c. The Variable Model: a more revolutionary model that takes into consideration the fact that all people learn at different paces, therefore the fixed form of education (breaking courses into quarters or semesters, classes and age-groups) is not the best approach to education as oftentimes students are required to move according to schedule before fully mastering topics and concepts. The Variable Model aims to create a self-paced
environment, and re-creates the one-classroom school house model where people of different ages share the same classroom. In this model, teachers have the more active role of mentors, their focus is on open-ended and creative projects, and core subjects are mastered independently by students using online resources.
In the US, since the implementation of the No Child Left Behind Act, which requires each student to pass standardized achievement tests or the school risks losing government funding, teachers have been more focused on test-prep and less focused on acting as mentors and educating students in a holistic manner. The Variable Blended Model could help to alleviate the unhealthy focus on core requirements and test prep.
The model the Chauncey Organization’s program follows is the Rotation model, in which the school day consists of a mix of traditional classes with periods of viewing Khan Academy online tutorials.
4.0 Market Analysis Summary – CPS Historical Information
In 1988, William Bennett, former US Secretary of Education, named Chicago public schools the worst in the nation. Chicago’s first attempt to reverse that label came later on that year with their decentralization of Chicago Public Schools (CPS) by establishing local councils comprised of parents, teachers, principals and community members. These councils were granted the freedom to make funding and curriculum decisions which had
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previously been controlled by CPS’ central office. While the decentralization made schools more efficient in decision-making, subsequent reports have indicated that the decentralization caused an unevenness in improvements, particularly between schools in low-income and more affluent neighborhoods. [3]
In 1995, the mayor of Chicago was granted authority over CPS. Mayor Richard M.
Daley’s administration, under the guidance of Paul Vallas, made budget decisions, negotiated with teacher unions, and handled the overall infrastructure of Chicago schools. Most notably, Vallas created tough academic requirement policies in order to improve student achievement test results. In 1996, students who failed to meet or beat the achievement test minimums were put on probation and intervention was required. Under Vallas’
administration, the focus of CPS moved from overall administration decisions to student performance on standardized tests.
The next phase of reform came about after Paul Vallas resigned and Arne Duncan (now the US Secretary of Education in President Obama’s administration) took over the CPS administration. Duncan’s mission became to close poorly performing schools, and open new and better ones. His plan became known as Renaissance 2010, in which he planned to open 100 new schools in 10 years. Between 2001 and 2009, Duncan exceeded his plan: 155 new schools were opened in Chicago, and 82 under performing schools were closed. [3]
The improvements these 3 phases of reforms in education created over the last 2 decades have been difficult to track and measure on a test performance basis as changes to the
underlying standardized tests have made test scores incomparable over time. While the general belief is that math and reading scores have significantly improved among elementary and high school students in CPS, a recent report by the University of Chicago found evidence to the contrary. The University of Chicago report showed that while CPS students’ reading and math test scores have shown real number improvements, students are still unprepared for high school and the majority of high school students are incapable of meeting the standards
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of the Prairie State Achievement Exam, a statewide achievement test for 11th grade students.
[3] Additionally, the report found that scores improved for white and Asian students, but only modestly for Latino students, and dropped for African American students, thus indicating widening racial achievement gaps.
Chicago schools are not what they were in 1990: graduation rates have significantly increased, overall academic results have edged upward; however, statistics show elementary and high school test scores remain well below the national averages and CPS students are considered less prepared academically for college than their peers in the outlying suburbs of Chicago.
The 2001 enactment of the No Child Left Behind Act put further pressure on CPS to ensure all students perform at grade levels as measured through standardized test results.
This act created a number of undesirable results, both in CPS classrooms and at the US national level. For example, under this act, teachers are under such pressure to ensure their students perform well on standardized tests that classrooms have become test-prep pressure environments rather than active, creative, holistic places for learning and development.
There have also been instances where teachers and school administrators have falsified student records in order to keep their jobs and allow their schools to remain open.
Another major issue with the No Child Left Behind Act is the tremendous profits being made in the private sector as a result of it. For example, Pearson, a for-profit education center, is in charge of creating the standardized tests for certain states. A recent news article referred to Pearson as “the world’s largest education business, which has a $32 million five-year contract to produce New York standardized tests.” [4] The article goes on to say Pearson’s contract size with New York is relatively small compared to some of their other contracts, like their five-year standardized test contract with the state of Texas for half a billion dollars. It also indicates Pearson’s involvement in Washington DC, and that a lobbyist employed by Pearson played a critical role in the drafting and passing of the No
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Child Left Behind Act in Congress. Beyond standardized tests, Pearson also provides many of the textbooks for US public schools. If students do poorly, and drop out of school, Pearson now, in partnership with ACE, handles GED exams so students can receive a certificate indicating the student has achieved a knowledge-level equivalent to that of a high school graduate. The GED used to be handled by a non-profit agency, but now is to become a profit-making test under the management of Pearson and ACE. This No Child act created such an advantage in the private sector, that it seems the act is no longer addressing the bill’s major intention, which is improved education for children in the US, but encouraging
for-profit private corporations to profit at the expense of quality of education in our American schools.
Up until January 2012, Chicago Public Schools offered the shortest school day
nationwide with classes beginning at 9:00am and dismissing at 2:45pm. A study conducted by the Pacific Research Institute found that due to the shorter school day in Chicago, students graduating from the district received 25% or four years less schooling overall than students in other districts [5]. Until this year, it was virtually impossible for Chicago to extend the school day due to the system’s poor funding structure and the teacher union’s unwillingness to cooperate as teacher wages have already been frozen for the past several years. In 2010, to side step the teacher unions, Ron Huberman, former CEO of CPS, created the Additional Learning Opportunities (ALO), a $10 million program supported by the Chicago Public Education Fund, a community foundation. The pilot introduced a mandatory longer school day in 15 Chicago elementary schools. To implement the program, CPS partnered with six local groups including the YMCA who provided facilitators to replace teachers in an
after-school program style format. In September of 2010, a pilot program was launched in 15 elementary schools. The program extended the school day in 15 schools by 90 minutes.
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Source: 2011 Additional Learning Opportunities website (www.alocps.org)
The program used the rotational model of blended online learning where each student used individual laptops and a facilitator moderated the classrooms on a scheduled basis.
Results from the program have proved successful according to the Pacific Research Institute whose evaluation of the program reported ALO students made substantial and statistically significant gains on test scores in Math and English over their non-ALO peers.
The ALO program still exists, but has not scaled. This may be partly due to the recent changes in Chicago city government with Rahm Emanuel taking over as Mayor of Chicago.
In January 2012, Emanuel was finally able to extend the school day in CPS. Teachers now must teach an additional 40 minutes per day without receiving additional pay. While 40 minutes may seem insignificant, it adds a substantial amount of time both to class preparation and instruction to CPS teachers’ already overextended workloads.
Chauncey Organization feels this 40 minute school day extension offers the perfect opportunity for Chicago schools to implement the blended Khan Academy model. The Chauncey Organization also aims to be a proponent of re-directing the focus of CPS back to holistic, quality education without the inherent pressures of standardized testing. The Chauncey Organization, in partnership with the Khan Academy, would like to put the focus once again on the students and teachers, and bring holistic, real learning back into the
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classroom on a no-profit basis. The re-engineering of the education model the Chauncey Organization is proposing aims to assist the Khan Academy, a free source of education, in overcoming Pearson and other private companies making enormous profits off of education in various US school districts. The Chauncey Organization plans to compete in partnership with the Khan Academy with these private enterprises through cost-leadership as well as differentiation strategies. The Khan Academy has already out-innovated Pearson’s education model and other profit-making models by providing a creative free and
open-source platform; the Khan Academy is thereby already posed to be the number one cost leader in the market.
Our focus will be on teachers and students, and learning. As a side benefit, we hope the program will naturally halt the huge profits of private organizations attempting to make a quick profit, which comes at a detriment to the quality of education in the US, as well as the tremendous expense these organizations place on US taxpayers.
4.1 Market Analysis – City Level
Two needs are apparent in the Chicago public education: funding structure reform and education model reform. Illinois public
school funding is derived mostly from local property tax revenue (48%), state funding (29%) and federal government funding (22%) [1]. Because the funding structure is heavily reliant on local property taxes, schools in affluent neighborhoods or higher per capita
areas are better funded than schools in lower-income neighborhoods.
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This disparity creates inequality in the education resources and quality of education provided at schools in richer neighborhoods as compared to those in poorer areas. Chicago public schools have the lowest funding levels per pupil in the state at an average of $8,765 per pupil per year. “…6,413 students who started elementary school in Evanston in 1994 and
graduated from high school in 2007 to the same number of Chicago Public School students, students in Evanston had about $290 million more spent on their education than their CPS peers.” [6] Additionally, schools in Chicago, as is the case with many schools in the United States, still use traditional models of receptive education in which one teacher delivers broad lectures to a classroom of students and uses textbooks for reading and homework assignments.
The traditional education model is less effective on multiple levels (learning speed, quality of student-teacher interaction, student motivation and classroom engagement) and more
expensive than newer technology supported blended models. Blended education models also teach students how to be self-motivated and learn independently, a concept critical for later stages in life.
4.2 Market Segmentation
The CPS district is the third largest school district in the US [7] and CPS is the second largest employer in Chicago with almost 40,000 workers [8]
There are 528 Chicago Public Elementary schools according to CPS’ 2011 budget
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236,524 elementary students were enrolled in public CPS (1st – 8th grades) in 2011 with increases in enrollment projected for FY 2012 [1]
According to the income demographics, 87% of CPS students are from low-income families (2010); this measure is based on students from families receiving public aid or residing in foster homes or institutions for neglected or delinquent children [1].
Ninety-one percent of CPS students come from non-white or minority backgrounds
In upper elementary schools, grades 4-8, the pupils per teacher standard allocation is 31:1 [1]
Student attendance rates are 91%
A high number of families in Chicago live in poverty. According to Chicago’s city budget
analysis, poverty rates in Chicago rank highest among most of the nation’s largest metropolitan areas.
A 2011 study by The Pew Charitable Trusts found that people with just a high school degree or less are 13% more likely to experience downward mobility, which means their incomes will be substantially below the incomes of their parents [9]. In CPS, over the last
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30 years, just 50 percent of students attending CPS have received a high school diploma. [10]
We will focus on 4th grade classrooms during initial rollout, as this age group is in a critical developmental stage where mastering basic math concepts is crucial to succeeding in higher grade levels. We also feel this target group is capable of engaging well in a blended learning setting and tends to be familiar and comfortable with using technology.
As stated earlier, as of yearend 2010, there are 528 elementary public schools in Chicago serving 236,524 1st – 8th grade students. The teacher per pupil ratio is around 1:31, meaning there are roughly 7,630 classes. We get a further rough estimate of the number of 4th grade classes by dividing 7,630 by 8, the number of grades. We therefore arrive at around 950 possible 4th grade class targets within our market. The Chauncey Organization would like to first focus on average performing classrooms, and once established, grow to
lower-performing classes, with the long-term goal of reaching classrooms at all performance levels in later phases throughout the city.
We are targeting 6% of the CPS 4th grade market in our first year of operation with the goal to have implemented and active Khan Academy blended learning math programs in 30 schools. In our second year, we will target an additional 17% of the market with the goal to achieve 91 new program implementations, bringing our total market capture rate to 24%.
By year-end of our third year, we have the more aggressive goal to implement 151 new elementary blended math programs, an additional 29% of the market, which would bring our total market capture rate to 52% of the 4th grade market. We plan to put the most emphasis on implementing our lower-cost, lower-service packaged options as these options are the most scalable.
We will focus on targeting school districts, and apply to use Race to The Top (RTT) funds, of which a total of over $42.8 million are available to be allocated to Illinois schools, and around $11 million of which are allocated for special projects to be awarded on a district-by-district basis for districts engaging in Science, Technology, Engineering or Math
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(STEM) related programs [11].
4.3 Target Market Strategy and Sources of Funding
Our plan is to target schools by offering grant writing and capital raising services to fund the blended learning program. In addition to RTT grant funds, we will also seek funding from both public and private organizations in the Chicago area such as the Chicago Public Education Fund, as well as national funds, such as the The Annenberg Foundation and Bill and Melinda Gates foundation. Our contracts will be contingent upon receiving the school’s buy-in and total support of the program. We feel it’s necessary that the concept and new model is supported on every level, from the school administration, to the 4th grade teachers and students, in order to ensure a successful launch and program. We will immediately cease working with schools in the early stages of implementation that show a lack of
enthusiasm or dedication to the program so that we can focus our energy on schools wishing to embrace the new style of learning and that show a true need for our services. In order to qualify a prospect school for the program, our Sales/Consultant will conduct interviews with the Principal, members of the administration team, and a sampling of 4th grade teachers and class parents to gauge whether our goals are aligned. Once the school is qualified as a good prospect, the grant writing procedures will begin and the implementation schedule will be drafted.
4.4 Competition - Overview
The ALO program appears to be the first official blended program in Chicago schools.
It provides us with potential competitor information, particularly in regards to the math learning software programs CPS are currently using. The ALO program, as described on page 13, still exists in 14 CPS schools, but has not scaled. With Rahm Emanuel taking over as Mayor of Chicago, the Chicago school day has finally extended. Teachers now must
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teach an additional 40 minutes per day without additional pay. This adds a substantial amount of teaching and class preparation time to CPS teachers’ already overextended workloads.
Each ALO school has the option of selecting from the following math and reading software program options [12]:
Math Software Options
Carnegie Learning Math Series (from Carnegie Learning) Grades 6 - 8
Odyssey Math (from Compass Learning) Grades 1 - 8
ST Math (from MIND Research Institute) Grades 1 – 5 Reading Curriculum Options
KidBiz3000 and TeenBiz3000 (from Achieve3000) Grades 2 – 8
Odyssey Reading (from Compass Learning) Grades 1 – 8
Early Reading and Reading Comprehension (from Headsprout) – Grade 1
A review of the math software programs, which we consider to be competitor products to the Khan Academy, provided insight into spending information on these and other related software learning products by CPS. Below is a list of line items found in CPS’ Fiscal Year 2012 budget with payments made to companies providing computers, math software and blended program services:
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Expert, highly educated teacher; ensures quality of education
Cuts down on CPS teacher preparation time
Learning platform: Exercises and assessments, feedback, mind map
Real-time reports and insight into student assignments, progress and problem areas, saves students results
Printable exercises; easy to “flip” classroom by having students watch videos at home and problem-solve using Khan Academy exercises in class
Ease of learning, self-paced, videos translated into 13 languages, averts learning gaps
Popular and familiar format; students are likely already using the platform (143,321,940 lesson views with 4.2 million unique visitors each month)
Speed of learning – concepts delivered in 10 minute videos, in line with attention span
Eliminates need for expensive textbooks
Discourages memorizing and formulas
Multi-sensory, stimulating, no-distraction learning: just teachers voice and blackboard, no distracting cartoons, talking heads, etc.
Answers to solutions are not every other question in the back of a text book. Student immediately knows whether his/her answer is correct
Scalable, Cost leader
Fun learning, painless math
Fun learning, painless math