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What’s in Texas' $500 Million Testing Contract with Pearson?

Update: The Texas State Auditor has uncovered problems with the $462 million contract between the Texas Education Agency and the testing company, Pearson. The auditor released a report Tuesday. It found TEA doesn’t have a process or the training in place to monitor the contract.

 The report also found the contract doesn’t require the TEA to specifically itemize costs and services in invoices with Pearson. According to the report, that means it’ll be harder for the agency to determine the cost or savings with the implementation of HB 5, the bill that reduces the number of high school end of course exams from 15 to five.

The report also found the TEA didn’t properly disclose whether Pearson employees used to work with the agency. 

“To be honest, in 2011 when we laid off about a third of our staff and a lot of those were high quality employees. We amended that language so testing experts could be hired by a testing company to work on other contracts, not the Texas contract," TEA Spokeswoman Debbie Ratcliffe said.


 The TEA says it’s already started implementing some of the recommended changes to the contract.

Original Story (5/27/13): By any measure, Texas’ contract with standardized testing companyPearson is gigantic.

The state’s latest agreement covers five years of testing (2010-2015), and costs nearly half a billion dollars. For about $90 million per year, the State of Texas receives a battery of tests, and the top-to-bottom services those tests require.

By the time a current student in Texas public schools graduates, she will have taken at least fifteen standardized tests. This means Texas has the most frequently tested students in the nation.

Even if that number is reduced, the prices for test creation, test management, packaging, distribution and scoring will remain substantial.

It was not always so. In 2000, as the Texas Assessment of Knowledge and Skills (or TAKS) test dawned,the state’s contract with Pearson was worth about $9.5 million. But as the federal No Child Left Behind education policies took effect, standardized tests increased in both number and scope.

Last fall, several media personalities noted that Texas’ $468 million contract with Pearson dwarfed the company’s contract with New York State by more than ten times. New York’s contract, also lasting five years, is worth a paltry $32 million.

Diane Ravitch, a former Assistant Secretary for Education under President George H.W. Bush – and an outspoken critic of the new wave of standardized testing – cited those numbers in an Austin televisioninterview last fall. And the same comparison appeared ina New York Times op-ed by Gail Collins.

As it stands right now, Texas is paying Pearson $88,312,333 for the 2012-13 school year. That includes about $9 million for “Program Management,” $3 million in “Quality Assurance,” $15 million in “Test & Measurement Services,” and $9 million in “Other Direct Costs.”

Take the case of the March language arts tests for students in grades three through eight. The materials cost $1.4 million, packaging and distribution $1 million and change, and processing and scoring cost $5 million. The total price of delivering the test statewide was just over $8 million.

But, as budget watchers will tell you, although New York and Texas are both big states and seem somewhat similar, comparing testing regimens turns out to be an extremely difficult task.

A report last year from the Brookings Institution tabulated the average cost of testing per student, and Texas ranked somewhere near the middle – in between a frugal $7 per-pupil in New York, and the whopping $114 per-pupil in the District of Columbia. (This is a separate figure than Texas’ total spending per pupil,which is near the bottom, ranking 49th out of 50 states.)

But those numbers are misleading. Washington D.C. is relatively small, as a testing district, and in New York, much of the cost of testing is borne by local school districts instead of an outside company like Pearson. Those costs did not show up in the Brookings report.

Bob Schaeffer, from Fairtest, an organization which advocates against standardized testing, said, in an email, “We are certain that New York and Texas do not provide an ‘apples-to-apples’ comparison.”

“The New York State Board of Regents maintains a large, in-house staff, which is largely responsible for test design and item selection,” he continued. So, in New York, “Pearson primarily handles test administration and scoring, while Texas pays Pearson for a full range of assessment services.”  

If there is a state that offers what seems to be a cost-saving alternative, it may be North Carolina or Kansas, both of which hire state universities to do the work. Tammy Howard, North Carolina’s Director of Accountability Services, said that their contractor, North Carolina State University, is “limited with the amount of overhead they’re allowed to add to the cost.”

The Brookings report links North Carolina’s relationship with its public universities as one of the reasons their testing costs, on average, about $10 per-pupil each year. That’s significantly lower than the testing budget in Texas, which, according to Brookings, hovers around $34 per-pupil when full assessment budgets are factored in.

But even this case is far from simple. North Carolina is a smaller state (1.4 million students vs. Texas’ 5 million) and its assessment budget, Howard said, is $23 million a year. That includes salaries, “the development of the test, the administration, the printing, the score reports.”

And North Carolina’s standardized testing is, for the moment, more straightforward. “Our tests are all multiple choice – they do not have constructive response, where you have to write out your answers,” Howard said. This keeps costs down, because multiple choice answers, unlike essays, can be graded by a computer.

The Texas Education Agency (TEA) is aware that half-a-billion dollars is a great deal of money. “Although the overall cost of the program is high, the per-student costs compare favorably with similar costs in other states,” the agency said in a statement. The TEA also notes that Texas has what it calls a “most-favored nations” clause, which says that “the per-student costs paid by Texas cannot exceed similar costs in other states with which Pearson does business.”

In an email, Pearson spokesperson Susan Aspey reiterated that Texas and New York make for a difficult comparison.

“Our contract for the state of New York … includes developing only regular education assessments in grades 3-8 math and grades 3-11 in English language arts,” she said. “It does not include science or social studies assessments or end-of-course (EOC) assessments, as we provide for Texas. Pearson does not provide New York printing, scoring, and reporting services, as we do for Texas. And we don’t provide New York psychometric services, online testing, or any technology product, as we do for Texas.”

Aspey points out that, in the big picture, “the amount spent by TEA for assessments represents 0.19 percent of the $47.4 billion K-12 education budget in Texas for 2011-2012.”

Without the specific numbers from the State of New York, which did not return calls for comment, it is a challenge to see whether Texas taxpayers are getting their money’s worth. What is certain is that, even if the Texas legislature succeeds in reducing the number of tests, until its contract runs out in 2015, Pearson’s relationship with Texas education will continue to run deep.

“What concerns me about Pearson is that they’re buying every aspect of the educational process,” Diane Ravitch said last fall. “The teacher performance assessment belongs to Pearson, the GED belongs to Pearson, and the testing belongs to Pearson.”

With 1,800 staff members in offices in Dallas, Austin and San Antonio, the state is essentially contracting Pearson to act as a for-profit arm of the state’s educational infrastructure. Texas is testing more students each year due to population growth, and, according to TEA, “additional retesters.” Even with a reduced number of tests, as long as Texas’ population continues to grow, and the state continues to demand more complex standardized tests, delivered by for-profit companies, Pearson’s position and experience means its influence is likely to continue.

I'm a freelance writer for the Austin American Statesman and others.