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Pearson Transcript Allows Me to Quote 400 Board-meeting Words

May 20, 2014

At the American Enterprise Institute in March 2014, billionaire Bill Gates explained why the Common Core State Standards (CCSS) are necessary above and beyond individual state standards that might be better:

You get more free market competition. Scale is good for free market competition. Individual state regulatory capture is not good for competition. [Emphasis added.]

In economics, “scale” involves decreasing costs as a result of the ability to mass produce.

Gates sees “scale potential” in the national standardization of public education– i.e., CCSS.

He believes such is “good for free market competition.”

Not true.

The national standardization of public education does not promote economic health for small (local) businesses. Instead, it feeds monopolies– like bloated, incompetent Pearson.

I have read and written much about Pearson. My conclusion: Pearson is very bad for American public education.

Pearson has an established history of finding itself on the defendant end of lawsuits, including those related to copyright infringementmisuse of a nonprofit, and faulty reporting of results.

Nevertheless, Pearson is involved in all aspects of American public education. It is tied to curriculum, assessment (including assessment of teachers in training), professional development, and data collection (and here).

Pearson is huge (“consisting of three worldwide businesses”), and becomes even larger by acquiring smaller companies– companies that one might be surprised to learn that Pearson owns. For example, Pearson owns attention deficit hyperactivity disorder (ADHD)-diagnosing companies (see here and here and here).

Pearson is also in a position to gather sensitive data on students without a parent even knowing it. This is possible via reports a teacher is required to complete (as in the linked example) and also via direct student input. (It is not unusual for test developers to ask students their opinions about how well a test works. However, given Pearson’s willing use of its tests as an opportunity to promote certain brand-name items as a means of sneaky advertising, it is not much of a stretch to conclude that Pearson is able to exploit the exam-examinee connection by asking students to provide sensitive information without parent or teacher knowledge.

Furthermore, it should come as no surprise that Gates is directly partnering with Pearson (both are involved in producing those costly iPads, including paying Pearson recurring, tri-annual software licensing fees).

Yes, indeed, the likes of a national curriculum is definitely good for mega-corporation Pearson.

However, in April 2014, Pearson has faced pressure regarding the secrecy of its exams in New York State:

American Federation of Teachers (AFT) President Randi Weingarten is sending a letter… to the executives of Pearson, the world’s largest education company, asking them to stop a  ”gag order” that is part of their $32 million contract with New York state to design new standardized tests aligned to the Common Core. The “gag order” bars teachers and principals from talking publicly about what’s on the exams, including any mistakes that educators find. [Emphasis added.]

As already noted regarding Pearson litigation, Pearson has an established history in making profound “mistakes” when it comes to its assessments.

Pearson CEO John Fallon responded to Weingarten directly in a brief note in which he states his willingness to “meet with [her] and [her] members to better understand… concerns and to work together….”

Pearson press has resulted in a reader’s search sent my way for this February 2014 transcript of a Pearson board meeting in which Fallon and Chief Financial Officer and Executive Director Robin Freestone discuss Pearson’s “2013 Results.”

The transcript, produced and released by investment platform SeekingAlpha, was accompanied by the following stipulations:

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

In its entirety, the February 2014 meeting transcript is 13,784 words. I am allowed to directly quote only 400 words– quite the challenge.

I’m in.

The beautiful piece is that I am also required to link to the original transcript (the briar patch to this Brer Rabbit). Thus, any of my readers might see the entire transcript at will– and other writers might, as well.

Interestingly, in all of those almost 14,000 words, there is zero 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.

Not addressed.

This much is true: Pearson is in education for the money. Of course they are. They exist to make a profit– a long-term, sustainable profit.

American CCSS feeds this beast quite well.

Let’s have a go at it, shall we?

In this meeting, Fallon and 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).

(Why, so many representatives of financial institutions in one meeting makes me think of the board of directors of Eva Moskowitz’s Success Academy charters. If one isn’t a classroom teacher, there sure is a lot of money to be made in education. But I digress.)

Fallon opens the meeting by explaining why profits were not as fine as they might have been for Pearson in 2013. He assures his 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 also notes that the “curriculum change” is also affecting their 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.

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. …what that work does is shift us much more quickly and much more irreversibly to where the biggest sources of future demand are. …we’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.  [Emphasis added.]

Pearson is banking on definite CCSS implementation in these United States.

It is Freestone who refers to “invest[ing] to build scale” in higher education. She 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.

Indeed, 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 mega-trend” of online learning. She discusses “building new partnerships” with Apple and Microsoft.

One of the analysts (Whittaker) raises the question of Pearson’s dependence upon 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.”

My 400 words are used up. 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 CCSS. Whittaker insists upon hearing of Fallon’s alternate plan of action; Fallon offers no substantive alternate plan.

Mega-corporation Pearson is dependent upon long-term CCSS implementation. Allow the implications of that realization to sink in.

(A reminder that the American Institutes of Research {AIR} is suing over Pearson’s being awarded the Partnership for Assessment of Readiness for College and Careers (PARCC) contract for CCSS test development. Supposedly, Pearson was the only company to apply. AIR challenges this assertion.)

Another analyst, Walker, asks about guarding profits against open access. Fallon is unfazed; he notes that dependence upon Pearson products will be so embedded into American education that free outside downloads offer no threat.

Pearson wants to either shut down competition or subsume it.

For those insisting upon CCSS implementation, I ask you:

Are you willling to hand to Pearson that which it apparently depends upon for its own future monopolistic, gluttonous growth:

American education “scale”?

If so, let me state yet again:

Bad idea. Really bad idea.

 

43 Comments
  1. Polly Anglin permalink

    Assessments still drive the system. $$$ motive is loud and clear. Polly

  2. How would Pearson feel about comments from your readers that add to the quoted word count?

    • A commenter quote is not a quote written by me.

      Commenters should also stay within 400 words and include the link as a source, I suppose.

      • Although they hold the copyright, the “fair use” doctrine does not specify how much may be quoted for the purposes of criticism, nor does the fair use doctrine give them the right to make such specifications for things such as criticism, parody, and so forth. Not that I’d want to go against such a huge machine in court, but I suspect they made this 400 word limit with the ulterior motive of attempting to limit critical commentary.

      • Joe, the transcript was produced by an investment platform, SeekingAlpha. Since they produced the transcript, they have the right to limit its use. Had I transcribed the interview myself, I would not have been restricted to a word limit.

        I am not sure what SeekingAlpha has to gain by limiting the quotable words to 400. Perhaps it is a means of generating traffic to their site.

      • I love you Dr. Schneider, and I love your book that I’m reading right now (read your dissertation too… a Monte Carlo study… wow!). So I’m going to have a hard time disagreeing here. I used to work in copyright years ago before going in to education. Indeed they produced the transcript and own it; they’ve also “published” it on their site. Under the “fair use” doctrine as it relates to criticism, they don’t have the right to limit your quotations to 400 words. One of the reasons for the fair use doctrine is so that criticism (free speech) is not limited. Nonetheless, what you did write (within this limitation of 400 words) is awesome!

      • Hi, Joe. You have a good point about fair use. However, in this case, I am satisfied by this post even playing within SeekingAlpha’s 400-word rule.

      • And you did such a GREAT job! Btw, “Chronicle of Echoes” is the best thing since Callahan’s “Education and the Cult of Efficiency.” 🙂

      • Thank you, Joe. I appreciate the encouraging words regarding my book.🙂

  3. Mercedes–Thank you so much for riding Pear$on. Without a doubt, we need to eradicate this incessant tumor of the reform cancer.
    With your meticulous research and writings, yes, WE can. And we WILL.
    Thank you!

  4. therlo permalink

    Isn’t it interesting how many of those financiers in the meeting are in cahoots with Teach for Awhile, Rheeject? Wow. Money and Power. Absolutely sickening and frightening. Oh, but its about the children and competing globally, right? If they can suck the entire world into the common core, they’ll have the market cornered. Ka-ching!

  5. jointherevolution permalink

    Well folks………….it’s the New World Order. Now think about surveillance everywhere as well as the National Data Center being built in Nevada, and you will be sure to lose some sleep tonight. If you get a chance, You Tube “George Carlin and Education” and watch the clip. It takes about 2 minutes in to really start hearing how little freedom we Rheeally have. Last April when I was doing research on Pearson, I found that Omar Khadafi’s son was a major stockholder in Pearson. Then POOF you couldn’t find that information. Someone brought it back into conversation a few months ago, having seen it as well. Chilling. Just chilling.

  6. FLERP! permalink

    “Perhaps it is the bad international press brought about by AFT members’ traveling to London to attend a Pearson board meeting that has resulted in Pearson’s willingness to release this February 2014 transcript of a Pearson board meeting in which Fallon and Chief Financial Officer and Executive Director Robin Freestone discuss Pearson’s “2013 Results.”

    Mercedes, fyi, the linked transcript wasn’t “released” by Pearson. It was compiled by a called “SeekingAlpha,” not Pearson. Pearson (and I think every other company of its scale) broadcasts its earnings calls on the Internet for anyone to hear and for anyone to quote from. You can go to its web site and listen to it.

    • FLERP, I fixed my error. Thank you.

      Online, the only ready transcripts of Pearson’s earnings calls appear to be produced by SeekingAlpha. I suppose the other option is for me to produce my own transcript from the original broadcast.

  7. rdetwiler permalink

    I’m sorry to leave this here as a public comment. I’d really like to read this blog, but find a strip of text on the right edge hidden, as though covered by the column with Blog Stats at the top. Any advice about what I might do to make the whole text visible and completely readable? Thanks.

    • RD, it must be a setting on your computer. I checked my blog to see if it was on my end, and the post appears fine. You might try hitting control+shift+(minus sign) to see if reducing the font size on your screen might remedy the situation.

      • rdetwiler permalink

        Thanks for checking for me. Shrinking the text that way just shrinks the whole screen and the right margin/edge of the post is still hidden. I can’t scroll sideways to see it, either. I’ve tried 3 different browsers and found no difference. Now that I’m subscribed, I could read today’s post fine in my e-mail. But I’d still like to figure out what I can do to read and share previous posts. I’ll keep looking for some wordpress viewing setting that I haven’t discovered yet…

  8. LLC1923 permalink

    Teachers are not Pearson’s or Pearson’s subcontractors’ de facto workforce. Contact every state legislator and register complaints using Pearson’s contracts via FOIA requests. Use our numbers to vote and defeat the US Department of Corporate Education, Duncan, Pearson, Common Core, Gates, etc. by voting.

  9. ARGOXY permalink

    Reblogged this on Inspire Teaching.

  10. laMissy permalink

    Wow! That “Behavior and Emotional Screening System” form is worded is such a negatively slanted way: http://images.pearsonclinical.com/images/PA/Products/BASC-2_BESS/bess_individualtracking.pdf

    “2. Disobeys. 3. Is sad. 4. Breaks the rules. 5. Is well organized. 6. Has poor self-control. 7. Is easily upset. 13. Annoys others on purpose. 18. Gets into trouble. 19. Gives good suggestions for solving problems. 20. Is negative about things. 21. Disrupts other children’s activities.”

    Teachers don’t talk about their kids in this manner, certainly not in a written assesment for a kid who needs help. Compassion is a foreign concept, apparently.

    So it’s not just their tests that are poorly written. Yikes!

  11. Mike in Texas permalink

    Here in Texas we aren’t even allowed to look at the test.

  12. Fred Smith permalink

    PEARSON. ALWAYS LEARNING. THE LAST WORD IN ACCOUNTABILITY.
    We’re here to save America. Ready to furnish tests and materials to assure that all children: Rich and poor; black, white, brown and yellow; girls and boys; ELLs and special education students are ready for college, careers, the global marketplace and inter-planetary competition.
    We are Pearson and we know what works: High standards, curricula tailored to meeting those core standards and, of course, rigorous exams to see whether children are developing the critical thinking skills and deeper understandings necessary for them to enjoy meaningful lives and help us succeed as a nation.
    We offer tests to measure and guide their growth from Pre-Kindergarten to Grade 12. We have textbooks and accessory materials, as well as software that will support them all along the way toward achieving these worthy objectives. Should any schools think they need extra support, our 24/7 staff of learning specialists is ready to furnish material that will enable teachers to help children prepare for the challenging tests. We’re happy to provide data processing services, reports and data management systems, as well, to keep all the information well-organized and protected from exploitation by predatory private interests.

    Picture of a giant octopus

    The beauty of our approach to assessment is its efficiency. The same tests can be used to inform teachers about their strengths and show administrators how they can work cooperatively to increase teacher effectiveness. Principals also benefit from the data when we provide timely feedback about school performance. We place objective information in the hands of school leaders and district superintendents, allowing them to make relevant comparisons about their accomplishments and determine where they may be at risk.
    But, we’re not content to stop there. We have recently developed new instruments to identify students who have demonstrated they have reached the standards of high school graduation and are ready to take their knowledge further. And we are working with schools of education to assure that education majors, our future teachers, can pass our demanding certification exams.
    Pearson, at you service: Reaching out and touching everything in education that matters.

  13. “Three bling for the educrats under the sky,
    Seven for the edubullies who on teachers throw stones,
    Nine for mere teachers doomed to die,
    One for the Snark Lord on his dark throne
    In the Centres of EduExcellence where the shadows lie.
    One BlingRing to rule them all, One BlingRing to find them,
    One BlingRing to bring them and in the darkness bind them
    In the Board Room of Gates where the shadows lie.”

    –Song from “The Lord of the Blingring,” book DCLXVI of the Blingringelungenlied (collected by KrazyTA)

    For more on classic Rheeformish songs and spells, see “Prosody of Financial Statements and Other Rheeformish Poetry” in “Grimoires and Other Rheeformish Literature,” Appendix 10 of the Rheeformish Lexicon.

  14. Julie Tran permalink

    This is interesting and on point.

    The re-appointment of Stuart Magruder—the one person on the LAUSD Bond Committee opposing the use of voter-passed construction bond (building & builidng repair) money for I-pads and accompanying software that deliver Common Core testing and nothing else—was just blocked by corporate-funded and “Pearson-backed” LAUSD Board Member Tamar Galatzan.

    (If not the only person on the Bond Committee who objects to the use of bond money going to pay for I-pads / software, Magruder is the one Bond Committee Member who’s most vocal opposed to Common Core… so vocal, in fact, that his being vocal just got him canned.):

    http://laschoolreport.com/school-board-blocks-appointee-critical-of-ipads-lausd/

    Magruder is also a parent of a LAUSD public school student, and is underwhelmed, to say the least, by what the insanely expensive ($ 1 billion TOTAL ???!!!) I-pads are actually delivering… apart from the idea that money raised by a voter bond to build new schools /repair repair existing schools was misused to pay for I-pads and software.

    Note that the “Pearson-backed” Galatzan’s rationale for blocking and silencing Magruder is that he’s not “open-minded” about I-pads / software being purchased with bond money, and that the LAUSD Board needs to get someone else to serve on the committee who’s more “open-minded.” The fact is that, in silencing him, Galatzan is carrying out the marching orders of her “corporate reform” masters.

    “Open-minded” is Galatzan’s euphemism for someone who just shuts the-Hell up and doesn’t make waves, or who does not dare attempt to block the corporate agenda pushed by Galatzan and her masters. The “Pearson-backed” Galatzan did this to shut up anyone else on the Committee who dared object the way Magruder

    BELOW is the testimony that cost Magruder his job / position on the Bond Oversight Committee: :

    (after he’s done, stick with this video to hear LAUSD teacher Julie Carson speak after Magruder about the same issue)

    One more thing…

    There’s a great comment, critical of Galatzan, in the article about Pearson-backed Board Member Galatzan’s canning of Stuart Magruder.

    http://laschoolreport.com/school-board-blocks-appointee-critical-of-ipads-lausd/

    It’s written by one Rene Diedrich:

    RENE DIETRICH:

    “It is frightening to me that (Galatzan)’s bullying is permitted to derail Socratic discourse. The fact that Ms. Galatzan is a prosecutor unwilling to hear other opinions is one thing but to be a member of the BOE is by definition a Democratic concession to the people . Mr. Magruder is one of ‘them’ as a citizen, a politically active father and a righteous member of that committee.

    “Why shouldn’t someone be allowed to criticize the iPad roll out? That is the freaking point. Looking at things from many angles is what makes ‘community’ and collaboration viable. Moreover, a lot what Magruder says is accurate.

    “Btw, It is encouraging to see this reported so clearly and objectively, thanks.”

  15. Seth Sandronsky permalink

    Pearson no more represents free market competition than I am the point guard for the Miami Heat of the NBA. The company relies upon the government for the granting of copyrights to gain profit and market share. By contrast, in the rhetoric of free market competition, the government steps aside for firms to attract buyers. Instead, the policy that is the lifeline for Pearson relies upon active government intervention. Adam Smith’s Invisible Hand of the marketplace that replaced the rule of the monarch was one thing. Pearson’s business model of turning to the government for help is quite another thing. Let us be clear. Gates obfuscates economic policy and politics in using the term free market competition. This is not an academic debating point.

  16. Reblogged this on and commented:
    In Search of Cash that Can Bloat My Monopoly

    “At the American Enterprise Institute in March 2014, billionaire Bill Gates explained why the Common Core State Standards (CCSS) are necessary above and beyond individual state standards that might be better:”

    Mercedes Cambridge reports on a board meeting that we all need to know about. Read on.

  17. I think so.🙂

  18. Let us not forget who the Director of Curriculum is for Pearson. Sir Michael Barber. A globalist that believes education is to change attitudes and values. He also is the creator of DELIVEROLOGY. One of the tenets of Deliverology is to make reform IRREVERSIBLE (ACT-GED-AP-SAT, books all being aligned will make it irreversible). So do you not agree he is buried deep behind the scenes??? David Coleman was a Rhodes Scholar and spent time at Cambridge and Oxford….Hmmmmmm. Barber is from the UK. What are the chances the two of them met up over there? And both of them worked as a consultant for McKinsey & Co. Hmmmmm….another coincidence??? Sir Michael Barber also is the founder of US Education DELIVERY Institute. This group actually signed a contract with the state of TN (and a couple other states) to implement CC in our state They set up Education Delivery Units. And you can best believe he infiltrated his scam called DELIVEROLOGY. I can tell you a bunch of stories about how DELIVEROLOGY does nothing but force people to lie and falsify performance.

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