February 18, 2025  |  Peter Long

Troubled K-12 Funding Waters in 2025: Position Your Company for Success

In the first part of this series, we explored what Smart Money is doing right now in light of the significant shifts occurring with the start of a new administration. Now, we turn our focus to how your company can position itself as a trusted partner to educators, school leadership, and district administrators during this period of rapid change underway.

The changes underway in federal education funding - most notably the restructuring and potential disbanding of the U.S. Department of Education - are creating uncertainty across the K-12 landscape. Schools and districts that once relied on clear-cut funding programs such as Title I (for disadvantaged students) and IDEA (for special education services) are now navigating a new, yet undefined system. What funding will continue and how will the channels / government departments through which they flow be altered to administer them going forward.

For companies providing products and services to K-12 schools, this presents potential risks and customer disruption. However, it also presents an opportunity for companies to differentiate themselves by becoming reliable sources of guidance and support in an evolving funding environment.

Understanding the Complexity of the Shift

The upcoming changes will not be uniform across all businesses in the K-12 market. For example:

1. A curriculum company reliant on Title I funds will experience different challenges than a kitchen supply business serving school cafeterias.
2. An AI-based learning platform targeting individualized education may be affected by shifts in grant-based funding differently than an athletics supplier influenced by changes to Title IX.
3. Or, special education providers deeply connected to IDEA funds may face a more state-by-state complex transition as schools figure out how to access these resources through new state or federal mechanisms.

There are no one-size-fits-all answers to the situation we all find ourselves in. Nor will there be a simple funding fix for the road ahead. Every company in this space must take proactive steps to understand how their particular funding channels will evolve and then work hard to educate their customers accordingly (meaning the teachers – schools and districts).

Educators Are Not Funding Experts - But YOU Can Be

Educators and administrators are busy managing classrooms, schools, and districts. Tracking every nuance of federal and state funding policy is not in their job description. Even under normal circumstances, school funding is an intricate web of federal allocations, state budget formulas, local tax levies, and special initiatives (such as gambling proceeds and community grants). With the current changes underway, the complexity is only going to increase and in some cases exponentially if each state is forced to set their own rules and standards.

Rapid and widespread changes in policy often lead to misinformation, speculation, and confusion. If you’ve ever followed national crises in real-time, you know how difficult it can be to distinguish fact from fiction amid a flood of conflicting reports. This is precisely the situation that K-12 administrators now face with federal funding shifts.

The most forward-thinking K-12 product and service companies will use this moment to become indispensable resources. By keeping up with the latest information and breaking it down into actionable insights, your company can position itself as a key partner in helping schools access the funds they need to purchase your solutions.

Focus on Your Specific Funding Channels

While the overall funding structure is complicated, your company doesn’t need to track every piece of the puzzle. Instead, focus on understanding how the funding sources relevant to your product or service will be affected.

For example:

• If you provide special education materials or services, focus on IDEA funding—where it will be administered, how schools apply for it, and what new compliance requirements may emerge.
• If you sell athletic equipment, track changes to Title IX standards and the potential impact on sports programs. Funds normally tied to the proper administration of Title IX may become untied giving a school more latitude.
• If your business supplies STEM curriculum, stay informed about grant funding and state-level initiatives that may replace or supplement federal funding streams.

By becoming an expert in your specific funding category, you can provide targeted, practical guidance to your customers (educators and administrators) helping them navigate the new landscape while ensuring continued sales for your business.

Navigating the Uncertainty

At this stage, many future funding policies and replacement programs remain unclear. Based on what we have seen so far, even the policymakers tasked with implementing the changes may not have any concrete answers yet.

The current administration has not provided much in the way of details on how new funding mechanisms will ultimately function. This uncertainty can be frustrating, but it also means that K-12 businesses have an opportunity to lead the conversation. By engaging with state and local education agencies, tracking legislative developments, and maintaining close relationships with district administrators, your company can be among the first to gain clarity and potentially even shape the actual implementation of new standards and then share it with your customers.

Consider these strategies:

• Proactively seek information. Reach out to state education departments, school boards, and advocacy groups to gather the latest insights.
• Host informational webinars. Bring in policy experts to discuss the latest updates and answer questions from educators.
• Develop funding guides. Create easy-to-understand materials that break down how schools can access funds for your product or service under the new system.
• Offer direct support. Help schools with grant applications, budgeting strategies, and compliance requirements to ensure they can continue purchasing from you.

Schools and districts will need this kind of support to navigate the transition, and businesses that provide it will stand out as true partners.

The Bigger Picture: Federal vs. State and Local Funding

It’s important to keep in mind that while federal funding is significant, it only accounts for about 14% of total K-12 education spending. State and local governments contribute the remaining 86%, which means that while federal changes are important, they do not dictate the entirety of the education funding landscape.

However, federal dollars are particularly crucial for schools in high-poverty areas, where Title I and other federally supported programs provide essential resources. Poverty areas are found in rural areas and inner-city areas. This is an issue that both conservative leaning parts of America and more liberal parts of America will have to navigate together. Both these rural and inner-city schools may experience the most disruption as funding mechanisms shift, but they also have strong incentives to find solutions quickly.

More Insight from MCH

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