For‑Profit Education Market Size and Early Childcare Spending Figures

8.2. The Education Market Education is one of the largest sectors in the world, representing approximately 5% of global gross national income of $48 trillion.'’ In 2005 in the U.S. alone, education was a $1.0 trillion market with for- profit education accounting for $81 billion or 7.8% of this amount."® The for-profit component of this industry (pre-K-12, post secondary and corporate training) is projected to grow faster than the overall historical industry growth rate, at a 7.4% annual rate, reflecting the increasing importance of for-profit operations in the sector, to reach a market size of $116 billion by 2010.'® Education is still predominantly provided by public / governmental entities in most countries including the U.S. KUE believes that the industry will converge towards a more balanced public / private system, similar to the evolution observed in the 20th century in other major industries such as healthcare, infrastructure and telecommunications. US Education Industry: Revenues Generated by For-Profit Companies (1999—2010E) $150 10.0% os ~ HD 9.0% & 5 $90 8.0% 3 = $60 7.0% ¥ ~ $30 6.0% 2 $0 5.0% & 1999 2000 2001 2002 2003 2004 2005E 2006E 2007E 2008E 2009E 2010E mmm For-Profit Spending =illFor-Profit % Source: Harris Nesbitt estimates, U.S. Department of Education National Center for Education Statistics, Training Magazine and Eduventures. 8.3. The U.S. Early Childcare or “pre-K” Market The highly fragmented early childcare or “pre-K” market includes care based in homes and housed by community organizations (e.g., churches, synagogues, YMCAs) and center based facilities. Center- based childcare includes preschools (nurseries), workplace centers (located on-site at the company), lease-model centers (located in a real estate developer's office building), back-up centers (a variety of on- site and off-site back-up care programs) and family day-care facilities (located in someone’s home or center). Although childcare may evoke thoughts of a babysitting service, education has become an increasingly important element in services to pre-K children. However, the education-focused portion of the childcare market remains relatively small. Since the early 1980s, center-based ECE has become the care provider of choice for families. The U.S. ECE unit generated an estimated $54 billion in total spending in 2005, representing a 10% compound annual growth rate since 1982." Approximately five million or 60% of 3 to 5-year-olds with working mothers are enrolled in ECE centers.*° The following growth drivers are expected to continue to fuel growth in the early childcare market: growing importance of ECE, demographics (e.g., more children aged five and younger), increase in families with two working parents, more educated parents, corporations recognizing the benefits of childcare services and tax incentives and other positive legislation. The perception of ECE as a fundamental component of child development has contributed to average annual fee increases of roughly 7% amongst center-based facilities, reflecting the stable, relatively inelastic nature of the demand for higher quality care.*‘ The number of children receiving childcare ” Source: UNESCO Institute for Statistics Database. 7 Source: US Department of Education National Center for Education Statistics and Training Magazine and Harris Nesbitt research. ? Source: Harris Nesbitt, Education and Training, September 2005. *° Source: “Early Care and Education: Work Support for Families and Developmental Opportunity for Young Children,” Urban Institute, September 2001. 21 Source: The National Economic Impacts of the Child Care Sector, 2002. 63 HOUSE_OVERSIGHT_024496