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*Scroll to the end of this story for a response from the NC Department of Public Instruction

Politico’s Stephanie Simon published an investigative report today looking into the business dealings of British education giant Pearson, finding that the company’s success is due in part to negotiating lucrative no-bid contracts with public education agencies around the country — including one with North Carolina.

The investigation found that public officials often commit to buying from Pearson because it’s familiar, even when there’s little proof its products and services are effective.

The North Carolina Department of Public Instruction, for instance, declined to seek competitive bids for a new student data system on the grounds that it would be “in the best interest of the public” to simply hire Pearson, which had done similar work for the state in the past. The data system was such a disaster, the department had to pay Pearson millions extra to fix it.

The data system Simon refers to is PowerSchool, which the News and Observer reported last year “has so many problems that the accuracy of transcripts, athletic eligibility and the number of students enrolled in schools is uncertain.”

Many of those problems were fixed, and the state sought a discount from Pearson to reduce the $7.1 million price tag for the PowerSchool. It’s not clear if any money was refunded, however, nor is it clear whether the state or local districts will be responsible for the $6 million owed to Pearson next year for PowerSchool.

Simon’s investigation also found that in many cases, Pearson was never held to performance targets outlined in the contracts—if they didn’t meet the standards, they weren’t penalized.

In addition to PowerSchool, Pearson also backs one of North Carolina’s new online virtual charter schools, N.C. Connections Academy. The State Board of Education approved N.C. Connections academy just last week for a four year pilot program, alongside K12, Inc.’s N.C. Virtual Academy.

The state legislature required the State Board of Education to approve two virtual charter schools for the pilot program, and only two non-profit organizations applied — one backed by Pearson, the other by K12, Inc.

The approval came in spite of serious reservations on the part of some board members as well as education advocates who feared that North Carolina’s students could experience the same negative academic outcomes that have been experienced by virtual charter school students in other states, or that poor students would have a hard time accessing the technology and infrastructure necessary for online learning.

Read Stephanie Simon’s full investigation of Pearson here.

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2/18/2015 UPDATE: NC Department of Public Instruction’s CFO, Philip Price, reached out to N.C. Policy Watch to respond to the Politico investigation of North Carolina’s contractual relationship with Pearson for its new student data system, PowerSchool.

Price said DPI took 16 months to work with the NC Attorney General’s office and other key state-level education stakeholders to gain a waiver for bidding out the adoption and implementation of a new student data system. The impetus for continuing to contract with Pearson, said Price, was that the education behemoth also owned the state’s old data system, NC WISE. A significant costs savings would occur if Pearson also undertook the construction and implementation of PowerSchool.

“NC WISE cost $168 million to implement. Pearson charged us just $3.7 million to convert to PowerSchool,” said Price.

That figure doesn’t include additional monies ($1.25 million) that the state had to pony up for more training and help with migrating data from NC WISE to Power School. Even so, Price says, the state saved a lot of money going with Pearson.

Politico’s story also makes the allegation that Pearson is typically not penalized when it fails to live up to contractual obligations. But Price says at least in North Carolina, that’s not the case.

“We’ve gotten credits back since we established a service learning agreement,” explained Price, who says that if Pearson doesn’t meet certain agreed upon elements of the contract, they refund the state money. “$437,000 in September 2014, and we’re still receiving credits.”

Pearson also gave North Carolina a year of free content, worth $6 million, for its SchoolNet application, which allows teachers to build lesson plans and formative assessments.

Uncategorized

The Pope Center for Higher Education is promoting the disruption (or dismantling?) of traditional higher education by way of reduced university budgets and a takeover by for-profit education models, according to a presentation given last week by the Pope Center’s president, Jane Shaw.

In North Carolina, we’re seeing for the third year in a row the university system suffering the deepest cuts of the three branches of the state’s education system. At the same time, UNC Chapel Hill is one of many schools joining the increasingly popular MOOC movement, which is a revenue model that could ultimately cut costs by reducing the need for labor, i.e. professors. One lecture could reach tens of thousands of potentially paying customers (also known as students).

Are these actions part of a much larger campaign to dismantle traditional higher education?

Shaw’s presentation last week was given at the State Policy Network’s annual gathering. Her talk was called “Innovation in Higher Education.” Check out her presentation here.

Notable among Shaw’s remarks include “there’s a lot of fat in higher ed budgets,” and that good policies are “frustrated by leftwing faculty.”

Alternatively, Shaw asserted that “For-Profits ‘Get It.’” However, Shaw’s slide also indicated that there are some problems with the industry, namely that they produce high default rates and low graduation rates (known as ‘churn’) and they are under fire from the media and Congress.

Shaw also compared using online and for-profit education as a means to disrupt the traditional higher education model with Clayton Christensen’s description of how Sony’s 1947 pocket radio turned that industry upside down.

The pocket radio was arguably a superior product to what consumers previously had access to and paved the way for subsequent inventions like television, video players and so on.

For-profit schools by and large provide lower quality educational experiences, charge high tuition amounts and are heavily subsidized by the American taxpayer by way of the federal student aid program.

Shaw concluded her presentation by encouraging states to keep financial pressure on university budgets, bring Western Governors University branches into the state system as Texas has done, and encourage institutions to accept credits from elsewhere, like the company StraighterLine.

**This post was updated to reflect that Clayton Christensen is not associated with the University of Phoenix. We regret the error.