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Class Dismissed

After education revisions, some franchises are shown the door


“I have never let my schooling interfere with my education,” Mark Twain once remarked. It’s a sentiment now befitting sweeping changes in the Elementary and Secondary Education Act (ESEA) that may end up expelling educational franchises from the nation’s schools beginning this fall.

As a result, franchisees of “learning-center” companies will not have access to the $2.1 billion budgeted for free tutoring programs.

In 2001, President George W. Bush put his stamp on ESEA with a major revision dubbed No Child Left Behind. It mandated a lofty goal: 100 percent of students deemed proficient in math and reading in the country’s public schools by 2014, as determined by standardized tests.

A key component of the goal was Supplemental Educational Services, or SES—a federally funded, free-tutoring program for improving test scores in low-performing schools.

The feds required states to allocate 20 percent of No Child Left Behind’s Title 1 dollars for SES, which obliged educators to contract with SES tutors. The for-profit educational industry, including nationally branded franchises, rushed in along with the independents.

Then in 2010, ESEA by law was revised again. The U.S. Department of Education reacting to complaints that teachers were merely teaching to standardized tests offered states waivers, which among other things allowed them the “flexibility” to drop SES. Educators had complained that provider quality and accountability varied widely.

“There were excellent providers, average providers and providers that did not measure up,” said Director of Federal Programs Cynthia Lemmerman of the Ohio Department of Education, who oversaw SES before Ohio became a waiver state in June.

To date, 33 states have received approval; several others, notably Texas and California, were waiting for waivers as of press time.

As a result, SES providers, many of them franchisees, will lose business. “SES is definitely fading away,” said Matthew Lupsha, senior adviser at Kumon Learning Centers, in Teaneck, New Jersey. He estimates franchise business will be down $230,000 in waiver-state Hawaii and off by 20 percent in waiver-state New Jersey. Nonetheless, he insists SES was merely a tiny portion of Kumon’s overall franchise revenue.

The Educational Industry Association is trying to stop the losses. The trade group, which represents for-profit educational businesses, has formed an SES coalition to lobby legislators to ensure “tutoring options are maintained.”

The fallout is likely to have the greatest impact on Club Z and Sylvan Learning Centers, two of the largest franchised SES providers, said EIA’s Executive Director Steven Pines. Sylvan has franchisees “active in both physical sites and they do a sizable SES business online,” he said, adding his group does not track overall SES revenue.

Doug Mesecar, Sylvan’s vice president for contract services, downplays the threat. “Less than 25 percent of Sylvan centers have been actively engaged in SES. It was important but ancillary to the core Sylvan business model,” he said.

So does Club Z’s Vice President of Operations Cari Diaz, who said just 20 percent of the Tampa-based company’s 480 franchised outlets provided SES, the bulk in Florida, Massachusetts, Illinois and California. She wouldn’t estimate how much SES business franchisees would eventually lose because some waiver states have opted to use SES this year.

Franchisees aren’t as sanguine. “SES helped me keep my doors open” after the recession shrank parent-pay private tutoring, said Sylvan Learning Center franchisee Annette Miller, an SES provider servicing three school districts. Miller estimates her revenue will drop 20 percent if waiver-state Florida’s state-approval process disappears. The state’s long list of approved providers includes 18 Sylvan franchisees.

Florida’s waiver, however, is in flux; despite federal approval, the state’s legislature passed a law early this year requiring school districts to set aside 15 percent of Title 1 funds for free tutoring, also known as SES.

The Ohio Department of Education, on the other hand, dispatched an email this summer warning SES providers it will no longer approve them. “External providers” must now contract directly with a Local Education Agency—in other words a school district—for review.

North Carolina’s Department of Education says on its website the waiver offers the public school system “new ways to hold Title 1 schools accountable for students’ academic proficiency, and new initiatives to support effective instruction and leadership.”

It isn’t good news for Meredith Thorton, a two-unit Sylvan franchisee in Burlington, North Carolina. “We are not serving the same two school systems in the same capacity that we did before,” she said, adding her business did not depend on SES.

She mentions Ace It! as an example of a program that schools could finance using Title 1 funds. “It’s just that they are not mandated to use them in the same way or to hire the same providers,” Thorton said.

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