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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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