Tutoring firms stand to gain from ailing schools

The program has been a boon for students like 11-year-old Jalen Henderson, who has struggled to get an education in Detroit’s financially crippled public schools. In his six years of schooling he has missed 1,800 hours – the equivalent of nearly two years. In 2001 his mother, Shirley, was diagnosed with breast cancer. His absentee father owes “a lot” of child support, according to his mother.

But last year Jalen turned things around, going from failing grades to the school honor roll with all As and Bs, according to his mother. Part of the reason, she said, was his attendance three days a week at a private tutoring facility operated by Catapult Learning, paid for by federal tax dollars.

“Now he can break down whole numbers — he couldn’t do that,” said Shirley Henderson. “He can read word problems, and he knows what to do.”

Jalen said he enjoyed attending in part because he got tokens that were redeemable for prizes like a lava lamp and a novelty hat for his mother. “It was fun,” he said, adding that he learned his “times tables” and division.

After some initial resistance, more districts are embracing the SES tutoring program, said Jeffrey Cohen, president of Educate Inc.’s Catapult Learning division, which is considered the leading provider. Educate, which also owns Sylvan Learning Centers, generated $34 million in revenues in the latest school year from the No Child Left Behind Act, up 37 percent from the previous year.

Major providers Although there are more than 2,600 providers who are allowed to offer private tutoring services for struggling public schools, much of the business is going to a few major for-profit companies. Here are some of the biggest providers: — Educate Inc. (Education Station) — Plato Learning — Failure Free Reading — Huntington Learning Centers — Edison Schools — Princeton Review — Kaplan — Brainfuse Online Instruction — Kumon — Club Z! — Babbage Net School — EdSolutions — Platform Learning — CompassLearning Source: ThinkEquity Partners

“I think there is a special value that the private sector can provide,” Cohen said. “We’re working on a very targeted, very specific problem. We’re not supplanting what the school district is doing, and we’re not suggesting that we should.”

Cohen said the federally funded tutoring is the fastest-growing part of his company’s business, pointing out that two of the biggest states, Texas and Florida, are in “the earliest stages of implementation.” In Florida, for example, the program will expand from 50 to 500 schools this year, he said.

With so many companies competing for inner-city mind share, many analysts and industry executives believe a shakeout  is inevitable.

“I think in the beginning it was very unclear whether this was going to be a real market and whether people were going to be able to make a profit,” said Kirsten Edwards, an analyst at ThinkEquity Partners, an investment bank. “It looks it’s much more attractive now. I think you’ll see even more companies popping up trying to get a piece of the market.”

Mark Jackson, who covers the K-12 market for Eduventures, a research firm, figures that about 50 firms already have about 80 percent of the business, and he says bigger companies have enormous advantages of scale because they have sales forces with  ongoing relationships with school districts in many states.

Executives of some of the more established companies appear to be treading carefully, avoiding any hints of hucksterism and trying to maintain or improve existing relations with school officials, who may have mixed feelings about the tutoring programs.

Any Title I money not used up for tutoring  reverts to the school, so there is some incentive to soft-pedal the tutoring option.

Plato Learning, one of the bigger players in supplemental education, is moving slowly into the new market, said Bernice Stafford, vice president of school strategies and evaluation.

“We want to make sure we are hiring really good teachers,” she said. “We want to make sure we are understanding the implementation challenges. And there are challenges -- urban schools didn’t just get that way. They got that way because of lack of attention.”

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