UPDATED
Many companies that once provided supplemental education services, or tutoring mandated at academically struggling schools under the No Child Left Behind law, are now scrambling to find new streams of income, or have already closed their doors, in the past year.

Steve Pines, president of the Education Industry Association, said that at its peak several years ago, about 2,500 companies and other organizations were approved to work with students using supplement-services funding allocated to improve students’ academic performance. About half of the state-approved providers are “commercial entities,” according to Pines. Other providers are a mix of school districts themselves, followed by community and faith-based organizations. Today, Pines estimates that the number of organizations providing those services has dropped by 50 percent.

Some supplemental education service companies, meanwhile, are still delivering tutorial services with funding from other sources, including the federal Title I program, which supports impoverished students, as well as grants, said Pines and others familiar with the program.

Providing so-called “SES” is one of the interventions required when schools consistently fail to make adequate yearly progress under NCLB. However, the Obama administration has recently granted waivers to nearly 40 states, as this infographic shows. Under the waivers, the states are free of the requirement to set aside funds for tutoring, except where the states themselves mandate it for academically struggling schools.

Finding new opportunities in the “post-SES world” was the topic of a workshop at EDVentures, a conference sponsored by the industry association last week in Dallas. Two business owners who once provided SES, but who have moved beyond it, guided participants through a series of questions designed to help them capitalize on other competencies their companies exhibit, and identify a path for new offerings or products.

Supplemental education services represented “a major part of our business a year ago. It made up 99 percent of our revenue. Now it makes up zero,” said Isaak Aronson, president of SmartStart Education, LLC in New Haven, Conn. “It was a scary, tough year. We learned a lot of lessons.”

By asking themselves what else they do well, Aronson and his team discovered that they had engaged parents successfully using text messaging—so they created a parent-engagement texting product this summer called SmartStart Text Connect, which they have sold to one school, with interest from others.

Beyond that, they are offering professional development, parent-engagement workshops, and additional professional services to individual schools and districts.

Jim Popp, president of University Instructors, a Richmond, Va.-based company founded in 1994, described how his firm started providing SES when schools the company was already working with began approaching them about the opportunity. Eventually, SES grew to represent 40 percent of their business. As the marketplace became more saturated with SES providers, Popp decided to abandon the “direct-to-consumer” model that SES providers follow.

Last year, Popp said university instructors had no revenues from SES, and continued its focus on being a “direct-to-schools” provider of interventions for students during the school day, professional development, after-school programs, and summer camps. He explained that his company also took a tool it had developed for its own work managing people in six states, and adapted it for external use.

University Instructors is now in its second year of a contract with the state of Virginia, providing an online tool that helps manage educational consultants throughout the state. In addition, the company has also diversified to help online content providers ensure that teachers are using the providers’ programs correctly in schools, monitoring student progress and providing professional development as needed.

Meanwhile, SES providers in California, which does not have a waiver, could face challenges similar to those of their counterparts elsewhere in the country, if a group of nine districts in the state have their special request for a waiver granted.

This post has been updated with a clarification about the number of companies and other types of organizations providing supplemental education services.