digital communication with parents in this environment is much more important. Mental health concerns will also be elevated.

What does history tell us about how school budgets might be challenged?

School funding is predominantly from State and local tax bases. Local taxes support about 40 to 50% of the annual operating budget. States add another 40 to 45%. And the remaining 5 to 10% is provided by the federal government.

It worth noting that States and municipalities typically must run balanced budgets, so they cannot finance operating debts. State taxes are primarily income based, and local revenues are mostly from property taxes. The former is much more recession sensitive, particularly in the near term.

We expect, this being an election year, that the federal government is going to step in. The schools have high fixed costs bases, and if you need to preserve teachers, there are not a lot of operating discretionary expenses that you can cut in the downturn.

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