Cashing in on government intangible assets

I have long noted that government’s have important intangible assets that need to be carefully managed and, in some cases, monetized. Here is a case in point. Yesterday, the Montgomery County Board of Education voted to approve a deal with Pearson, a major educational publishing company (see a story in the Washington Post). Under the terms of the agreement, the school will accelerate its work on developing and implementing a new educational curriculum. Pearson will have own the copyright, help develop the testing and training material and have exclusive rights to market the materials, including using the Montgomery County school’s name. The school system will help in the marketing by allowing prospective customers to visit classrooms and in other promotional activities. The school system will receive up to 3% royalties including a $2.25 million advance on royalties.
According to the Post story:

Pearson was attracted to Montgomery because of its national reputation for high test scores and innovative educational approaches.
“What Montgomery County Public Schools has accomplished for its students over the last 10 years is inspirational for the rest of the nation,” said Pearson chief executive Marjorie Scardino in a statement.

The deal was not without critics who, according to the article, expressed concern over the propriety of such a commercial relationship. The article notes that a nearby jurisdiction has taken a different tack:

Across the Potomac, the Fairfax County schools used to sell their curriculum on their own, retaining the rights, until officials decided several years ago that tracking the money wasn’t cost-effective. Now, they license it free of charge to public schools that ask for a copy, said schools spokesman Paul Regnier.

Apparently, the Montgomery County deal is the first time a publisher and a school system have jointly worked on an entire curriculum. It will be interesting to see if other school systems look for similar opportunities. As the article notes, part of the reason for the school system pursuing the deal is that it needed the money. Many other school systems are in similar circumstances — but not necessarily with the intangible assets that the Montgomery County system has to exploit.
It will also be interesting to see if the deal sparks any interest or debate on national guideline as to what local government intangible assets should or should not monetized. The federal government has a confusing set of policies on how it manages and values its intangible assets. I assume that the situation is the same at the local level.
In this regard, maybe the federal government can lead by example. As I’ve said many times before, a first step would be to know what we have. We need review of how much the government spends on developing intangible assets. An intangible asset budget would help tell us how we are doing in fostering the development of intangibles within the larger economy. We need an inventory of government-owned intangibles as well. That inventory would give us the baseline for better internal management. Both reviews are needed before we can set a coherent intangible asset management policy.

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