Julie Garcia handed Apple Inc. (AAPL) iPads to students in her seventh-grade pre-algebra class on a recent morning before showing the pupils how to use the tablet to graph data, hunt for correlations and record how-to videos.

A math instructor at Innovation Middle School, Garcia is one of the first to use some of the more than 25,000 iPads the San Diego Unified School District bought from Apple this year.

“It’s the cool factor,” Garcia said as she looks over the room of students tapping energetically on tablets. “They are super motivated.”

For districts around the country, though, it’s the price as much as the cool quotient that could draw them to a new, smaller version of the iPad that Apple will unveil tomorrow at an event in San Jose, California. Apple has long been a leader in education, and schools began embracing the iPad soon after its 2010 debut. Yet as fiscal budget shortfalls crimp spending all the more, schools in growing numbers are warming to the handheld devices as an alternative to more expensive laptops.

Now schools, as well as consumers, are about to get another big price break: The smaller iPad may cost as little as $249, according to Barclays Plc. That compares with $499 to $829 for the current iPad.

Beyond the school market of course, Chief Executive Officer Tim Cook will use the device to try to widen Apple’s lead over Amazon.com Inc. and Google Inc. and fend off a more recent threat from Microsoft Corp. in the market for tablets, which NPD DisplaySearch predicts will more than double to $162 billion by 2017. Cook will unveil an iPad with a 7.85-inch screen diagonally, people familiar with its development said in August. The current iPad has a 9.7-inch screen.

iPad Shift

Yet Apple executives plan to make a point of highlighting the iPad’s educational capabilities at tomorrow’s event, according to a person with knowledge of the planning. Little wonder. Education spending on information technology, including hardware, was about $19.7 billion in the 2010-2011 period, according to the Center for Digital Education.

Educators’ bet on tablets mirrors a trend in the broader consumer-electronics market, where consumers are buying iPads instead of traditional personal computers. PC sales in K-12 fell 8 percent in the U.S. last quarter, the third straight decline, Gartner said.

“We’re moving away from desktops and laptops,” said James Ponce, the superintendent of the McAllen Independent School District in Texas. “Ninety percent of the work is now being done on mobile devices.”

School Sales

The education push is part of a strategy put in place under co-Founder Steve Jobs, before the iPad was introduced in 2010. While Apple has a history of selling Mac computers to schools, the company realigned its education sales force to emphasize iPads, a person familiar with the changes said.

Innovation Middle School has traditionally used Lenovo Group Ltd. (992) computers because Macs are too expensive, said Harlan Klein, the school’s principal.

“They were cost prohibitive,” Klein said. “With the iPad, they are competitive.”

The new iPad comes at a critical time for Apple. Its shares have dropped 13 percent since reaching a record on Sept. 19, two days before the company released the iPhone 5. The stock rose 1.7 percent to $620.24 at 9:49 a.m. in New York.

Sales of the smartphone have been constrained by supply constraints. Apple is also facing fresh competition in tablets fromMicrosoft (MSFT), which on Oct. 26 will release the Surface, its first foray into hardware. Apple had about 70 percent of the market in the second quarter, compared with Samsung Electronics Co., which had 9.2 percent, and Amazon’s 4.2 percent, according to IHS ISuppli.

Courting Educators

To woo educators, Apple’s sales staff meets regularly with school administrators and procurement officers across the U.S. The company has sales staff assigned to work with schools in particular regions of the U.S., and pays for district officials to visit Apple’s headquarters in Cupertino, California, to learn about new products.

“Apple has got the world’s biggest education sales force, they have a great device and they have a long history in education,” said Tyler Bosmeny, the CEO of Clever Inc., an education software company. “This is absolutely something that they would be crazy to ignore.”

The company will need to set the new iPad’s price right to woo cash-strapped districts.

“Once these tablets get in to the $200 to $300 range we are going to see a real aggressive uptake in the K-12 market,” said Vineet Madan, a senior vice president at McGraw-Hill Cos. (MHP) education unit.

To save money, San Diego’s school district bought iPad 2s after Apple dropped the price of that model when the newest version was introduced earlier this year.

Training Teachers

Drawing on funds raised through a voter-approved bond measure, the district spent about $370 on each iPad, which comes pre-loaded with various educational applications, Browne said.

Besides budgetary constraints, a major challenge for schools is training teachers and managing all the new equipment and software. If a teacher wants to use an iPad math application, synchronizing a classroom of devices and monitoring all the students’ work can be time consuming. In San Diego, a team of eight employees helps train teachers and manage new technology.

“A lot of the time we see people putting technology in the classroom to be innovative, but it ends up being more work for teachers, not less,” said Bosmeny, whose San Francisco-based company is designed to help schools manage the data from iPad applications. “Everyone becomes a part-time data shuffler.”

Touch Screens

In southern Texas, Ponce of the McAllen Independent School District reached out to Apple soon after the district decided to get away from buying laptops and desktops, which he said were expensive to maintain and unappealing for many students. Apple was at the table helping craft the district’s strategy for integrating technology in classrooms, he said.

“We included them because they have revolutionized the world,” Ponce said. “We had people in the room who were thinking bigger than we could.”

The work resulted in McAllen buying about 25,000 iPads, paying Apple about $3.5 million a year as part of a financing deal the district worked out with Apple. About half the district’s technology budget is now going to Apple, Ponce said. Students are using iPad applications to test for vocabulary, make presentations and compile class notes.

While some teachers have resisted the new technology, many are adapting because they see students are increasingly fluent with touch-screen-based technology, said Courtney Browne, a technology resource teacher at San Diego Unified School District.

“Education is changing and it can’t just be the teacher up there talking,” she said. “It’s not just about the stuff; it takes the teacher to be able to use them.”

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net