When Pearson Talks Profit, American Education Is Surely Discussed
On February 27, 2015, Pearson CEO John Fallon led the company’s quarterly meeting over the state of Pearson earnings for the final quarter of 2014. In such meetings, Fallon and other Pearson executives discuss profitability with a number of analysts.
In this post, I highlight the discussion related to Pearson’s experiences, plans and expectations for one of their largest markets: North American school.
This meeting has been transcribed by a company known as SeekingAlpha. I am allowed to directly quote only 400 words. (The entire transcript goes beyond education and is almost 29,000 words.)
Let’s open with a comment from Pearson chief financial officer (CFO) Robin Freestone:
As you know we still expect market conditions to stabilize in our largest markets in 2015. In North American school although the policy environment remains uncertain in state assessments we expect greater stability in school learning services and growth in Connections.
The “uncertain policy environment” centers on the reauthorization of the Elementary and Secondary Education Act (ESEA). As to the reference about “growth in Connections”: This is a reference to online education company, Connections Education (as in Connections Academy), which Pearson purchased in 2011.
Fallon follows Freestone’s comments with some language that sounds all too familiar in the American atmosphere of test-score-driven, competitive, “education reform”:
And we will achieve that growth by meeting what we think is one of the biggest needs in the world today which is all about equipping more people with the education and training that is increasingly essential to prosper in the global economy that really does value knowledge and skills more than it ever did before.
Fallon then explains his point with two “practical examples” of focusing on “driving” Pearson product “access and outcomes” designed to result in “higher financial returns” for Pearson. One of these examples involves a Pearson product, enVisionMATH, which Fallon touts as follows: “By the end of second year of using the product, students’ math’s capabilities [are] similar to children between 2 and 4 years older.”
Fallon notes that the publicity generated from this miracle of enVisionMATH “helps turn us to scale.”
The goal of Pearson is the same as the goal of billionaire Bill Gates’ education intrusions: To develop “to scale.” Educational sameness for the masses so that education corporations like Pearson might maximize profits.
In this post, Alan Singer of Hofstra University asks some serious questions about the research on enVisionMATH, questions that go beyond the couple of sentences of gloss offered by Fallon in his February 2015 business meeting.
Fallon’s second example of promising growth in these United States focused on a single “blended learning” middle and high school in Maryland, College Park Academy (CPA), which opened its doors in 2013 and which uses Pearson’s Connections curriculum– which is fully aligned with the Common Core State Standards (CCSS).
This is a school that has kids seated in front of computers for most of the day, but hey, they’re getting good test scores, and that is all that matters. Based on the handbook (linked above), physical education is not offered every day, and in order to shorten the school day, recess was cut, but that is okay, too, since CPA is not an elementary school.
A school like CPA is getting good press for its test scores, and that can only benefit Pearson, the supplier of the school’s curriculum. Fallon states that “Pearson’s virtual school service… was actually the fastest growing product anywhere in Pearson last year.”
Fallon sees schools as needing “to reimagine the way they operate, which is why we think the blended learning model which College Park Academy is very much at the forefront of is going to have a very big future over the next decade.”
Blended learning: Kids coming to a building in order to sit in front of computers.
(At the end of the meeting, an unnamed analyst asks about the fact that Pearson boasts of its digital education products but that there is a continued, vocal skepticism about Pearson’s digital learning. Fallon responds that Pearson is “sustaining the value of that transition” to digital learning and expects it to yield “significant benefits” in the next three to five years.)
For Fallon, it is all so simple: “If we can demonstrate we extend access and improve outcomes, then [customers] will reward us financially and commercially.”
Be seen as the producer of higher test scores–> make money.
Fallon does want to “ensure that Pearson is widely known and widely trusted” even as it promotes its image as “the world’s leading learning company.” Two problems here: First, Pearson already has an established reputation in botched testing. Second, Pearson is just too big to trust. It is clear that Pearson wants to control the entire American education enterprise by becoming “embedded” and making itself “indispensable” to districts and schools. American schools must be careful to not allow a for-profit education company to cultivate American educator dependence on its products.
Indeed, in his presentation, Fallon often shapes the Pearson profit-drive as part of a “shared mission” to “empower people through learning.” However, if that “mission” veers from test-score-driven “reform” sameness, Pearson cannot “scale” it. And what Pearson cannot scale, Pearson will not support. To do so would be to forsake maximized profits.
During the question-and-answer portion of the earnings call, financial analysts asked about the reauthorization (as they called it) of No Child Left Behind (NCLB). Pearson president of the school division, Doug Kubach, offered this summary:
So we are following the reauthorization quite closely, because that does drive a lot of aspects of our business around assessments and professional development and new curriculum materials. It’s likely that if it is reauthorized that the major focus will be on the accountability provisions and moving more of the control around accountability back to states, but as far as we can tell right now there really won’t be any major impact on the implementation of standards or on the annual assessments provision.
Fallon later offers more on Pearson’s assessment presence in the US:
…The first thing to note about our assessment business in the U.S. is how diversified we’ve become while the state assessments that are driven by the Federal No Child Left Behind Act are an important part of our business there. Just one part of our business, we have a really strong clinic assessment business, diagnostic testing, future certification, language testing and so on. So we are not really that exposed if there are dramatic changes in terms of the federal legislation. Now as I mentioned earlier, we are watching the reauthorization of the No Child Left Behind Act very closely, because that does affect that part of the business if there is a move, which we are anticipating, of more control back to states, that’s really the environment that we’ve been operating in under No Child Left Behind from the beginning.
Fallon’s comment is that a move away from the CCSS and common assessments push promoted by those NCLB waivers and by Race to the Top (RTTT) is no big deal since Pearson was working the pre-CCSS/common assessment, NCLB testing angle for years.
However, if one compares Fallon’s words in this February 2015 earnings call to his words in the February 2014 earnings call, one notes that his previous hopes for the “scale” possibilities of CCSS have been dampened. Furthermore, what is conspicuously absent from this February 2015 earnings call is the fact that the PARCC consortium is a dwindling consortium. In fact, based upon what Pearson set as the bottom of its pricing scale for PARCC assessments, Pearson did not anticipate selling so few PARCC tests. (See the 2014-18 Pearson-PARCC contract here.)
And Pearson has yet to have the meeting in which it faces the idea of the growing American grass roots refusal of standardized tests– and of the fact that the opt-out issue has been acknowledged in amendment form in the Senate ESEA reauthorization draft.
Nevertheless, in their February 2015 meeting, the Pearson executives steer persistent analyst attention away from US standardized testing and toward Pearson’s greater testing presence in these United States. Regarding Pearson’s testing business in the US, Freestone adds
…The state testing is only part of our testing business because we’ve got natural testing and clinical which is one of our highest margin businesses in there as well.
Says Freestone, Pearson has a testing stronghold in the United States. Not to worry about the ESEA reauthorization backing off on that federal control because Pearson plans to sell tests to the states.
And since Pearson goes for “scale,” one might expect Pearson to try to sell different states similar assessments. This is already a possibility if Pearson sells PARCC items to other testing companies chosen by states– an idea already being promoted on the “revised” PARCC States page.
One last item before I sign off:
Pearson also has its own college, not surprisingly named Pearson College. It is located in London and apparently focused on business. Of course, the goal is not to keep Pearson College in London but to “take our degree programs to other institutions and in particular, outside of the UK.”
Yep. Pearson has plans to “scale” its education products. However, increasingly more Americans are actively resisting that test-score-driven lifeblood upon which Pearson depends.
Makes me already curious about Pearson’s February 2016 earnings call.