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Will Coronavirus Flay School Budgets?

Across the large and small display industry, many planners in the US are wondering how the Covid-19 pandemic will end up affecting revenues and business coming from the K-12 and higher ed markets. Most concern is currently directed at the predictable loss of educational funding as states both shift existing resources into emergency healthcare budgets and, at the same time, experience tax-collection shortfalls in general.

Planners anticipate that state governments will aim to backfill those collections shortfalls with steep cuts to services like education. In excess of 80% of school budgets are dedicated to personnel and contracts, so much of the focus for budget cutting will necessarily fall to capital budgets, including technology outlays.

The Bad News
The answer to the initial question posed in the headline of this story is ‘yes”, but the ensuing reality promises to be much more complex. Yes, budgets will no doubt be knifed by states. Colleges, forced to refund millions of dollars in housing and meal plans, will need to slash their budgets. K12 districts, surprised by the costs of disinfecting schools, delivering meals to needy students (while schools have been shuttered), and needing to purchase large swaths of distance learning licenses for children, will find their budgets flayed. Quoting Governor Cuomo of New York, citing schools specifically: “No one can say ‘I don’t accept this reality of a revenue loss’. It is a reality for everyone and everyone has to adjust to it…no one is held harmless from reality. Everyone is going to have to deal with the reality.”

Disrupted Cycles
The havoc created by Covid-19 will also likely upend and/or delay education purchasing cycles. Shifting the regular and predictable budgetary cycles of schools, usually July 1 through June 31 the next year, and spread over 365 calendar days, schools might find themselves with state exclusions to run purchasing later than normal or allow them to carry money over. Thus, purchasing that tends to slow down in July (folks are on vacation, money is spent) may show surprising life. Some last-minute monies may also rush onto the scene in the fall, given the impact of Covid-19. Start-of-the-year school funding may be reprioritized away from other projects, unpredictable grant awards may arise, or parent organization funding may be redirected at the last minute.

The Good News
Yet all the news may not be negative. With the advent of a “new normal” of extended crisis, districts will likely funnel attention and resources towards future continuity of learning scenarios, now that continuity of learning is top of mind. We are likely to see opportunities like these:

  • Distance learning pilot projects, skunkworks, and one-off experiments are likely to surface everywhere, hoping to latch onto mainstream funding at later date.
  • Discretionary money, along with funds re-prioritized from somewhere else in the budget, are likely to be aimed at continuity of learning challenges, which are display-intensive.
  • Federal, state or foundation grant funding will mushroom to address continuity of learning circumstances.
  • Small pushes and new initiatives at the individual school level will pop up.
  • In-house PTA funding, along with classroom or school fundraising efforts, will shoot upwards.
  • Anticipated funds from technology referendum issuance (these are protected from state budget reductions) that have been approved by voters, will surge their way as expected through the system, along with technology bond issues that spread themselves out over a 5-7 year period of continuous and predictable funding. The same goes for new school construction funding, leading to the outfitting of the newly built school with supporting technology, on a one-time basis.

I hope this makes the reader feel better about ed market opportunities. Specific regions could experience an uptick in display sales in a rush either anticipated or late shopping, or as interest in continuity of learning sparks upwards. But sales folks will need to be agile, quick to react, and watchful.— Len Scrogan