>

> By JUNE KRONHOLZ

> Staff Reporter of THE WALL STREET JOURNAL

>

> Teachers, parents and principals may have their doubts about No Child

> Left Behind. But business loves it.

>

> The Bush administration's new education plan requires schools to

> prove that their children are learning math and reading, and are

> closing the achievement gap between white and minority children.

> Already, states are reporting that thousands of schools aren't

> meeting minimum learning goals and now face an array of sanctions.

>

> Companies that sell to the schools -- from test publishers to

> tutoring services to teacher-training outfits -- say business is

> booming as troubled districts turn to them for help.

>

> There's a burgeoning "sense of consumerism in public education" as

> parents learn about the law and begin demanding services, says

> Jeffrey Cohen, president of Sylvan Education Solutions, a unit of

> closely held Educate Inc. His company says it expects to tutor 20,000

> youngsters in struggling schools this year, with No Child Left Behind

> requiring the schools to pick up the $40- to $80-an-hour tab.

>

> Test publishers are the most obvious winners, because the law

> requires states to track student progress by giving yearly reading

> and math tests in grades three through eight. Educational Testing

> Service, the nonprofit company that writes the SAT college-admissions

> tests, introduced a new elementary- and secondary-education division

> as the law worked its way through Congress. It expects revenue of $75

> million this year from tests it is writing for California, New Jersey

> and Puerto Rico.

>

> Likewise, Harcourt Educational Measurement, a unit of publisher

> Harcourt Inc., says it has rewritten its key standardized test,

> renamed the Stanford 10, to tap the No Child Left Behind market. The

> new test is aligned with state curricula -- that is, questions come

> from what's taught in most classrooms rather than from general

> knowledge -- and states can add their own questions. Ten states have

> already bought the new test, whose costs vary by grade but are about

> $7 for a third grader. Harcourt Educational doesn't release revenue,

> but spokesman Mark Slitt says the unit expects to double its revenue

> in five years. "There's a lot of state business out there in the

> pipeline," he adds.

>

>  PROFIT POTENTIAL

>

> Some areas under the U.S. government's $24.3 billion budget for

> elementary and secondary education where businesses can compete for

> contracts:

>

> • $12.4 billion for aid to high-poverty schools

>

> • $1.05 billion for reading programs

>

> • $700.5 million to improve technology use in high-poverty schools

>

> • $390 million to help states write standardized tests

>

> • $320 million to build and run charter schools

>

>

> Source: U.S. Department of Education

>

>

>

> If schools do badly on their tests, or if their English-language

> learners, disabled kids or the members of any racial or ethnic group

> don't meet yearly learning goals, a series of sanctions kicks in,

> including one that requires the schools to use some of their federal

> money to hire tutors. Only a few thousand schools must offer tutors

> so far, and few parents yet know to ask for them. But thousands more

> schools will face federal sanctions beginning next year, and

> districts with failing schools are required to set aside 20% of the

> federal money they now get to educate low-income youngsters to pay

> for tutoring -- potentially, about $2.4 billion.

>

> Hundreds of "supplemental service providers" have already lined up to

> offer tutoring, including Sylvan, Kaplan Inc. and Princeton Review

> Inc. -- companies best known for offering college test-prep courses

> or homework help.

>

> Kaplan, a unit of Washington Post Co., says it will have tutors in

> only 30 or 40 school districts this year, including New York City's,

> where it expects revenue of about $1 million. But as parents start

> learning about the service and demanding that schools hire tutors for

> their kids, it's "clearly going to be a growing market," says Seppy

> Basili, a Kaplan vice president.

>

> No Child Left Behind also has created demand among schools for tools

> to help them track student progress and interpret the new data the

> law requires them to generate. Princeton Review is selling a Web-

> based product called Homeroom that lets teachers give frequent

> minitests to see whether their students are on track to pass the

> state exam. Test results come back immediately, identifying which

> youngsters are weak in, say, measurement or fractions, and providing

> exercises to help them improve their skills. The product costs $3,500

> a school per year and is already in 3,000 schools, Princeton Review

> says.

>

> Similarly, Kaplan offers the Kaplan Achievement Planner that, for

> about $20 a student per year, analyzes each student, then gives

> teachers different lesson plans for their fast, slow and average

> learners. It also supplies instantly scored minitests that look and

> read like the state exam. Kaplan says revenue for its elementary- and

> secondary-school division has doubled since No Child Left Behind

> passed.

>

> The law's emphasis on reading scores is also fueling new products to

> help youngsters, including struggling teenagers, learn to read.

> Scholastic Inc.'s Read 180 product uses videos to give youngsters

> background on the story they're about to read, then individually

> helps them through each chapter using computer software, and provides

> reading exercises to build their speed and fluency. Scholastic's Read

> 180 was developed with National Institutes of Health funding, costs

> $30,000 for 60 students, and can be used over multiple years.

> Scholastic says Read 180 generated $40 million in sales last year,

> making it the company's fastest-growing education product.

>

> On the low-tech side, Scholastic this year began selling 100-book,

> $275 classroom libraries that meet the law's requirement for

> federally funded reading programs that they actually teach kids how

> to read. The collection for third graders, for example, includes the

> book "How Sweet the Sound," which Scholastic says builds phonemic

> awareness, while "Up, Up and Away" builds vocabulary and "The Story

> of Ruby Bridges" helps with reading fluency.

>

> The Association of American Publishers says that school textbook

> sales are flat this year because states have cut education spending,

> and particularly book purchases, as part of their budget-balancing

> efforts. But some of those cuts are being offset by the president's

> $1 billion-a-year Reading First literacy program. The publishers

> estimate that a third of the program's funding is going into

> textbooks.

>

> The law also puts new pressure on the schools to boost teacher

> quality and to look beyond traditional education schools for

> teachers, which could prove a boon for online colleges. Kaplan, which

> already has an online university, plans to open the Kaplan College

> School of Education beginning next year for people who already have a

> bachelor's degree but need either subject-matter courses or teaching-

> technique courses to get a teaching job.

>

> Companies that offer midcareer professional development programs also

> stand to benefit as schools prepare to meet a spring 2006 No Child

> Left Behind deadline for proving that all of their teachers

> are "highly qualified" because they have either taken a refresher

> course or passed a test in the subject they teach. The test-prep

> companies and online universities are also developing programs to

> help teachers deal with all the data they have now. Kaplan offers a

> $3,000 half-day course to help teachers understand testing, and ETS

> has an $18,000 course that trains districts to judge how good their

> teachers are.

>

> Write to June Kronholz at june.kronholz@wsj.com

>

> Updated December 24, 2003