The Business of Back to School
5 Trends We’re Watching Across the Education Space
U.S. students and educators are about to begin the third academic year transformed by the COVID-19 pandemic. The virus has upended education systems, disrupted learning and ignited intense debate about if, when and how to reopen schools for in-person learning.
As the back-to-school season approaches, Baird Global Investment Banking’s Knowledge Solutions team is in active contact with companies across the sector. Out of those discussions, we share our top five themes to watch as the 2021 school year begins.
1. Increased Funding & Delayed Purchasing Decisions
The Biden administration’s 2022 budget request earmarked billions in funding for education, including nearly $103 billion for K-12 schools. This wave of funding, which has yet to be fully realized, will benefit schools and the vendors that serve them.
The K-12 selling cycle historically follows the same pacing year in and year out and is typically heavily weighted in the summer months. Anecdotally, we are hearing while the aggregate sales are tracking well, the purchasing timing decisions by schools are off their normal cadence this year and are either being pulled forward or pushed back due to a variety of factors.
2. Tackling the "Learning Loss"
Remote and hybrid learning proved to be extremely disruptive for schools, teachers and students alike. The inconsistency in access and delivery of learning created an imbalanced environment where some students thrived, and others struggled. In this respect, the pandemic exacerbated serious gaps and inequities that already existed in education.
We also believe assessment will emerge as a key theme. Many assessments were deferred or subject to exemptions in 2020. As a consequence, teachers are beginning the 2021-22 school year without a quantitative measure of where their students “are” in their learning. This situation underscores the need for assessment to find out what students have mastered and gaps to be addressed.
Empirically speaking, most agree that there will be some degree of a “COVID slide” in terms of knowledge gained / retained (very similar to the “summer slide phenomena”). However, teachers may be loathe to hear the phrase “learning loss” as it can be interpreted as undercutting the immense amount of work that they did to keep schools running during almost 18 months of non-traditional education.
3. Teacher Shortage Intensifying
Around the country, there has long been a teacher supply-demand imbalance. That imbalance has only intensified during COVID as some teachers have decided to not return to the job due to a variety of personal and professional reasons. As such, schools are now in a difficult position and often need to quickly backfill openings.
4. COVID Ripple Effects
While its uncertain when COVID will officially be over, the one thing that has become certain is that the ripple effects from the pandemic will be felt for a long time. The challenge schools are facing is that many of these obstacles are under the surface and not readily apparent. This has placed a premium on behavior monitoring tools and social-emotional learning.
Additionally, we believe synchronous virtual and hybrid instruction – or rather, the infrastructure to support it – is here to stay. For many schools, COVID delivered a crash course in how to arrange remote accessibility, leverage video technologies, and deliver virtual and hybrid instruction. Schools have proven they can deliver those learning formats when needed and will the plans, technologies and tools to do so, even after the pandemic sunsets. When a need to shift to distance learning arises in the future, schools will be prepared.
5. School Safety Back in Focus
Pre-COVID, school safety was one of the top themes across the K-12 landscape. During COVID, school safety was temporarily deprioritized in order to support remote learning. As many schools begin to return to some level of in-person activities, we fully anticipate that school safety will vault back to the top of purchasing prioritization decisions for educators.
Since 2004, Baird’s Knowledge Solutions team of dedicated investment banking and institutional equity research professionals has been actively covering the sector. Today, our coverage spans the education lifecycle – from early childhood education to professional training and compliance – and reflects experience across a wide range of business models including traditional and online schools, digital content/assessments, professional skills development/CE, and software-based enterprise solutions.
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