*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.

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.


Virtual charter schools will face restrictions if they want to open up in North Carolina.

The N.C. State Board of Education voted today to adopt a policy that would require the online-based schools to adhere to a significantly lower funding formula ($3504 per student) than brick-and-mortar charter schools, maintain high graduation rates and low withdrawal rates of students. Schools will also need to keep a ratio of one teacher for every 50 students and keep graduation rates within 10 percent of the state average (80 percent), and can’t have withdrawal rates higher than 15 percent in two out of three years.

Committee leaders for the legislature’s education committee took issue late last year with the state board making policies about virtual charter schools, saying that the board didn’t have the authority to tinker with funding formulas or single out online-based schools. Bill Harrison, the chairman of the N.C. Board of Education who will faces a likely replacement from new Gov. Pat McCrory, disagreed. (Read our story about that tiff here.)

The legislature, of course, could undo the state board’s decision if they choose.

The state currently has no virtual charter schools, though the state does operate the N.C. Virtual Public School, wich allows high-school students (and some middle-school students) to take individual classes as part of their regular studies.

Virtual charter schools have shown a keen interest in North Carolina. Two national online learning companies have sent letters of intent to the N.C. Department of Public Instruction that they want to open up their doors in 2014: Connections Academy, owned by the for-profit education company Pearson and N.C. Virtual Academy, to be run by the for-profit K12, Inc.

K12, Inc., through a non-profit organization called N.C. Learns set up by K12, tried to open up in the state last year, and had their application ignored by the N.C. State Board of Education, which authorizes charter schools in the state. The matter is now tied up in the appellate courts, with N.C. Learns appealing a lower judge’s ruling affirming the state board’s denial. State Sen. Fletcher Hartsell, a prominent Republican legislator, was hired on as N.C. Learn’s attorney for the case and K12 has hired another former lawmaker, Jeff Barnhart, as a lobbyist, according to the N.C. Secretary of State’s office.

Pearson has lobbyists of its own – four were hired from Capstrat, the Raleigh-based lobbying firm.

Here’s the new policy adopted by the N.C. State Board of Education:


Policy for N.C. virtual charter schools by ncpolicywatch