The
Bush Education Bill and the Post
April 9, 2002
By Margie Burns
Supporters of social programs may consider President Bush
a grinch, but he's been a Santa Claus for the Washington Post
Company. With the signing of HR1, President Bush's "education
reform" legislation, the company stands to reap a bonanza
in the hundreds of millions of dollars.
As both critics and supporters have noted, this education
bill chiefly authorizes funding for standardized testing in
the schools, in every state and at every level. It also authorizes
funding for entrepreneurial licensing and certification programs
pertaining loosely to education, through expanded Title IV
resources under the Education Act of 1965.
This is where the Post comes in. The company, most famous
for its eponymous newspaper, has a large education segment
and lists "provision of educational services" in public record
filings among its "principal business activities." One principal
subsidiary is Kaplan, Inc., the tutoring and test-prep company,
which "publishes course materials, books, software, and Web
content to help prime students for standardized and licensing
examinations." Kaplan, Inc., in turn owns other education
businesses, including Quest Education (acquired in August
2000) and Score! Learning.
The numbers for these ed-biz companies are impressive. In
January 2000, operating revenues for the company's education
segment (Kaplan and the rest) were $240,075,000 - third, behind
revenues for advertising and circulation, but about 11% of
total operating revenues of $2.2 billion. In December 2000,
education segment revenues were $352,753,000 - a 40% increase
in the year, to about 13% of the total $2.4 billion. Operating
revenues for 2001 in the company's education segment have
increased again - to $493,271,000 -- while the Post's 10-K
SEC filings report that its circulation and advertising have
declined (a Business Wire in May, 2001, reported Kaplan as
making "good progress," with advertising businesses "weak").
Advertising has remained lower in the late-year recession
and in the aftermath of the September attacks.
Kaplan and its subsidiaries have been booming, comparatively
speaking -- perhaps with some help from the press; one Newsweek
cover article touting the new era of standardized tests was
titled "The Tutor Age." As of December 2001, Hoover's Company
Capsule Database estimated Kaplan's sales for the previous
year at approximately $535.8 million. Press releases over
the past two years have heralded acquisitions, publications,
and additional software and training in states including Texas,
Massachusetts, New York, Maryland, and Louisiana. (Kaplan
also has numerous part-time employees and no union.)
Should the company's education segment expand by a third,
it will generate at least $110 million more in operating revenues,
per year, for the company as a whole. However, the expansion
will probably exceed 30%: with the acquisition of Quest Corporation,
its 41 schools in 13 states, and other Kaplan educational
locations, are now eligible to participate in Title IV programs.
According to a spokesman in the office of Representative John
Boehner (R-OH), who supports the education bill, current authorization
for Title IV funding is "nearly doubled" by the bill, which
will further increase it from $1.9 billion the first year
to $2.1B, $2.4B, and $2.65B for the next years. This Title
IV funding (from the 1965 Education Act) can go to all kinds
of programs including online or "distance learning" courses
and certification programs like those offered by Quest Education
Corporation.
Nothing is certain in the business world. But if the projected
expansion in standardized testing continues for the next five
years - accompanied by dizzying expansion in tutoring for
the tests, software and publications for the students, teachers
and parents preparing for the tests, and publishing and software
for the tests themselves, etc. -- then the Post stands to
accrue the largest financial windfall for a single paper in
the history of American newspapers, at least from legislation.
You can't accuse the Post of bragging about it, though. The
sole reference to the Post's financial interest in the education
bill occurred in two sentences about Kaplan on August 16,
2001 (A9), by reporters Michael Fletcher and Neil Irwin (my
phone and email questions, in June 2001, were not answered).
Neither media commentator Howard Kurtz nor the Post's ombudsman
has mentioned the connection, to date. Kurtz hosted a live
online interview (May 7, 2001) with Douglas Reeves, author
of a book co-published by Kaplan and touting standardized
tests, without mentioning the Post's interest. (My email question
was not posted; calls to the Post newspaper and the Post Company
for comment have not been returned.)
This is not to imply that the current federal legislation
is the first time Bush education proposals have benefited
the Post. Kaplan also offers publications and services for
students preparing for the Texas Assessment of Academic Skills
(TAAS), instituted by then-Governor Bush (1994-2000) to mixed
reviews. Indeed, Kaplan's significant presence in Texas was
enhanced, across the board, by the Governor's educational
initiatives in Texas.
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