Education Spending Slows

According to Input's latest "State and Local Education MarketView" research, K-12 education spending will slow through 2007 as state and local governments struggle with ever-increasing health-care costs and other conflicting budget priorities.

"There will be marginal growth over the next couple of years as health-care costs continue to rob education budgets," says James Krouse, manager of state and local market analysis at Reston, Va.-based researcher Input. "There are so many different issues the administration is grappling with -- from the war to social-security reform and now Hurricane Katrina -- the interest and bandwidth isn't there."

The latest research forecasts the total education IT market hovering around $7 billion for fiscal year 2006 and slightly higher in 2007. By 2008 however, the market should recover, with growth ultimately reaching 45 percent and $10 billion in spending by FY 2010.

In the meantime, during the next two years, Krouse says higher education will see continued investment in extending network services and online resources, as well as an increased interest in security and identity-management solutions on campuses. At the K-12 level, however, Krouse says the focus will be on balancing online resources and leveraging them to improve the effectiveness of education while not necessarily replacing existing models.

While health care and homeland security have been receiving the majority of funding at the state and local levels, education grants saw cuts. Many of the cuts were restored, but not to their original levels, Krouse adds. For example, Krouse points to the Enhancing Education Through Technology (EETT) program, which was intended as a broad-scope technology grant to purchase hardware, software, and technology professional development, and developing of technology programs. The original funding target was $700 million. Congress has restored just $425 million of that for 2006.

While funding will continue to be restored for education grants and, therefore, spending, Krouse sees more federal oversight being put in place for K-12 technology investments. Whereas previously the technology funding was broad-based and discretionary, Krouse says changes are ahead.

"More stringent guidelines will be put in place as budgets are tighter and folks in Congress and at the agency level want to see accountability," he says. "We're spending all of this money, what is it getting us. They want some sort of measurement."