(2nd update: Response from Pearson, and from author to Pearson)
Mercedes Schneider is a veteran teacher in Louisiana who has been educating students for more than two decades, as well as an education researcher who has been highly critical of corporate school reform. She is also the author of two books, “A Chronicle of Echoes: Who’s Who in the Implosion of American Public Education,” and the newly published “Common Core Dilemma: Who Owns Our Schools?”
The following is an excerpt from her book about the Core. It is about the education company Pearson and it is revelatory in showing the connections between some education reformers and corporate leaders.
Here’s the excerpt, with footnotes removed. (Reprinted by permission of the publisher. From Mercedes Schneider, Common Core Dilemma—Who Owns Our Schools, New York: Teachers College Press. Copyright (c) 2015 by Teachers College, Columbia University. All rights reserved.)
Those “Powerful Market Forces”
In March 2014, billionaire Bill Gates participated in an interview with the American Enterprise Institute (AEI), one of the many organizations he financially supports in his effort to promote the Common Core State Standards (CCSS) (see Chapter 9). In a 6-minute video clip from the AEI interview, Gates purports to explain various aspects of CCSS, including the reason for the “common” component. His explanation has nothing to do with educational quality:
If [states] have two [sets of standards] they’re comparing, they ought to probably pick something in common because, to some degree, this is an area where, if you do have commonality, it’s like an electrical plug, You get more free market competition. Scale is good for free market competition. Individual state regulatory capture is not good for competition. [Emphasis added]
His mechanical analogy of education as an object to “plug in” aside, Gates says that the “commonality” of CCSS “is good for free market competition”; however, he immediately notes that he prefers market competition on a level beyond that of the state. In other words, education companies that are smaller—and are more likely to be vested in their locales—are not the market Gates wishes to promote.
Gates is thinking bigger. Much bigger.
In her March 2014 interview with Gates, Washington Post reporter Lyndsey Layton asks Gates about Gates’s Microsoft and the business relationship it has with international education corporation Pearson—and the possibility that Gates is promoting CCSS because of the potential for Microsoft to benefit financially from CCSS-related business arrangements.
Gates is not pleased with the question, and he states that Microsoft’s business arrangement with Pearson is not connected to CCSS. Still, Gates clearly promotes CCSS so that American education can be brought “to scale”—and to a level that only national and international education corporations could manage. Microsoft is a major corporation, and as such, it could benefit from CCSS. Layton’s question is appropriate and appears to hit a nerve with the billionaire founder of Microsoft.
As Layton points out, Pearson is also a major corporation that could benefit from CCSS.
As to Gates’s stated benefit of CCSS as promoting free market competition: Small education businesses, step aside. CCSS is for the big boys.
So much for “free market competition.”
Ever since the outset of CCSS, Pearson’s profit-hungry radar has been on alert. The intent of this chapter is to examine Pearson’s profitability hopes regarding CCSS. First, a brief word about the history of Pearson Education.
A Century and a Half of Pearson
Pearson was not always a company in the education market. Far from it. In 1844, Samuel Pearson founded a construction company, S. Pearson and Son, in Yorkshire (England). In 1879, Samuel retired and gave his share of the firm to his grandson, Weetman, who then became partner to his own father, George Pearson. In 1884, Pearson relocated its headquarters from Yorkshire to London. Under Weetman’s direction, Pearson prospered. Weetman turned Pearson into one of the largest building contractors in England. The Pearson business good fortune continued when, in its work in Mexico in 1910, Pearson struck oil and later sold its oil shares to Shell-Royal Dutch. Beginning around 1910, aside from construction, Pearson became involved in oil, coal mines, electricity, and aviation. Add to these expanded business involvements the fact that in 1921, Pearson acquired a number of United Kingdom local newspapers, from which it created Westminster Press. Around 1935, Pearson turned its attention away from building, and its oil, coal mines, electricity, and aviation interests became nationalized (i.e., the government took them over). Also around 1935, Weetman’s son, Clive, became chairman of the company. In the early 1950s, Pearson gained a controlling interest in the Financial Times.
Once Clive’s nephew, Weetman John Churchill Pearson, entered the business in the mid-1950s, Pearson gradually became an “industrial group” via a business strategy called acquisition. As Investopedia notes,
Acquisitions are often made as part of a company’s growth strategy whereby it is more beneficial to take over an existing firm’s operations and niche compared to expanding on its own.
Here is a summary of Weetman John’s “acquisition” contribution:
Clive’s nephew, Weetman John Churchill Pearson, became increasingly involved in the affairs of the family company, taking over as chairman when his uncle retired in 1954. The company had a controlling interest in Lazards, the merchant bank, and a variety of other financial and industrial investments, including Westminster Press, a chain of provincial newspapers. Over the next twenty-three years, the company was transformed by acquisition into a broadly based and highly profitable industrial group by buying well-managed firms which had a strong position in niche markets and which were capable of being developed over the long term.
Since the 1950s, Pearson acquisitions have centered on publishing, including education publishing. Here are some of Pearson’s acquisitions since the mid-1950s: Financial Times (1957), Longman Publishing (1968), Penguin Publishing (1970) (Penguin expanded into the Penguin Group in 1983), Addison-Wesley (1988), HarperCollins Educational Publishing (1996) (also in 1996, Pearson’s Penguin Group acquired the Putnam Berkley Group), Simon and Schuster (1998), Dorling Kindersley and NCS (2000), Rough Guides (2002), Edexcel (2003), AGS Publishing (2005), Harcourt Assessment and Harcourt Education International (2007), Wall Street English (2009), Medley Global Advisors (2010), Connections Education, Schoolnet, TutorVista (2011), EmbanetCompass (2012), and Grupo Multi (2013).
In 1985, Pearson’s Financial Times expanded to New York, then to Germany in 1999 as Financial Times Deutschland. Pearson moved its Financial Times into Asia in 2003 and Australia in 2004. In 2012, Penguin combined with Random House to become the world’s largest trade publisher.
And Pearson continues to purchase stakes in other companies—presumably with an eye to eventually own them if doing so might prove profitable (e.g., Pearson holds a 61% stake in Interactive Data and a 75% stake in CTI Education Group).
Pearson is huge, and it continues to grow. Here is the Reuters description of Pearson in 2014:
Pearson plc (Pearson), incorporated on August 12, 1897, is an international media and education company with its principal operations in the education, business information and consumer publishing markets. The Company delivers the content in a range of forms and through a variety of channels, including books, newspapers and online services. It offers services, as well as content, from test creation, administration and processing to teacher development and school software. It operates in more than 70 countries worldwide, its major markets are the United States (55% of sales) and Europe (22% of sales). Pearson consists of three worldwide businesses: Pearson Education, The FT Group and The Penguin Group. Effective August 27, 2013, Pearson acquired BioBehavioral Diagnostics Co.
CCSS fits a company as huge and as financially aggressive as Pearson like a multimillion- (billion-?) dollar glove on an ever-expanding hand. (Notice that the acquisition mentioned last is that of a company to “diagnose behavior”—as in student behavior. But that is another topic for another book.)
I’m sure that for Pearson executives, CCSS was love at first dollar sign.
The Pearson–Common Core Engagement
Pearson appeared on the CCSS scene in 2009, at which time its nonprofit, the Pearson Charitable Foundation (PCF), paid the Council of Chief State School Officers (CCSSO) a $100,000 “grant.” PCF paid CCSSO two additional “grants” in 2010 ($340,000)12 and 2011 ($100,000). Thus, by way of its nonprofit (which Pearson “the For-profit” happens to primarily fund14 and which Gates also funds),15 Pearson paid over half a million dollars to one of the two organizations that holds the license for CCSS.
An engagement ring in its CCSS love affair.
Indeed, the CCSS license includes language that identifies two education companies as supplying CCSS examples: McGraw-Hill and Penguin Group.
McGraw-Hill is the company that purchased CCSS “lead writer” David Coleman’s Grow Network in 2004 and for which Coleman worked until 2007, the year that he founded his nebulously defined education company, Student Achievement Partners (see Chapter 6).
Penguin Group is a Pearson acquisition—the same Pearson that owns the nonprofit PCF that donated over half a million to CCSS license holder, CCSSO.
Cozy, isn’t it?
Interestingly, on November 18, 2014, Pearson announced that its nonprofit arm, PLC, would close at the end of 2014. The explanation was that Pearson plans “to integrate all of its corporate responsibility activities and functions into its business as a way to maximise social impact.”
PLC or no, along the lines of “maximizing” its “impact,” Pearson Education is definitely depending on CCSS to turn handsome profits. And to a company the size of Pearson, with its 2013 sales at GBP 5.2 billion (approximately $8.8 billion), CCSS holds promise for profits in a variety of products and services.
Pearson: “We’re Big, So Quality Becomes Irrelevant”
“Bigger” does not necessarily mean “better,” as evidenced in Pearson Education’s history of test scoring errors, delays, and other issues in which the Pearson product disrupts education flow around the country.
As I note in a blog post from May 2014:
In September 2013, FairTest Public Education Director Bob Schaeffer compiled a list of Pearson’s testing errors, questionable practices, and subsequent fines/lawsuits dating back to 1998. Schaeffer documented 38 incidents—24 of which have happened since 2011.
High-stakes testing failures have high-stakes consequences. Here are several highlights from Schaeffer’s list. Each incident is noted by year and state in which the Pearson error incident occurred:
2000 Minnesota—45,739 misgraded graduation tests leads to lawsuit with $11 million settlement—judge found “years of quality control problems” and a “culture emphasizing profitability and cost-cutting.”
2005 Virginia—computerized test misgraded—five students awarded $5,000 scholarships [based on misgraded test results]
2009–2010 Wyoming—Pearson’s new computer adaptive PAWS [Proficiency Assessments for Wyoming Students] flops; state declares company in “complete default of the contract;” $5.1 million fine accepted after negotiations but not pursued by state governor
2012 New York—More than 7,000 New York City elementary and middle school students wrongly blocked from graduation by inaccurate “preliminary scores” on Pearson tests
2012 New York—More than two dozen additional errors found in New York State tests developed by Pearson
2012 Mississippi—Pearson pays $623,000 for scoring error repeated over four years that blocked graduation for five students and wrongly lowered scores for 121 others
2013 New York—Pearson makes three test scoring mistakes blocking nearly 5,000 students from gifted-and-talented program eligibility
2013 Virginia—4,000 parents receive inaccurate test scorecards due to Pearson error in converting scores to proficiency levels.
Despite Pearson’s established history of testing errors that have profoundly impacted the education systems in a number of states, in May 2014, one of the two CCSS testing consortia, the Partnership for Assessment of Readiness for College and Careers (PARCC), awarded Pearson the contract to develop the PARCC test. As reported by Education Week’s
Sean Cavanagh and also included in my May 2014 Pearson blog post:
The global education company Pearson has landed a major contract to administer tests aligned to the common core standards, a project described as being of “unprecedented scale” in the U.S. testing arena by one official who helped negotiate it.
The decision to award the contract, announced Friday [April 30, 2014], was made by a group of states developing tests linked to the common core for the Partnership for Assessment of Readiness for College and Careers, one of two main consortia of states creating exams to match the standards.
Pearson is expected to perform a broad range of duties under the contract, including development of test items, delivery of paper-and-pencil and computerized test forms, reporting of results, analysis of scores, and working with states to develop “cut scores,” or performance standards for the exams. [Emphasis added]
That “Pearson is expected to perform a broad range of duties” fits with Gates’s assertion that CCSS will bring education in states nationwide “to scale.” A nationally expansive education endeavor such as CCSS requires a mammoth company to “scale” it nationwide. However, it seems that Pearson’s past performance becomes irrelevant because “market competition” is slim as a result of a lack of mammoth-education competition.
Or is it?
One curious fact is that former CCSSO president Gene Wilhoit—who was president of CCSSO during the time that Pearson’s nonprofit, PCF, donated half a million dollars to CCSSO—became one of three board members for the PARCC nonprofit, launched in February 2014. (The other two PARCC board members are Laura Slover, formerly with Achieve and serving on the CCSS development groups, and Paul Pastorek, former Louisiana superintendent who cosigned the CCSS MOU for Louisiana.)
A second curious fact, this one noted in press related to Pearson’s winning the PARCC contract, was that Pearson was the only bidder. Within days of reporting Pearson’s PARCC contract win, Education Weekly carried the story of the American Institutes for Research (AIR) lawsuit against PARCC for allegedly shaping the bidding process to favor Pearson:
A decision to give the education provider Pearson a major, potentially lucrative contract for common core testing is being challenged by a competitor who claims the award was made through a process that was unfair and biased in favor of the eventual winner.
The American Institutes for Research, a Washington-based organization that has a substantial place in the testing field, has filed a legal action in New Mexico state court that argues the contract was awarded in a process that was illegal, and structured in a way that wrongly benefited one company—Pearson. . . .
A Mississippi state official, part of the negotiating team on the contract, could not put a dollar value on the contract, but described its size to EdWeek as “unprecedented” by the standards of the U.S. testing industry. . . .
In June 2014, Fox News reported the estimated value of the PARCC contract to be $240 million per year. As the Education Week report continues:
In court documents, AIR officials say they would have submitted an official proposal to do the testing work, if they thought the bidding process was fair. But they ultimately did not believe they had a legitimate chance to win, and so they decided not to turn in a proposal.
In the end, Pearson ended up being the only bidder, a PARCC state official told EdWeek. . . .
On the surface, it might appear that AIR just missed its chance by choosing not to submit a proposal. However, it appears that the Request for Proposals (RFPs) favored a company that already had a platform in place for—well—Pearson alone:
In December, AIR filed a protest with the state, citing several objections to the RFP put forward for the testing project. For instance, AIR argued that the solicitation improperly tied assessment services to be provided in the first year of the tests with work in subsequent years, essentially creating a “bundling of work” that unfairly restricts competition. That bundling of work favors Pearson, because it would rely on a content/delivery platform already developed by Pearson for the PARCC tests, AIR said in a Dec. 11, 2013 letter to New Mexico’s education department.[Emphasis added]
As of June 11, 2014, New Mexico judge Sarah Singleton suspended Pearson’s arrangement with PARCC pending a speedy review of the RFP process.
When asked by counsel for the State if the [PARCC-Pearson] contract could go forward in the meantime, Singleton denied the request.
“I don’t want you to go forward until you’ve heard their protest,” she said adding that they must hear AIR’s protest and decide if the request for proposal needs to be reconsidered.
“So how long will it take you? I would like to try to do it as soon as possible,” Singleton added during the hearing, “because I don’t want those poor school children sitting around next year not knowing what they’re going to be tested on.”
Officials for all parties involved, the PARCC, Pearson, and AIR, declined to comment sighting [sic] that the case was still open.
Judge Singleton’s words show that she does not understand that the “poor school children” are tied to CCSS as the “what” that they will “be tested on.” Nevertheless, her judgment is mistrustful of PARCC’s attempt to dismiss AIR’s request on a technicality. New Mexico state purchasing agent Lawrence Maxwell gathered and reviewed written documentation on the contract protest. However, Maxwell’s decision is not necessarily the final word on the multimillion-dollar matter:
In his letter, Maxwell said that officials at Pearson and New Mexico’s department of education, would be given the right to respond to the AIR’s protest by June 18. AIR would then have one week after that to respond to what the other two entities have to say.
There won’t be a public hearing on the case, Maxwell said. Instead, “the decision of the state purchasing agent will be based entirely on the written record.”
New Mexico state law says that once a decision is made by the state procurement agent or office, a party can appeal that decision in the courts. So the battle over the PARCC contract could be a fairly protracted one, if all the parties in play pursue all of their options.30 [Emphasis added]
In situations in which the “free market” appears to be rigged, the courts are brought in, and “college and career readiness” is shown to be worth loads of cash—enough for one entity to sue another over the right to run the power-wielding assessment arm of contemporary American public education.
Whichever education mega-company or other organization develops and executes PARCC, one truth is certain: That organization will have incredible power over the futures of millions of Americans—individual students, teachers graded using student test scores, and schools and districts whose existence depends on standardized test scores. Notice that one of the tasks accorded to Pearson in its PARCC contract is “helping” Those “Powerful Market Forces” states “to develop cut scores.” A cut score is the determined threshold for what the one setting it considers “acceptable performance.”
As was proven in New York in 2013—where Education Commissioner John King “set” the cut scores for a Pearson-CCSS test in such a way that he was able to tell the public that he “expected” a 30–37% passing rate—he who sets the cut score rules the education system.
Pearson and Common Core: Indispensability is the Key
In case there is any doubt that Pearson is well aware of the incredible profit value of CCSS, one should consider what Pearson executives discuss in their business meetings. In May 2014, I wrote a post about Pearson’s February 28, 2014, earnings call, a meeting in which Pearson discussed its 2013 results with attention to the future—a future dependent upon CCSS-driven profitability. I used a meeting transcript produced by the company Seeking Alpha. Although the transcript is almost 14,000 words long, Seeking Alpha allows me to directly quote only 400 words—quite the challenge. Much of what I include in this section comes directly from my blog post.
Interestingly, in all of those approximately 14,000 words, there is no discussion of the millions Pearson has paid in numerous fines over the years—fines related to its test-item and scoring blunders. Surely such ineptitude affects profits.
This much is true: Pearson is in education for the money. Of course it is. The company exists to make a profit—a long-term, sustainable profit.
In this meeting, Pearson CEO John Fallon and chief financial officer Robin Freestone are addressing several market analysts: Sami Kassab (Exane BNP Paribas, Research Division); Mark Braley (Deutsche Bank AG, Research Division); Rakesh Patel (Goldman Sachs Group Inc., Research Division); Matthew Walker (Nomura Securities Co. Ltd., Research Division); Ian Whittaker (Liberum Capital Limited, Research Division); Claudio Aspesi (Sanford C. Bernstein & Co., LLC., Research Division); Patrick Wellington (Morgan Stanley, Research Division); and Nick Michael Edward Dempsey (Barclays Capital, Research Division).
The presence of eight market analysts makes it easy to remember that, above all, Pearson is a for-profit with business interests in education. To Pearson, education is business.
Fallon opens the meeting by explaining why profits were not as fine as they might have been for Pearson in 2013. He assures the participating financial analysts not to worry, that “we are determined to return Pearson to sustained earnings growth as quickly as [possible].”
Of course, Pearson expects CCSS to deliver:
The [schools business] sector is awaiting a major curriculum change brought about by Common Core. As we expected, it has been implemented slowly as budgets and policy align state by state.
Fallon assumes that CCSS will drive state policy. This is an interesting assertion, given that CCSS is supposedly “state-led.” According to Fallon, it is CCSS that “leads” the states—and specifically, the curriculum in those states.
Yes, the assessment component of CCSS is quite the golden goose, but not only for the estimated $240 million per year that the PARCC assessment is worth. There are also the auxiliary benefits. For example, in 2012, Pearson contracted with both of the CCSS assessment consortia (PARCC and Smarter Balanced) to develop a “technology readiness tool” to assist states in transitioning to CCSS assessments. However, even this assessment prep tool is not the real coup.
Whichever company (or companies) develops the CCSS assessments automatically has credibility with school districts for providing curriculum aligned with those assessments.
Think about it: Why would a district whose existence depends on handsome test scores purchase curriculum from an education company with no connection to the high-stakes assessments when such curricular helps are available from the company that created the test itself? Furthermore, the more desperate the district is for high test scores, the more likely that district will “find” the money to purchase Pearson curriculum to accompany Pearson-developed tests.
And remember, Pearson is even willing to “help” states determine how to set cut scores. In doing so, Pearson holds much power in determining state passing rates—or failure rates. Moreover, in its “helping,” Pearson also steps into the world of professional development. Another market. “Assisting” states in reducing the number of “failing” students creates yet another market for Pearson to exploit.
So what if Pearson has an established record for botching the assessment process and negatively impacting the lives of thousands of students?
Just pay the fine and move on. Sloppiness becomes irrelevant.
Ahh, the potential for unprecedented profits in the world of education that is centered upon high-stakes testing!
Just be patient, Fallon assures those who are concerned about profitability.
Those supposedly “state-led” CCSS states will need that “aligned” curriculum—just the way that the National Governors Association (NGA) said in 2008 that CCSS, curriculum, and assessments would align and Gates said in 2009 that they should align.
Fallon also notes that the “curriculum change” is also affecting Pearson’s profits in the United Kingdom (UK), where there is also a version of CCSS:
As with Common Core in the U.S., we are investing now in . . . this [UK] curriculum change that starts in 2015.
That’s right: The United Kingdom has its own version of CCSS, loosely called the “reformed GCSEs” (General Certificate of Secondary Education) and “reformed A levels” (advanced-level high school coursework, usually considered the standard for university admission). To enhance understanding, I will offer a brief aside on the UK version of CCSS. For the sake of space, I will focus on the “reformed GCSEs.”
Notice how eerily similar the UK promotion of its “slimmed-down national curriculum” sounds to CCSS:
Employers, universities and colleges are often dissatisfied with school leavers’ literacy and numeracy even though the proportion of young people achieving good grades has gone up in recent years. Around 42% of employers need to organise additional training for young people joining them from school or college.
We believe making GCSEs and A levels more rigorous will prepare students properly for life after school. It is also necessary to introduce a curriculum that gives individual schools and teachers greater freedom to teach in the way they know works and that ensures that all pupils acquire a core of essential knowledge in English, mathematics and sciences. . . .
To give teachers more freedom over their teaching, we are introducing a slimmed-down national curriculum for 5- to 16-year-olds to be taught in maintained schools from 2014. . . .
The new curriculum for all subjects contains the essential knowledge that all children should learn, but will not dictate how teachers should teach.
Though the general sales pitch sounds similar to CCSS, the UK “reformed GCSEs” differ from CCSS on a few key points. First of all, the United Kingdom already has a national curriculum; in the United States, the federal government is forbidden to produce a national curriculum.
Second, the UK version of CCSS began with published content in November 2013 in English and math in 2015; however, it goes beyond those two subjects. In April 2014, the United Kingdom published “reformed GCSEs” for subjects in areas including sciences, languages, and social sciences. Furthermore, the nation plans to conclude with revisions in the area of fine arts in September 2016.
An important way in which the UK “reform” differs from that in America is that the UK “reformed GCSEs” are not tied to high-stakes tests outside of teacher or school control. The United Kingdom will use some national tests, but these appear to be limited in number and not automatically associated with teacher evaluation:
To give schools greater freedom, we will:
remove the current system of national curriculum levels so that schools have the freedom to design their own assessments against the new national curriculum. . . .
In 2010, the Secretary of State commissioned Lord Bew to undertake an independent review of testing, assessment and accountability at key stage 2. Lord Bew published the final report of his review in June 2011.
Following Lord Bew’s recommendation, from 2013 there will be no externally marked test of English writing. Pupils’ ability in the composition element of writing will be subject to teacher assessment only. The new grammar, punctuation and spelling test will assess pupils’ ability in these skills. [Emphasis added]
Thus, as they stand in June 2014, the UK “reformed GCSEs” are not a central component to high-stakes testing outcomes; they do not lead to any “necessary” consortia-developed testing designed to impact individual students and “grade” teachers and schools, and they include teacher judgment as a component of assessment.
I find it ironic that the United Kingdom has a national curriculum, a concept forbidden in the United States for fear that the federal government would use it to override state and local autonomy, and yet, the UK government is showing no interest in using its national curriculum as a means to panicking the UK public into some international competition dependent upon high-stakes testing outcomes. The United Kingdom is not trying to “become” a 21st-century world power. Meanwhile, the United States is a 21st-century world power, and its USDOE is micromanaging state education “autonomy” in the name of “racing to the top.”
Still, Pearson is depending upon the profits to be garnered by the United Kingdom’s national curriculum reforms. National-level reforms cater to mammoth corporate structures such as Pearson.
Returning to the February 2014 Pearson earnings call: Fallon assures his analysts that all will be well by 2015:
These [cyclical and policy-related] factors will be a drag on us again in 2014, but after that, these headwinds start to ease. And in time, as the curriculum change comes through, as the enrollments recover, they start to blow at our backs again rather than in our faces.
Fallon sees 2014 as an opportunity to prepare Pearson to become infused in America’s inevitable, CCSS-determined education market:
We are choosing exactly this moment to push ahead with the largest restructuring in the history of Pearson . . . if we can [and as we] successfully embed ourselves with our customers. . . . [W]hat that work does is shift us much more quickly and much more irreversibly to where the biggest sources of future demand are. . . . [W]e’re . . . stepping-up our investment in North America, with an extra GBP 60 million ($102 million) in 2013 alone. . . . We’re doing so to get ahead of the forces reshaping our industry . . . and to reduce our exposure to the corresponding risks.
Pearson is banking on definite CCSS implementation in these United States via “embedding” itself—making its products and services indispensable.
“Irreversible” in the CCSS market. It reminds me of a drug dealer offering “free” hits as a means of ensuring future junkie dependence. Of course, following such a plan surely is more respectable if the dealers wear tailored suits and sit in plush leather chairs in board rooms while discussing the matter via conference call.
It is Freestone who refers to “invest[ing] to build scale” in higher education—building “to scale” being a term Bill Gates used to describe the supposed “free market” advantage of CCSS over “equally good,” state-level standards. Freestone adds:
The important point is that once we get through that period of investment . . . incremental revenue per student then becomes very profitable. And these are long-term contracts with high renewal rates. . . . As we transition from print to digital, we move from a license to a subscription selling, with revenues spread over multiple years. This reduces revenue and margin short term, but it gives us a more visible business and greater market opportunity in the long term. And as we reach scale, the benefits again are very significant indeed. [Emphasis added]
Though her reference in this case is to Pearson’s higher education market, Freestone’s statement puts me in mind of LA’s iPad software license renewal fees. In that situation, Los Angeles Unified School District (LAUSD) chose Pearson’s unfinished product over products already in use and receiving solid reviews from the users. The Pearson product came “bundled”; however, what was not readily apparent was the software renewal fee that would occur after 3 years.
Embedding. Make the Pearson license renewal indispensable to education functioning.
Freestone refers to “scale” again when discussing Pearson’s role in the K–12 education market:
As in higher ed, no silver bullets to help . . . prepare . . . pupils. . . . So we contribute by offering . . . curriculum; data-driven adaptive learning; enhanced teaching development; assessments which test higher-order skills. But actually, our most important role is actually helping to implement and scale the significant changes that are required to adopt digital, or actually, blended learning. . . . Again, same model as in higher education, these new business models create much bigger revenue opportunities as we get into bigger addressable markets. . . . [Emphasis added]
Freestone continues with Pearson’s plan “to capitalize” on “that megatrend” of online learning. She discusses “building new partnerships” with Apple and Microsoft.
In his March 2014 interview with Washington Post reporter Lyndsey Layton, Gates denied that Microsoft was benefiting from CCSS. However, according to Freestone, there is always the potential for future Microsoft profits related to CCSS via a Pearson-Microsoft partnership.
In Pearson’s February 2014 earnings call, one of the analysts (Whittaker) raises the question of Pearson’s dependence on 2015 CCSS implementation for future profits. Fallon uses editorials on CCSS as evidence that CCSS will move forward (such sophisticated research, eh?) and comments that before CCSS, “local, stand-alone operating companies” were an impediment to not being able to “scale at anything.”
That is true. Those “stand-alone” companies upon which local economies depend are indeed a nuisance to corporate-nurturing “scale.”
My 400 words are used up for directly quoting the Pearson earnings call. I must resort to paraphrasing.
Whittaker has asked once about an alternate plan of action if CCSS doesn’t work as anticipated. Fallon responded initially that all of CCSS need not work in 2015, just some of it. Whittaker insists upon hearing about Fallon’s alternate plan of action; Fallon offers no substantive alternate plan.
Mega-corporation Pearson is dependent on long-term CCSS implementation. Allow the implications of that realization to sink in.
Another analyst, Walker, asks about guarding profits against open access.
Fallon is unfazed; he notes that dependence on Pearson products will be so embedded into American education that free downloads provided by other entities than Pearson offer no threat.
Pearson: Tailor-made for Those Powerful Market Forces
When Gates speaks of the importance of CCSS in bringing American public education “to scale,” one cannot help but wonder whether his mind is specifically on the benefits of CCSS not only to his own Microsoft, but also to Pearson. As for Pearson’s market strategy, it wants to either shut down competition or subsume and also make its bloated, corporate self indispensable to American public education. CCSS is tailor-made for the Pearson philosophy of embedding and acquisition, and like so many organizations involved in the CCSS venture, Pearson is positioned to benefit from its initial “investment” in CCSS license owner, CCSSO.
CCSS is the gift that Pearson counts on to keep giving.
Addendum: In July 2015, a New Mexico judge ruled in favor of Pearson, and AIR said it would not pursue the issue any further.
Here’s a response to the excerpt from Don Kilburn, president of Pearson North America:
The Answer Sheet blog recently shared an excerpt from a book that claimed to understand Pearson’s motivations for being involved in education. We weren’t given the opportunity to respond directly to the points raised in that piece, many of which are rather presumptuous. [Note: Actually, I did invite Pearson to write as long a response as desired but the offer was declined.] So without responding to every point we believe is inaccurate, I’d like to take an opportunity to explain what Pearson is, and what we stand for.
Yes, we are a for-profit company. We currently do about $5 billion worth of business annually in the U.S., out of an estimated $1 trillion that is spent on education each year. Pearson is just one of many companies (for-profit and non-profit) serving public K-12 and higher education institutions across the country. Hundreds of education technology start-ups as well as Fortune 500 companies like Apple, Facebook and Google compete for a share of this business as well.
In this competitive environment, Pearson is held accountable for how we perform as a company by educators, students, schools and higher education institutions, as well as our shareholders and our employees. We are a company of nearly 40,000 – 15,000 of whom are former teachers, and many more, like me, are U.S. parents. All of us are focused on making a difference in the lives of learners.
At Pearson, because we are parents and community members, we welcome scrutiny. We’re seeking to be transparent in our work. This means engaging with students, parents, teachers, and professors to learn more from them.
We don’t shy away from public debate around education policy, which we agree is necessary. Earlier in the year, we posted the full transcript of our Annual General Meeting to share openly our goals and thinking, and our willingness to hear criticism. You can read the full transcript online.
We also believe business has a role to play across K-12 and higher education – providing innovation and investment that might not be possible otherwise. We’ve joined with America’s Promise Alliance to support states in increasing graduation rates with a State Activation program. Our hope – like everyone involved in education – is to help every kid reach his or her full potential and live a fulfilling, fruitful life.
Regarding our ability to invest, we recently sold the Financial Times and our share of the Economist Group and are committed to using those proceeds to advance programs and products that work in K-12 and higher education.
We understand that not everyone will agree with us. And we can firmly say that we are always striving to do better. This can be seen in our public commitment to achieve better learner outcomes, identify what works in education, and report out on how well our products, programs and services are meeting that goal, which we call our “efficacy agenda”. We made some of our research on this front available already, and we’ll continue to do. This efficacy agenda ensures that when we participate in the education space, it’s going to be with the right level of quality and rigor.
The Answer Sheet blog referenced specific concerns about our work in assessment. We meet the highest industry standards to make sure our tests are fair and valid, and our focus is always on the fairness, accuracy and validity of these tests. In managing a multi-step, multi-stakeholder process, on occasion, we have made mistakes. When that happens, we take immediate action to address them and analyze what went wrong so it doesn’t happen again. We are continuously working with educators to create better assessments that provide better feedback. With the states who make up the PARCC consortium, we successfully helped deliver more than 15 million online assessments this past spring with no downtime.
Finally, we support all states and educators as they diligently work to improve learning throughout this country, whether in a state that has adopted the Common Core State Standards or not. We always have. We are proud to work with teachers, professors, schools, districts and states daily to help make a measurable difference for learners, and we will continue to do so.
Don Kilburn, president of Pearson North America
Here’s a response to Pearson from Mercedes Schneider, the author of the book which was excerpted above. The full response is on her blog, here:
In my book, Common Core Dilemma–Who Owns Schools?, I have a chapter on London-based mega-company, Pearson. On September 23, 2015, Washington Post education writer Valerie Strauss featured an excerpt from that chapter. Readers are able to view Strauss’ post on her blog, “The Answer Sheet,” by clicking here.
On October 08, 2015, the president of Pearson North America, Don Kilburn, responded to Strauss’ post, and those comments are printed above.
For starters, I do not consider for-profit education mammoth Pearson as “just one of us.” Clearly Kilburn is trying to promote such an image in his response. This attempt to disarm the American public regarding the Pearson potential to drive American education is expected when one reads in Pearson’s July 2015 earnings call that Pearson CEO John Fallon intends to “build the Pearson brand more proactively.” (Note: The directly-cited information from Pearson’s July 2015 earnings call comes from this transcription by SeekingAlpha.)
Fallon was also encouraged to learn that our American Congress’ retaining a major annual testing component in the proposed Elementary and Secondary Education Act (ESEA) reauthorization “reaffirms a commitment to annual assessments as a means of promoting the quality in education.”
Here is where Pearson’s vision breaks with that of many American teachers, parents, and students. We do not view test-obsessed “education” as producing quality. We view it as punitive, and as narrowing the creativity of both students and teachers– and intended to deliver the ulterior motive of labeling schools as failing– which benefits the corporate reform motives of both killing teaching as a profession (cheaper bottom line) and replacing the elected-board-run community school with under-regulated, test-centric charter schools.
If Pearson actually did “engage with students, parents, teachers, and professors,” no doubt Pearson would have to face the sentiment that a growing proportion of American education stakeholders do not want a mammoth education company inextricably woven into the fabric of the American public school classroom.
Pearson is just too big– and as a for-profit, it seeks to become ever bigger.
For all of Kilburn’s warm, hand-holding rhetoric, profits drive Pearson.
But back to the Pearson disconnect: Pearson CEO Fallon believes that teachers reject being evaluated using student test scores because they just need more time to adjust to Common Core:
As you know we’ve been at the forefront of helping states to develop assessments that measure these new standards. And, initially at least, the teacher evaluation that’s linked to these new standards is proving unpopular with teachers, primarily because they’re worried that they should be given more time to adjust to the higher expectations that are now being placed on them.
Wrong. Teachers reject the idea of being evaluated using student test scores because such a system cannot work. The American Statistical Association has formally opposed such a practice. It is time for Fallon and Kilburn to recognize this fact. No amount of “adjustment time” will make the invalid practice of tying teacher jobs to student test outcomes valid.
Instead, the Fallon and Kilburn focus is on “better assessments.”
An issue leading to Pearson’s losing its lucrative Texas testing contract (the most recent of which was a five-year contract worth $468 million) involved the sentiment that through that contract, Pearson had become too influential over Texas public education.
So, in reflecting on the Texas contract loss, Fallon noted that it would provide the opportunity for Pearson to make even better tests– in the name of serving parents and teachers:
The biggest contract we’ve lost in Texas is still largely paper based and we’ve announced plans… to halve our print based test processing facilities nationwide. …That work freezes up actually to take much more of a lead in developing the next generation of better, smarter digitally-led assessments which meet the understandable concerns of parents and teachers….
What if the “understandable concerns of parents and teachers” center upon seriously reducing the American education dependence upon standardized testing?
What if parents and teachers increasingly respond to the federal testing mandate by refusing the test?
Will Fallon and Kilburn support those teachers and parents?
Kilburn states that Pearson delivery of PARCC testing was successful because there was “no downtime.”
This is no selling point for me to admire Pearson. I am a public school teacher, and I am tired of testing– the very testing that Fallon is happy to see continue– the very testing that Fallon counts as “promoting the quality in education.”
Kilburn downplays the $5 billion that Pearson draws in annual profits from American education, and he also downplays Common Core. However, Pearson has a history of helping its for-profit via its now-closed charity, the Pearson Foundation, and that in connection with unarguably potentially-profitable Common Core. As Valerie Strauss reported in November 2014:
Last year the Pearson Charitable Foundation — the nonprofit arm of the largest education publishing company in the world — paid $7.7 million in fines to the state of New York after authorities found that it had broken state law by helping its for-profit parent. How? By helping it develop Common Core educational products and by paying travel expenses for potential clients to attend education conferences.
Nonprofit organizations are not supposed to be helping for-profit companies make money. Oops. …
According to the settlement…, Pearson used its nonprofit foundation to develop Common Core products in order to win an endorsement from a “prominent foundation.” A story by my Washington Post colleague Lyndsey Layton said that Pearson used the foundation to develop Common Core products, including courses, to win an endorsement from a “prominent foundation,” which happened to be the Bill & Melinda Gates Foundation, which was a prime funder of the Core from its creation.
Strauss continues by noting that even as it pays millions in fines, Pearson neither admits nor denies wrongdoing. But such an arrangement hardly promotes public confidence in the Pearson brand. On the contrary, such exposure only highlights “Pearson’s motivations for being involved in education”:
Politico’s Stephanie Simon noted in her February 2015 blockbuster scrutiny of Pearson’s hold on the American classroom that the company wields “enormous influence over American education” — writing textbooks and tests; selling software that grades essays, tracks student behavior, diagnoses and treats ADHD, evaluates teachers and more; administers exams that license teachers; co-owns the GED, etc. The story says:
Indeed, Pearson has its hand in so many education services that corporate executive Donald Kilburn confidently predicted on an earnings call last summer that the North American division would flourish even if states and school districts had to cut their budgets.
As long as sales reps can show that Pearson products get results, Kilburn said, “the money will find a way to come to us.”
But the POLITICO review found that public contracts and public subsidies — including at least $98.5 million in tax credits from six states — have flowed to Pearson even when the company can’t show its products and services are producing academic gains.
Pearson’s broad reach in American education is evident in the variety– and dollar value– of its contracts. POLITICO found that millions in taxpayer dollars and student tuition have flowed to Pearson in deals without competitive bids and through contracts set up to protect Pearson’s profits, even when promised results don’t materialize.
Simon offers details of such Pearson-friendly deals in multiple states, including Alabama, Arizona, Florida, California, and New Jersey.
Profits, profits, profits.
And as Simon reports, while “the company has numerous competitors for nearly all the products it sells, but the POLITICO review found Pearson often has the inside track for contracts because its products are so ubiquitous and its sales staff builds such tight relationships with state and local officials.”
Pearson exerts tremendous influence over American public education with an end to ever-increasing profits. Common Core and its attendant tests provides the undeniable potential to further streamline that influence.