Take the federal No Child Left Behind Act (NCLB) of 2001. Add its heir, the Race to the Top Fund (RTT-TF), part of the American Recovery and Reinvestment Act (ARRA) of 2009. Under NCLB and RTTTF, pupil scores on standardized tests are center stage in public K-12 school reform. Public school principals and teachers with students who fail to measure up to learning standards based on test scores face harsh penalties, ranging from schools closing, with employee layoffs, to openings of charter schools (brick-and-mortar and online).
There is more to this learning and teaching dynamic than meets the eye. For instance, off-stage are for-profit corporations. Their fiduciary responsibility is to private shareholders, not public interests. So what is the interplay between the corporate sector and public K-12 school reform?
We turn to Kaplan Test Preparation (KTP) schools. The global company readies students for exams such as the SAT, ACT, LSAT, GMAT, MCAT and GRE in the U.S and abroad. KTP joins Kaplan Higher Education and Kaplan International as the three segments of Kaplan, Inc., launched in 1938 and now a subsidiary of The Washington Post Company. Kaplan Inc. earned 55 percent of the company’s revenues of $2.196 billion in 2012, according to its annual report, down from $2.404 billion in 2011 and $2.804 billion in 2010. KTP earned $284 million in 2012, $303 million in 2011, and $314 million in 2010. This steady revenue decline, according to CEO Donald E. Graham, results, in part, from a high rate of unemployment. Further, pummeling earnings is an “absurd overregulation of the sector by the U.S. government.” Kaplan plans for expansion include continued acquisition of businesses such as Celtic Healthcare, a home health-care firm. In the meantime, Kaplan’s private-sector education model is expanding to nations such as Australia, Ireland, and Singapore. (Carina Wong, a spokesperson for KPT, did not reply to an interview request.)
Kaplan ended its one-year membership in the education task force of the American Legislative Exchange Council (ALEC), a non-profit advocacy group—until recently off the public radar screen. ALEC, with financial support from corporate interests such as AT&T, Bank of America, Comcast, Eli Lily, Exxon Mobil Corporation, Koch Industries, and many others, writes model bills favoring corporations for state lawmakers across the U.S. Why the focus on state legislatures? Statehouses are where the tax dollars are for K-12 public schools. In her new book, Reign of Error: The Hoax of the Privatization Movement and the Danger to America’s Public Schools, author and education blogger Diane Ravitch writes: “The states have the primary responsibility for maintaining and funding public education. The federal government acts in a supportive role.” Nevertheless, federal education policy via the NCLB and RTTTF increasingly influences states and local school districts. The influential mechanism driving public K-12 school policy is student scores on high-stakes exams used for punishing and rewarding.
Pearson Inc., a British company, owns Pearson Education and earned a return on investment capital of 9.2 percent in 2008; 8.9 percent in 2009; 10.3 percent in 2011; 9.1 percent in 2011 and 9.1 percent in 2012. Pearson Inc. owns the publishing imprints of Addison-Wesley, Allyn and Bacon, Benjamin Cummings, Longman, Prentice Hall, and Scott Foresman. The company also provides electronic learning programs, developing, processing, and scoring tests. Pearson calls itself “the world’s leading learning company,” with “36,000 people in more than 70 countries.” The company earned $7 billion in education revenues for 2011, according to its 2012 annual report. Eighty-four percent of Pearson’s education revenues flow from student assessments and achievement tests. By contrast, the company’s Penguin Random House imprint earned 2012 revenues of 11 percent, and the Financial Times 5 percent, respectively, while shifting its products, education included, from print to digital platforms.
Accelerated Technology Investment
Pearson Inc.’s growth strategy is straightforward. According to CEO John Fallon, “We need to move faster in our digital transformation, our move into services, and the building of our presence in emerging markets.” That is where the most robust growth has been occurring for Pearson Inc. To this end, Glen Moreno, company chairperson, said in Pearson’s 2012 annual report, “accelerated technology investment and increased operating efficiency will enable us to reach our strategic goals more rapidly.” A recent example of this strategy is Pearson’s embedding of digital content on iPads for students in the Los Angeles Unified School District. The instructional data on the iPads is the “Pearson Common Core System of Courses.” The Common Core State Standards are becoming the basis of nationwide exams for public K-12 pupils.
Pearson Education spent $4.4 million lobbying Congress over issues such as regulations, from 2009 to the first half of 2013, according to the Center for Responsive Politics, based in Washington DC. Connections Academy, a for-profit online learning enterprise that began in Houston, Texas, co-led the ALEC’s education task force before Pearson, Inc. and acquired the online firm in August 2011. According to Pearson, Connections is no longer a part of ALEC. However, the state bills that Connections, the second largest online school company nationwide, supported on ALEC’s education task force, are still operative, said Rebekah Wilce, a researcher and reporter for the Wisconsin-based Center for Media and Democracy. K12 Inc., the biggest cyber school firm, and formerly owned by Kaplan, Inc., remains a member of the ALEC education task force, according to Wilce—Lindsay Russell and Bill Meierling of ALEC did not answer phone or email requests for comments.
According to the group’s website: “Each year, close to 1,000 bills, based at least in part on ALEC Model Legislation are introduced in the states. Of these, an average of 20 percent become law.” According to a CMD analysis for the legislative year 2013, released this August, of “139 ALEC bills that affect public education, 31 of these became law. Just seven states did not have an ALEC education bill introduced this year. Among other things, these bills siphoned taxpayer money from the public education system to benefit for-profit private schools, including the “Great Schools Tax Credit Act.”
For the 2014 state legislative agenda, ALEC held a meeting early last December in Washington, DC. According to Wilce of the CMD, ALEC’s “States and Nation Policy Summit,” to create and propel a 2014 legislative agenda is most notable for “what will happen behind closed doors. ALEC posted part of its legislative agendas for the meeting, while continuing to hide its funders and corporate authors of special interest legislation. On ALEC’s agenda for 2014 are…priorities and bills (which will become official ALEC ‘models’ once passed by the task forces—with corporate lobbyists voting as equals alongside state legislators—and approved by the board of directors).” Consider this legislation on public K-12 school reform. According to Wilce, “ALEC’s “Student Achievement Backpack Act,” also appears to be based on Utah bill, 2013 SB 82, which provides access to student data in a “cloud- based” electronic portal format.
According to Ed Week, it was inspired by a publication by Digital Learning Now, a project of Jeb Bush’s Foundation for Excellence in Education, which has ties to ALEC and is funded in part by Pearson, an international media company that bought out Connections Education, formerly a very active member of ALEC’s Education Task Force.”
In Texas last July, the state auditor released a report detailing how the Texas Education Agency has failed to oversee properly a five-year $462 million government contract for students’ standardized testing statewide with Pearson Education. Is that the extent of the state’s testing spending? The answer is no, according to Linda McNeil, an education professor at Houston-based Rice University and director of the Center for Education there. “The costs to local school districts for employee time handling the administering of this standardized testing are overlooked,” she said. Meanwhile, the Pearson Education contract represents 61 percent of all TEA contracts. There are seven registered lobbyists for Pearson Education, which paid them $510,000 in 2013, according to the Texas Ethics Commission. B. Alexander (Sandy) Kress is one of the registered lobbyists for Pearson Education in Texas. Kress was a senior advisor on the NCLB to GOP President George W. Bush and a past president of the board of trustees of the Dallas Public Schools. “NCLB has benefited the testing industry in the amount of between $1.9 and $5.3 billion a year,” according to an article titled “Bush Profiteers Collect Billions From NCLB.
Purchased for $2.4 billion by private equity firm Apollo Global Management LLC in March 2013, McGraw- Hill Education earned revenues of $2.3 billion in 2011, down from $2.4 billion in 2010, according to Pearson’s 2012 annual report. CTB/McGraw-Hill is a unit of McGraw-Hill Education, which serves over 18 million students in every U.S. state and 49 nations, delivering a range of assessment tests in math, reading, science, social studies, and writing. According to McGraw-Hill Education’s website, the company provides “proven, research-based content with the best emerging digital technologies to guide assessment, teaching, and learning to achieve the best possible outcome for students, instructors, and institutions.” As the dawn of the economic slowdown began in the U.S., McGraw-Hill joined a domestic venture, the Tata Group, in India. Today, Tata Mc Graw-Hill Education is “providing learning solutions to India’s burgeoning economy,” according to McGraw-Hill Education. The company invested in new technology, speech recognition software for English language learning in China in 2010. Stateside, McGraw-Hill Education’s acquisition of Key Curriculum boosted its footprint in the technology of mathematics teaching, expanding the company’s services for the roll out of the Common Core State Standards, in which public K-12 school students take achievement tests. In Hawaii, the state education department purchased “McGraw-Hill Reading Wonders—the first-to-market K-6 core reading program built from the ground up to address the Common Core State Standards for English Language Arts —as the exclusive reading program for classrooms” statewide on September 26, 2013.
Asked about McGraw-Hill Education’s political lobbying efforts, Charles Zehren, a spokesperson for Apollo Global Management LLC, declined to comment. According to the Center for Responsive Politics, Apollo Global Management LLC donated funds to GOP House Speaker John Boehner this year. Federally, McGraw-Hill Education had not lobbied separately from the other company units since 2008. The latest lobbying figures for the entire McGraw-Hill Companies, according to the Center for Responsive Politics, are:
$1,500,000 in 2009
$1,650,000 in 2010
$1,280,000 in 2011
$1,000,000 in 2012
On May 9, 2010, the NY Times reported on the involvement of major hedge funds—from Anchorage Capital Partners to Greenlight Capital and Pershing Square Capital—in K-12 public school reform. These interests financially support a non-profit K-12 school reform group, Democrats for Education Reform (DFER), a federal political action committee under the leadership of Joe Williams. The three hedge funds above declined requests for comments on how K-12 public schools reform affects their profits and losses, and how each company assesses its level of risk and reward. Likewise, Devin Boyle, a DFER representative, did not reply to questions about its strategies to advance K-12 public school reform and to quantify the financial involvement of its hedge fund backers. It is worth noting that DFER’s sister group, Education Reform Now, non-profit advocacy outfit formed in 2005, over which Joe Williams also presides, had contributions of $9 million in calendar year 2010, according to its IRS Form 990. ERN’s annual gross income was $80,000 in 2006; $173,500 in 2007; $1,344,460 in 2008; $1,152,851 in 2009 and $10,883,330 in 2010. The lion’s share of ERN’s spending went to increasing the number of charter schools in the state of New York.
The director of ERN is Brian Zied, founder and CEO of Charter Bridge Capital Management, a hedge fund. John Petry is ERN’s chair and co-partner of Gotham Capital, also a hedge fund. According to DFER’s website, it aims “to return the Democratic Party to its rightful place as a champion of children, first and foremost, in America’s public education systems.” Joe Williams’ ERN salary of $120,561 in 2009 nearly doubled to $218,565 in 2010.
Adrianna Hutchinson of StudentsFirst, the K-12 public school reform group that Michelle Rhee, former chancellor of public schools in Washington, DC, now from Sacramento, California, declined to comment. Rhee’s nonprofit education reform group claims “to defend the interests of children.” StudentsFirst operates in 34 states and received unnamed donor dollars to do political advocacy, $4.6 million in 2010-2011 for its 501(c)(4) activities as an IRS Form 990 shows. Rhee’s reform group resembles ERN’s. Both ERN and StudentsFirst mirror the IRS status of GOP master-strategist Karl Rove’s Crossroads Grassroots Policy Strategies, also a 501(c)(4) non- profit.
Rhee, married to Sacramento Mayor Kevin Johnson, both of whom are Democrats, also heads the non-profit StudentFirst Institute. Johnson is Second Vice President of the U.S. Conference of Mayors, Vice President of the National Conference of Black Mayors, and Chair of U.S. Secretary of Education Arne Duncan’s Education Reform Task Force. Johnson founded Stand Up for Sacramento Schools, a nonprofit school reform group, with funds of $500,000 from the Eli and Edythe Broad Foundation. The EEBF “trained” Jonathan Raymond, the superintendent of the Sacramento City Unified School District, who lacked prior classroom instruction experience, as does Mayor Johnson.
Johnson joined Mayors Michael Hancock of Denver; Angel Taveras of Providence, Rhode Island; and Julián Castro of San Antonio on a Mayors for Educational Excellence Tour that began in Denver, October 15, 2013. They wrote: “Facing the inherent difficulty of addressing the challenges of the city’s five school districts, Sacramento saw a need to attract proven education practices. The mayor’s office helped convene and recruit prominent national organizations, and within just one year, City Year, Teach for America, StudentsFirst and College Track launched sites in the city.”
It is unclear that “Sacramento” saw a need to reform its K-12 public school districts, unlike the corporate philanthropists that fund Johnson and Rhee’s advocacy groups. Such philanthropy from the nation’s richest interests, including the Broad, Gates and Walton Foundations. About 100 miles southwest from California’s capital city near Silicon Valley, Terry Moe of the Hoover Institution at Stanford University, is a longtime critic of traditional public K-12 schools, who advocates for alternatives such as charter schools and vouchers.
In his view, traditional public schools under-serve at-risk students. “The public school system is short- changing the nation and our children, especially poor and minority kids,” Moe said. His solution is the movement to increase school choice “to bring many more high-quality good (education) options to families.” The notion of more education options for students and their families is threatening to local school districts and teacher labor unions, according to Moe. “They don’t want money or students to leave public school districts.” For him, the marketplace can provide students and their families (education consumers) with learning opportunities and resources unavailable in the K-12 public education system.
Twenty years of charter school growth, he lamented, have resulted in only 5 percent of U.S. public school pupils attending them. (An estimated 90 percent of charter schools are union free, good news for employers who can pay lower wages to teachers without collective bargaining agreements. )
Moe blames the politics of labor unions and school districts that let teachers off the hook for their students’ low achievement results on standardized tests. According to him, the solution to this problem is simple. K-12 educators require carrots and sticks to raise their students’ achievement. “We need to reward the good teachers and schools and weed out the bad teachers and schools,” he said. To this end, RTTTF ties classroom teacher evaluations to the academic progress of students and raises limits on the opening of new charter schools. Against the backdrop of federal, state, and local policies for K-12 public school reform, the primary business motives of Kaplan Test Preparation, Pearson Education, and McGraw-Hill Education are to increase market share and profits. If they fail to do this, competitors will win the battle of the marketplace. To avoid defeat, enterprises use influence, ideological and political, to gain advantage over rivals.
Alternatively, K-12 public school reform relies on an active politics marinated with donor dollars to grow. Consider the recent emergence of a parent trigger law, driven by NCLB labeling of low performing schools where students’ scores on standardized tests regularly fall short of the NCLB 2014 target of 100 percent proficiency.
With petition signatures of a majority of parents at such schools, parents can gain control of their kids’ education. In this way, parents can oversee a school budget, fire staff, and turn over daily operations to private charter school firms. Adelanto School District east of Los Angeles in California’s Mojave Desert became the site of the nation’s first parent trigger law in January 2010. Former California Senator Gloria Romero, a Democrat, who co-sponsored the parent trigger law that GOP Governor Arnold Schwarzenegger signed, was the Golden State’s director of the DFER. She left that post to launch the Foundation for Parent Empowerment under the ERN umbrella.
The Illinois-based Heartland Institute, whose website says it aims “to discover, develop, and promote free-market solutions to social and economic problems,” drafted a brand of the parent trigger law and gave it to ALEC. In turn, ALEC developed model legislation for the parent trigger law and distributed it across the U.S.
According to the CMD, there were 13 states with model bills for parent-trigger laws from ALEC in 2013. Oklahoma was the only state where lawmakers approved such legislation. From statehouses to Pennsylvania Avenue, private interests are all over public K-12 school reform. Billion-dollar global corporations such as Pearson Education lead the way. Following the money trail can reveal how it meshes with education policy formation. Z
Seth Sandronsky is a Sacramento-based journalist.