Despite overall gains in net profit as a whole, McGraw-Hill’s education division, specifically its K-12 group, experienced a significant drop in revenue during the first quarter of this year.

As reported in its earnings report for the first quarter of 2012, revenue for McGraw-Hill’s education division dropped 2.3 percent over the fourth quarter of last year (a period in which it experienced gains). But the school-education group, which excludes the company’s higher education, professional, and international publishing business, dropped 10 percent in revenue, to $95 million, compared with the first quarter of 2011. The company attributes the drop to continued cuts in state funding. The division’s operating loss decreased due to lower costs associated with a staff restructuring.

“I am encouraged by recent growth trends in Higher Education and Professional,” said Harold McGraw III, chief executive officer of The McGraw-Hill Companies, in a statement. “In addition, our cost reduction efforts are offsetting government funding challenges in the elementary-high school portion of our education business.”

This year, the company plans to spin-off its education division into a separate company from its financial information division, which includes the Standard & Poor’s Ratings Services.

Overall, McGraw-Hill saw a profit of $123 million in the first quarter of 2012, up from $120 million the same period last year. Operating profit in its financial division increased 9.8 percent over last year for the period.

The company’s stock is trading at $48.40 per share as of noon Tuesday, down $0.70 from the start of the day.