NEW YORK, July 23 McGraw-Hill Cos MHP.N said
on Friday that school textbook sales had declined in the second
quarter because of spending cuts by state governments,
including California and Illinois, illustrating the strain on
U.S. state finances,
The textbook business accounted for 38 percent of the
company's second-quarter revenue of $1.5 billion. But the
school education group's revenue fell by 4 percent.
"State budget pressures continue to be a factor in this
year's elementary and high school market, as we had expected,"
Chief Executive Harold McGraw told analysts on a conference
"Only the state new adoption market will show solid growth
this year, but here, too, funding concerns are driving reduced
purchasing levels," McGraw said.
For fiscal 2011 and 2012, states will likely have budget
gaps totaling $260 billion, according to the Center on Budget
and Policy Priorities in Washington, D.C.
All states except Vermont are mandated by their state
constitutions to balance their budgets, and so they have cut
spending in many areas including education. California school
districts, for example, have reduced their purchases of
reading, literature and math.
South Carolina canceled math book purchases, Indiana
postponed purchases for the year and Illinois suspended a
textbook loan program that had funded many orders in 2009,
McGraw said. School districts in Georgia and Oklahoma have also
scaled back textbook purchases.
McGraw Hill is expecting the market for university and
college textbooks to grow 5 percent to 7 percent in 2010. The
company reported double-digit growth in the second quarter for
some subject areas, including science, engineering and math,
business and economics.
The elementary textbook market is expected to grow 4
percent to 6 percent in 2010, down from a previous forecast of
6 percent to 7 percent.
McGraw said major opportunities existed in Texas, Florida
and California, despite cutbacks, said McGraw.
McGraw Hill, which also owns credit rating agency Standard
& Poor's, is closely monitoring the federal government's plans
for education spending, including stimulus programs such as the
$4 billion Race to the Top grants, $350 million of common core
assessment grants and $650 million of investing for innovation
"For the McGraw-Hill school education group, these grant
programs offer potential for both assessment and instructional
materials," said McGraw.
The $862 billion economic stimulus plan the U.S. government
passed last year sent nearly $40 billion to states for school
funding, but that money expires at the end of this year and
school districts are considering massive spending cuts.
Congress is considering providing them with an additional
$10 billion, which is intended for education jobs.
(Reporting by Ciara Linnane; )