But I do think for a lot of them, their structural costs increase and now they’re finding themselves having to sort of far out ways to scale back. I don’t think that we are under the same kind of pressure because we have not had — it’s not that we haven’t benefited from that funding. We have sort of indirectly benefited from some of it. But we haven’t taken the same sort of approach maybe to it, and I don’t think that we have a cost structure that’s going to be need to be rightsized because of ESSER funding going away. Now having said that, I think Donna mentioned in her remarks that still means we continue to pursue cost efficiency. We run an efficient business here, but those are — that’s a distinct thing altogether. The funding environment at the state level, I think, continues to be in line with our expectations, meaning it’s positive, it’s continuing to trend positive.
And we think that the funding environment going into next year is stable, and we will see positive fund increases. Now how that actually translates to our business next year based off of mix and flow-through and things like that, we don’t know yet. I think we’re going to see robust strength in our business going into next year. The mix of funding and how that impacts us, I think, remains to be seen. But sort of whatever it’s going to be, it will be, I’d say, if it impacts us, it will be somewhat temporary, meaning a 1-year thing, and then we’ll sort of refer to a normalized pattern of the year after that. So I’m not too concerned about it, although there’s a potential for based on mix and things like that, some one-time impact to us. But I don’t think it’s severe as you might be hearing from districts and things like that.
Unidentified Analyst : Got it. That makes a lot of sense. And then just for the follow-up, I think you mentioned your app volumes and the conversion rates were looking good for the fall cohort. I know it’s still kind of early. Can you give any more color on what’s driving that success?
James Rhyu: Yes. So I think my comment is really focused on if the trends this year continue into next year. This year, we are — because the fall cohort season is barely underway. I mean there’s not really a lot of data yet for that. But the in-year season that we’ve seen has been very strong. Application volumes continue to be strong. Our conversion rates continue to be strong. And so we do think — and we saw this last year, we saw that translate into a good fall season. So we think it is a good early indicator of it translating again into a good fall season. A couple of years ago, for those of you who remember, we actually had, I would say, an operational — not a great operational fall season. And we’ve worked really hard over the past couple of years to improve that and we continue to improve it.
And I think those operational things give us those improvements in both application funnel volumes as well as conversion rates. And so I think a lot of it is attributed to, I say, our operational improvements that we’ve made. And also, I think, particularly in the in-year side of it, the overall market dynamics, which I talked about a little bit as well, I think, are strong.
Unidentified Analyst : Got it. Great quarter. Thank you very much.
Operator: We take our next question from Greg Parrish with Morgan Stanley.
Greg Parrish : Good evening. Thanks. I’d like add my congrats on the quarter and strong results. So I guess I’ll just ask about fall enrollments a slightly different way. Maybe just kind of zooming out higher level, you have sort of long-term financial targets out there kind of imply mid-single digits to high single-digit enrollment growth high single digit at the upper bound of your 2028 targets. So that’s kind of the framework you have out there. If you think about next year, there are any sort of headwinds to that framework? Or do you expect the kind of growth in the long-term framework sort of knowing what you know now?
James Rhyu: Yes. I think based on what we see, we don’t see a headwind against that framework. I think it’s a really good way to think about it and the way you’re framing the question, I think, is really smart because we are trying to build a long-term growth business here. I know everybody is concerned about the fall. And so we’re building the long-term engine here for growth. I think that everything we see from a market dynamic perspective and our own operating sort of cadence, if you will, indicates that we’re right within that framework. And I think we expect that all things being equal, we’re going to continue to execute well against that.
Greg Parrish: Great. And then maybe talk about M&A pipeline. I mean, is that full at the moment? Could you see things ramping up? Are you seeing M&A activity kind of ramp up broadly? And then sort of secondly and related, maybe you can kind of update us on view management and the Board’s willingness to potentially lever up if the right acquisition target presents itself? Or do you sort of like the sort of very low leverage position that you’re in?
James Rhyu: Yes. So listen we’ve always been very active in terms of our M&A pipeline. I’ve been a little bit more bearish on valuation and I continue to be a little bearish on valuation out there. So I don’t think there’s anything on the near horizon for us. I think if we deploy capital, I want to make sure that we deploy for a good return at a high probability. And I think I just don’t see that right now. I think our Board is going to be supportive of the right strategic deal if that comes along. And I think structuring that right strategic deal, if it includes leverage, I think they’re going to be supportive of I think they’re probably more focused on ensuring that we make good strategic decisions that are the right long term — in the right long-term interest of our shareholders.
