Educational Services of America

By William Williams, wwilliams@nashvillecitypaper.com
May 25, 2007

Mark Claypool is president and CEO of Nashville-based Educational Services of America, a provider of special, alternative and post-secondary education programs for children with special needs, behavioral disorders and/or emotional difficulties.

Previously a social worker, Claypool in 1999 created ESA, which now has approximately 1,500 employees, with all but about 150 of them working with students each school day.

Claypool, 43, has undergraduate and graduate degrees from Middle Tennessee State University. He is a native Nashvillian and lives with his wife and daughter in Inglewood.

Describe ESA’s business model and discuss how you developed it.

Our business model was developed at my dining room table in 1999. First, we developed our philosophy, our approach and our standard of operations. We determined the company would grow by acquiring schools and programs that have proven records of helping children. I created ESA as a for-profit entity so that the company could focus on helping kids rather than on raising money. And I believe a for-profit business model results in greater transparency and accountability.

Why are there no ESA schools in Tennessee? Does ESA plan to open schools or programs in Tennessee?

When we started the company in 1999, funding mechanisms made it more efficient to operate in certain parts of the country rather than others, but we are exploring opportunities to provide services in Tennessee.

Discuss ESA’s annual revenue and/or other financial results metrics.

We currently serve 6,000 students in schools and programs at 105 service sites in 16 states. FY 2007 revenue is projected to be $75 million.

What are ESA’s growth plans?

We know there is tremendous need for services like ours as more children continue to be diagnosed with learning disabilities. A new study by the Centers for Disease Control reported that one in 150 children is diagnosed with autism, up from one child in 166, and that number continues to increase.

We hope to be in several more states by this time next year and we anticipate Fiscal Year 2008 revenues of $95 million. We believe there is the potential to grow each of our four service areas. Two service areas, Exceptional Schools and Spectrum Schools, serve students ages 3 to 22 with disabilities such as autism, Asperger’s Syndrome, developmental disabilities and emotional disturbances. College Living Experience assists students with special needs attending college or vocational school, and Ombudsman provides alternative education for middle and high school students who are not successful in a traditional school setting.

Where does ESA’s funding come from and do you rely on grants?

ESA’s operations are funded by tuition payments paid by public schools that contract with ESA, parents who pay tuition and state governments that contract with the company.

What are the liability issues specific to operating schools and programs for students with special needs and how does ESA address these issues?

Anytime you are serving children, there are liability issues. We believe that our focus on serving students in day school environments limits our exposure to liabilities compared to companies that operate residential programs. Also, our dedication to risk management by having sound policies and procedures (for example, ESA uses policy of “line of sight” supervision) and diligently training our teaching staff to those standards is the best way to address these issues. We are represented by the local law firm of Sherrard & Roe.

What are the particular business challenges to operating ESA? How do you address/overcome these challenges?

We operate in a rapidly changing environment. Special education has changed a great deal in the last few years with the rapid rise of the incidence of complex developmental disabilities such as autism and the advent of new rules and regulations such as the federal No Child Left Behind law (NCLB). And, at the same time all these changes are taking place, we continue to grow very rapidly. That means that we have to keep acquiring talent, constantly train new teachers and staff, and locate and maintain school properties.

Even with all of the rapid change involved, I personally find the entire process of growing the company to be very challenging and rewarding. We are really on the cutting edge with our program models and we are documenting great successes for our students. We have grown very rapidly and plan to continue to grow at an even more accelerated pace for the foreseeable future; there are always growing pains and system integration headaches. However, having worked for organizations in the past that were in decline, I can say that even on our craziest day, working for ESA is extremely challenging, terribly rewarding – and a lot of fun.