Simba Expects K-12 Industry to See Some--but Low--Growth by 2023

Back in 2009, the instructional materials industry and schools were just beginning to understand the impact of the federal stimulus package in fiscal 2010 that would help pull the country out of the Great Recession.

A decade ago, the federal stimulus package that bolstered state and local education budgets was expected to provide the roadmap of where opportunities lie for providers of instructional materials and services to the PreK-12 school market. Still, an aura of uncertainty persisted as to how 2009 would turn out, let alone further down the road.

Though the cause of current recession in 2020 is different than the recession that began in 2008 (and was officially declared ended in June 2009), many observers expect a similar long road to recovery.

In mid-2020, despite the stock market, the U.S. economy remains mired in a “deep recession,” according to the Center on Budget and Policy Priorities. State and local governments have been hit particularly hard and state rainy-day funds are not big enough to cover the shortfalls, according to the CBPP.

In addition to the expectation of reduced funding for schools, COVID-19 has resulted in other casualties, notably the postponement of English language arts and math adoptions in 2020 and 2021 in North Carolina.

The delay in North Carolina on top of the delay in Florida in 2019 has turned a concentrated three-year opportunity into a more spread out four- or five-year event. Anticipated state budget cuts in the coming years could further erode the opportunities.

Spending Outlook

In its newly released report, Publishing for the PreK-12 Market, 2020-2021, Simba Information projects that PreK-12 instructional materials industry sales generated just under $8.9 billion in sales in 2019, growing 6.5% from an estimated $8.35 billion in 2018.

Spending contracted in the first half of 2020. Sales of instructional materials to K-12 schools declined 30.3% in the first six months of 2020, according to the Association of American Publishers.

While some publishers said that they began to see a return in school interest and demand as early as May, Simba still expects overall contraction in the industry in 2020, down 3.3% to $8.6 billion.

The growth that any segment experiences is projected to be modest. While Simba expects basal curriculum sales to decrease 14.5%, largely because of the combination of smaller adoption opportunities and cancelled adoptions, courseware is projected to increase 5.7% to just under $1.8 billion as schools move online even faster than planned. Digital supplements also are expected to benefit, growing 4.3%, again powered by the online move. The spending outlook beyond 2020 is particularly unclear at this point, but Simba expects the overall market to grow at a compound annual rate of 0.8% through 2023.