District buying power 2007: first of a series: research reveals enormous K12 purchasing power.

IN SPITE OF POPULAR ATTENTION DIRECTED TO budget cuts in K12 school districts, the reality is that aggregate school spending across the nation increases steadily from year to year and will continue to do so. Furthermore, school buying power is becoming increasingly centralized, rather than less, and administrators are making decisions for a total market that is enormous.

As the magazine of education leadership for top-level decision makers in K12 education, District Administration reaches key executives in virtually every school district in the United States, including superintendents, business officers, technology managers, curriculum directors, library/media center directors and funding administrators. Certainly no one is better qualified to comment on the current state and processes of school spending than readers of this magazine.

While District Administration publishes annual spending reports to provide insights into school markets, this year is different since we commissioned the independent research organization Martin Akel & Associates to conduct an extensive survey of our readers, and assess personal and institutional buying power for districts across the nation.

Random samples of subscribers were drawn from all sizes of school districts--from enrollments of less than 600 to 10,000 or more students--and each individual received a questionnaire about buying activities and expenditures over a four-year period.

Although the data collected focused on the 2006-2007 academic year, the researchers also compiled trend data for the two preceding years and projections for the two succeeding years. This article summarizes school spending results and decision-making processes across districts, and upcoming issues will present findings for technology, curriculum, security, construction and renovation. The study confirmed the enormous buying power of K12 school district executives, and also showed us some surprises. The following are selected data tables and summaries of what we found out.

K12 BUYING POWER RESULTS AT-A-GLANCE

97% DA readers who have a leadership role in purchasing decisions.

93% DA readers who participate on teams/committees to determine purchases.

96% "Brand Builders": DA readers whose decisions led to purchasing a specific vendor's products within the past two years.

93% "Brand Burners": DA readers whose decisions led to rejecting a specific vendor's products within the past two years.

$33.3 billion Projected current year expenditures on goods and services across all districts reached by District Administration magazine.

$4.32 billion Projected current year district expenditures on technology.

$2.95 billion Projected current year district expenditures on curriculum.

$23.8 billion Projected current year district expenditures on construction/renovation.

$1.17 billion Projected current year expenditures on security.

PERSONAL BUYING POWER--CALLING THE SHOTS

As a publication that focuses on management issues for administrators in the K12 market, DISTRICT ADMINISTRATION specifically targets district-level educators who are heavily involved in brand and product decisions. Across the board, DA subscribers are actively involved in planning, evaluation and the final selection of new products; are members of decision teams; are innovative in suggesting new ways to use products to achieve objectives; and are opinion leaders intimately involved in selecting or rejecting competing products.

Leadership Roles in Product Adoption

Virtually all DA readers--97 percent--have leadership
responsibilities in purchasing products and services, and 83
percent of subscribers are involved in making final decisions.
Nine out of ten are also opinion leaders, sought out by others and
influencing them in making purchases. These data summarize
leadership roles.

26.4%   I'm the leader in our district or school
42.2%   I'm one of a small group of leaders
27.8    I'm part of a larger team that provides leadership
26.4% + 42.2% + 27.8%   Subtotal, have a leadership role
3.6%    I'm not involved in a leadership role

Note: Table made from pie chart.

Roles on Decision Teams

Nine of ten--93 percent--are also involved with teams/ committees that determine purchases of technologies, products and equipment for their districts, and three-quarters--72 percent--have team management responsibilities. District buying decisions are not made in isolation.

Establish teams/committees                57.9%
Team/committee leader                     48.9%
Supervise team's/committee's efforts      52.1%
Team/committee member                     59.4%
Special project responsibility            36.2%
Not involved with teams/committees         7.4%

Note: Table made from bar graph.

Involvement in Purchases

Subscribers were asked how involved they are in the purchasing and approval process for specific categories of products and equipment. In each case, two-thirds or more play a role in the decision process.

                             Involved   Not Involved

Technology systems           91.0%      9%
Curriculum                   84.8%      15.2%
Construction/renovation      64.0%      36.0%
Security systems             68.7%      31.3%

Note: Table made from bar graph.

SCHOOL DISTRICT BUYING POWER--ENORMOUS MARKETS

The readership survey projected that the total 2006-2007 expenditures for purchasing goods and services across all districts reached by DISTRICT ADMINISTRATION magazine is $33.3 billion, which represents an enormous market. The following data present purchase priorities, average expenditures by category and district size, and the projected spending trends for the next two years.

K12 District Spending Trends

Over the past two years 71 percent of districts increased expenditures for products and services a total of 5.9 percent, excluding construction and renovation-related spending, and 13 percent have seen decreases. Similarly, projections for two years from now show 70 percent of districts increasing spending for products and services, and 11 percent projecting decreases.

                                      % Respondents

                                          Compared to    Expected 2
                                          2 Yrs. ago    Yrs. From Now

Very significant increase (21% or more)        9.1            6.6
Significant increase (11 - 20%)               15.7           20.9
Increase (1 - 10%)                            45.7           42.6
Subtotal, Increase                            70.5           70.1
No change (0%)                             16.6           18.5
Decrease (1 - 10%)                             8.0            5.8
Significant decrease (11 - 20%)                3.8            4.1
Very significant decrease (21% or more)        1.1            1.5
Subtotal, Decrease                            12.9           11.4
Total                                         $1.00          $1.00
Net Average Overall Change                    $0.06          $0.06

Average Expenditures in Five Product Categories

Respondents indicated their overall district's 2006-2007 expenditures for major areas of products and equipment. In each case, nine of ten districts are planning expenditures, led by spending for construction, technology and curriculum products/programs. These results were used to project the total expenditures in each category across all districts reached by District Administration magazine.

Average Expenditures in Five Product Categories

                     % With        Average
                     '06/'07      Expenditures
                   Expenditures   Per District

Technology             99.3          $577,100
Curriculum
  Products/
  Programs             98.2          $423,500
Construction/
  Renovation           86.1        $2,965,000
Security
  Products/
  Equipment            84.6          $163,600
Personnel/
  Administrative
Products             87.4          $139,300

Combined District Expenditures on Products and Services

In the 2006-2007 school year, the average school district spent $4,840,000 on products and services, including construction and renovation-related spending.

Expenditures                   % of Respondents

$0                                    0.2
Less than $500K                      50.3
$500K - 749K                          8.5
$750K - 999K                          4.6
$1 mill. - 1.9mill.                   7.6
$2 mill. - 2.9mill.                   4.3
$3 mill. - 3.9 mill.                  4.3
$4 mill. - 4.9 mill.                  1.1
$5 mill. - 9.9mill.                   6.9
$10 mill. - 19 mill.                  5.1
$20 mill. - 29 mill.                  1.8
$30 mill. - 39 mill.                  1.3
$40 mill. - 49 mill.                  1.1
$50 mill. or more                     2.9

Average district expenditure: $4,840,000

District Purchase Priorities

Subscribers listed their district purchasing priorities for the
2006-2007 school year. Half or more indicated that technology
systems, curriculum products, and personnel/support/administrative
products are current priorities. (This survey was conducted prior
to the tragic shootings at Virginia Tech, and indications are that
security spending is now a higher priority than indicated).
Percentages refer to respondents.

Technology systems                          76.3%
Curriculum products/programs                69.2%
Personnel/support/administrative products   50.7%
Security systems/equipment                  39.6%
Construction/renovation purchases           37.2%
None of the above                            3.4%

Note: Table made from bar graph.

Average Expenditures by District Student Enrollment

Based on data from respondents, average expenditures were calculated across all school districts reached by District Administration. According to Market Data Retrieval, at the time of the survey there were 14,328 districts in the U.S.

                                    District Student Enrollment

                            Less than
                               600       600-2,499    2,500-9,999

Technology:                $219 mill.    $779 mill.   $1.33 bill.
hardware, and
software

Curriculum Products/       $108 mill.    $416 mill.    $876 mill.
Programs: books,
software, teaching
materials

Construction/              $1.48 bill.  $6.28 bill.   $8.86 bill.
Renovation/Remodeling:
contractor services,
building materials,
windows, flooring,
and heating/ventilating/
AC equipment

Security Products/         $6.2 mill.    $358 mill.    $290 mill.
Equipment: physical
security, access
control, and cyber
security

Personnel/Support/         $112 mill.    $110 mill.    $508 mill.
Administrative Products/
Equipment: professional
development programs
and student records

TOTALS                     $1.98 bill.  $7.94 bill.   $11.86 bill.

                            District Student Enrollment

                              10,000       Total All
                              or More      Districts

Technology:                 $1.99 bill.   $4.32 bill.
hardware, and
software

Curriculum Products/        $1.55 bill.   $2.95 bill.
Programs: books,
software, teaching
materials

Construction/               $7.16 bill.   $23.77 bill.
Renovation/Remodeling:
contractor services,
building materials,
windows, flooring,
and heating/ventilating/
AC equipment

Security Products/          $463 mill.    $1.17 bill.
Equipment: physical
security, access
control, and cyber
security

Personnel/Support/          $359 mill.    $1.09 bill.
Administrative Products/
Equipment: professional
development programs
and student records

TOTALS                     $11.52 bill.   $33.30 bill.

BRAND "BUILDERS" AND BRAND "BURNERS"

Within districts, DA subscribers are frequently responsible for the selection or rejection of brands of products, services and equipment. Of these, 96 percent were involved in decisions that led to the purchase of specific products, and 93 percent were involved in decisions that led to specific brands being rejected. For example, in a three-month period, 60 percent of readers were involved in "burning" a specific brand.

                                % of
                             Respondents

                   Decision    Decision
                    Led to      Led to
                   Purchase    Rejection

Within the
 last month         48.7        38.7
Within the
 last 3 month       19.2        21.4
Within the
 last 6 months      11.9        11.6
Within the
 last 9 months       4.7         4.1
Within the last
 12 months           8.8        10.6
Within the last
 24 months           1.4         3.9
Longer than 24
 months ago          1.6         3.1
Subtotal,
 Affecting
 Vendors            96.3        93.4
Never                3.7         6.7

KEEPING UP-TO-DATE

We want to continue to be your go-to source for up-to-date and accurate information on products and services for K12 school districts, and in the articles in the continuation of this series, we will drill down in each of the purchase priority areas. We also offer a rapidly expanding online products guide on our Web site (www.districtadministration.com/products) that has thousands of products to view. In addition, early in 2008 we will publish a special "thirteenth issue," devoted entirely to products, and will name the "Readers' Choice Top 100 Products of 2007." Let us know what works best for your district, so others can make informed decisions, by ratings your favorites today. DA

Odvard Egil Dyrli, [e-mail], is editor-in-chief of DISTRICT ADMINISTRATION, and emeritus professor of education at the University of Connecticut.