00:00Some public schools are getting an AI revamp for their budgets, embracing tools like Microsoft's co-pilot to target crippling
00:08deficits.
00:08It's moving the needle in places like Florida's Broward County, where officials hope to save $50 million over the next
00:15five years, mitigating a record $100 million shortfall.
00:19Joining us with more is Bloomberg's Erin Hudson.
00:22Erin, such an interesting story. Let's get specific here.
00:26How exactly are schools using these AI tools to address their budget situation?
00:32Yeah, so the schools that are systematically adopting AI, they're thinking about this in terms of using AI tools to
00:39identify savings in terms of dollars or time.
00:42In the case of Broward County, they're looking at chipping away at their deficit by looking at energy bills, maintenance
00:48bills.
00:49That's that $50 million over five years.
00:53And over the year to date, they've also been kind of just analyzing overtime staff hours, for example.
01:00So here today, they've actually saved $12 million so far is what they tell us.
01:05So, yeah, the districts are sort of looking at this as a way to help address their budget challenges,
01:12which are really strained at the moment with the pandemic aid ending and enrollment declines, which is the driver of
01:19Broward County's deficit.
01:20Absolutely. Well, talk to us a little bit about which tech companies are involved.
01:25You know, which which firms are seeing this as an opportunity?
01:29Yeah, it's all the big ones.
01:32Google and Microsoft are they're already in the case 12 space in a big way.
01:38So some districts would say they kind of have a little bit of a starting advantage.
01:42But a lot of companies are moving in there.
01:45Open AI launched their K-12 offering in November.
01:49And then there's also a world of startups.
01:51So we mentioned one in our story.
01:53It's called Magic School, and it's using Anthropics AI models to build out its platform, its chatbot and other tools.
02:01And really, this is called Education Technology or EdTech for short.
02:06That's a really big spending market.
02:08It's about $30 billion as of 2024, and it's only projected to grow and double by 2033.
02:15So there is no dominant player at the moment.
02:18So that's the space that these tech companies are looking at trying to get into.
02:22And what does this mean for investors here?
02:26Because you think about the sort of composition of the muni market.
02:30Obviously, these K-12 schools are a big part of that.
02:34Definitely.
02:35And for investors in school bonds, the way they think about it is kind of how are district leaders managing
02:41their budgets.
02:43So in theory, if AI tools are helping district leaders manage their budgets more effectively,
02:49really address deficits that exist or shortfalls, that, in theory, is credit positive.
02:56But it's very early days.
02:58You know, 10% of schools out there are doing this.
03:01So it really, it's going to be interesting to see how it plays out and if the AI tools deliver
03:07on the promises
03:07that these school leaders are hoping that they will.
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