Testing Companies Mine for Gold
by Barbara Miner
There's gold in them there tests.
Thanks to the testing mandated by the federal No Child Left
Behind (NCLB) legislation, private companies are mining the
testing field with all the power their accountants, test-
makers, and marketers can muster.
States are likely to spend $1.9 billion to $5.3 billion
between 2002 and 2008 to implement NCLB-mandated tests,
according to the non-partisan Government Accounting Office
Those GAO figures cover just the direct costs of six years
of developing, scoring, and reporting the tests˜which is
performed under contract with private companies. Add in
indirect costs, such as the amount of classroom teacher
time devoted to coordinating and giving the tests and,
increasingly, preparing students with ongoing "practice"
tests, and testing experts say the figure could be 8 to 15
The amount of education money devoted to standardized tests
is only part of the problem. Invariably, the private
testing companies that control standardized testing operate
behind closed doors with little to no public
accountability. They function as subsections of
multinational conglomerates that view the U.S. testing
industry as just one tentacle of publishing and
entertainment empires that span the globe.
"There's very little oversight of the testing industry,"
notes Walt Haney, an education professor at Boston College
and a senior researcher at its National Board on
Educational Testing and Public Policy (NBETPP). "In fact,
there is more public oversight of the pet industry and the
food we feed our dogs than there is for the quality of
tests we make our kids take."
Where's the Outcry?
There has been little public outcry over the fact that
private, multinational companies operating beyond public
oversight are determining which students, schools, and
districts in the United States are deemed "failures" and
which are deemed "successes." Given the secrecy that
shrouds testing company operations, information is
negligible. What the public doesn't know, the public
doesn't complain about.
Critics of standardized testing also point to a third
problem beyond the amount of money and the secrecy. That's
the problem of missed opportunity. There's little doubt
that the Bush administration's obsession with standardized
tests as the sole determinant of school success has
undermined reforms that focus on teaching children to think
and to do more than fill in circles on test forms.
"The amount of money spent on standardized testing is not
the real problem," notes Monty Neill, executive director of
the Boston-based group FairTest. "The real problem is how
it distorts teaching and learning."
The Testing Explosion
NCLB, introduced two days after George W. Bush took office
and passed a year later, instituted an unprecedented level
of federal mandates for testing public school students. The
mandates built on bipartisan support for a corporate-
influenced agenda of increased standardized testing. But
NCLB carried that agenda to new levels, both with the
number of tests and the harsh sanctions for those schools
not meeting predetermined levels of test progress.
NCLB requires annual testing of students in third through
eighth grades in mathematics and reading or language arts,
and testing once in high school. Beginning in 2007-08,
states will also be required to give tests in science at
least once in elementary, middle, and high school. All
told, there will be 17 NCLB tests each year for school
districts. This translates into unfathomable amounts of
school time devoted to standardized testing and teaching to
those tests. It also creates untold business opportunities
for the companies that produce the tests. (If you add in
district- and state-mandated tests on top of NCLB
requirements, and the growing number of "practice" tests
given to students so they will do well on the "real" tests,
the number of tests schools must administer skyrockets.)
Shrouded in Secrecy
Ironically, although Bush has used the rhetoric of
accountability to justify NCLB, the finances of the testing
companies are almost impossible to uncover, the tests
themselves are generally not made public, and mistakes in
the tests often come to light only when angry parents,
students, or school administrators threaten to sue over
mistakes in scoring. (See sidebar.)
While the public knows little of the testing companies,
lobbyists have ensured that legislators are well aware of
those corporate interests. Following Bush's first election
and his unveiling of NCLB, testing company representatives
descended on Congress to push for the type of standardized
testing that Bush had made so popular in Texas.
"I've been lobbying on education issues since 1982, but the
test publishers have been active at a level I've never seen
before," Bruce Hunter of the American Association of School
Administrators said at the time. "At every hearing, every
discussion, the big test publishers are always present with
at least one lobbyist, sometimes more."
And of course, there are the personal connections between
the Bush Administration and the testing industry. A January
2002 article in The Nation points out that the Bush
administration has a particularly "cozy relationship" with
the testing company run by McGraw-Hill. The heart of this
relationship, the article notes, "lies the three-generation
social mingling between the McGraw and Bush families. The
McGraws are old Bush friends, dating back to the 1930s."
In fact, on the first day he assumed his job at the White
House, Bush invited Harold McGraw III into his office,
according to The Nation .
The Testing Companies
Three companies have traditionally dominated the market for
developing tests: Harcourt Educational Measurement, CTB
McGraw-Hill, and Riverside Publishing. All are part of
larger conglomerates, and their financial data generally
are not reported separately from the controlling
A fourth, little-known company, Pearson Educational
Measurement out of Iowa City, Iowa, has significantly
increased its market share in recent years. According to
the Dec. 1, 2004 Education Week , Pearson has for now
overtaken Riverside as the third main testing company.
With the testing frenzy engendered by NCLB, the testing
industry is going through a shake-up and newer companies
are competing for state contracts. Some of the newer
players: Measured Progress out of Dover, N.H., Data
Recognition out of Minnesota, and Educational Testing
Service based in Princeton, N.J.
"It's a very competitive landscape right now, and I'd say
it's undergoing a fair amount of change," Jeff Galt,
president and CEO of Harcourt told Education Week .
According to the Education Week survey, CTB/McGraw Hill
currently dominates the market, with contracts in 23
states. Harcourt Assessment has contracts in 18 states,
Pearson in 13, and Riverside in 12. The survey does not
indicate the dollar amounts of the contracts or the number
of students tested.
As with any business, the testing companies are driven by
the need to make profits, not to improve education. They
will do what the market requiresthem to do˜nothing more,
"These companies are really only interested in making
money, and under NCLB they will make more money, while
essentially remaining unaccountable," notes Neill of
FairTest. "In other words, you keep the pain public and you
privatize the profits."
Following is a brief summary of the major companies.
Harcourt publishes the Stanford Achievement Test series
such as the SAT-9 (not to be confused with the SAT college
entrance test). In 2002, more than 15 million students took
the SAT-9, according to a special on "Frontline," the PBS
The company is based in San Antonio, Texas, and employs
more than 1,200 people at its headquarters. Among its other
products are clinical tests, such as the
Wechsler "intelligence" tests. It is affiliated with the
Harcourt book publishing companies, which range from
Harcourt School, publishers of kindergarten materials; to
Holt, Rinehart, and Winston, publishers of middle- and high-
school materials; to Harcourt Trade Publishers, which
But that's only the tip of the conglomerate iceberg. All of
these endeavors are part of Reed Elsevier, a London-based
publisher that has a variety of separate legal entities,
subsidiaries, associates, and joint ventures. Reed Elsevier
is also known for its legal products such as LexisNexis,
medical and science publications, and more than 130
business-to-business publications, ranging from the
entertainment industry magazine Variety to Luxury Home
Builder to Soho Today .
In 2001, Reed Elsevier had $5.6 billion in sales, according
CTB/McGraw-Hill is best known for its TerraNova tests,
especially its Terra-Nova CTBS tests for grades one to 12,
and its California Achievement Tests (CAT). The company
currently leads the testing industry in terms of number of
state contracts, and says that it serves more than 15
million students in 8,500 school districts in all 50
states. (Some contracts are with districts, not with
states.) Like Harcourt, the company is part of a larger
conglomerate; its parent company is McGraw-Hill, based in
New York. Among the general public, McGraw-Hill is better
known for enterprises such as Business Week magazine and
Standard & Poor's, the financial and investment analysis
company. It also owns four television stations. Overall, it
has 280 offices in 40 countries.
For the nine months ending on September 30, McGraw-Hill had
revenues of $3.84 billion with net profits of $566 million,
according to Reuters.
If these numbers aren't enough to make you realize that the
testing business is big business, consider the pay for
McGraw-Hill president and CEO, Harold McGraw: $3.14 million
Like many companies, CTB/Mc-Graw-Hill realizes that
developing and selling the tests is only the beginning of
the testing goldmine. These tests also need to be scored
and reported, and then districts have to figure out how to
store and evaluate data over several years in order to
prove they have made the "Adequate Yearly Progress" that
NCLB requires. Hence, there is an explosion in scoring,
reporting, and database services as well.
In June, CTB/McGraw-Hill acquired TurnLeaf Solutions, "a
national provider of customized online reporting and data
Pearson Educational Measurement
Pearson was previously seen as a niche player emphasizing
data processing and scoring of tests. In 1968, for example,
it began scoring test items for the National Assessment of
Educational Progress (NAEP.)
With NCLB, Pearson has begun to develop a range of services
that also includes test development. Pearson touts its
ability to quickly turn around score reports as one of its
advantages. According to Education Week , in Texas the
company turns around results for some high-stakes tests in
five to seven days.
Riverside, based near Chicago in Itasca, Ill., is best
known for its Iowa Test of Basic Skills (ITBS).
Approximately four to five million students in eight states
took the ITBS in 2001, according to "Frontline."
Riverside also publishes a variety of reading assessments
designed to meet the "Reading First" phonics-oriented
mandates of NCLB, which will provide federal dollars only
for specific reading programs. Among the materials being
promoted by Riverside are the Gates MacGinitie Reading
Tests and the Basic Early Assessment of Reading (BEAR, with
a silly-looking bear as the trademarked product icon).
Riverside has one of the most-well-known corporate parents:
Houghton Mifflin Company, which is owned by HM Publishing
Corp., which is owned by a consortium of private investment
firms comprised of Thomas H. Lee Partners, Bain Capital,
and funds managed by the Blackstone Group. Company press
releases say Houghton Mifflin has more than $1 billion in
Houghton Mifflin is also venturing into the database field.
In December 2003 it bought Edusoft, a San Francisco-based
company that provides web- and computer-based tests˜and
databases to store test results. Among its marketing
promises: Edusoft can help classroom teachers develop "mini
tests" that will gauge how close students are to passing
the state tests. Edusoft's website says that more than 300
districts are currently using its services to comply with
NCLB and that the Edusoft data warehouse currently stores
more than 100 million student scores across more than
Not to Be Forgotten . . .
Given the NCLB-driven explosion in standardized testing,
smaller companies are also trying to increase their market
share. One of the most successful has been the nonprofit
Educational Testing Service, best known for the SAT college-
entrance exam and its Advanced Placement program. In 2003,
for example, ETS flexed its power and won a three-year,
$175 million contract to oversee California's testing.
There are also companies that hope to make their money on
scoring the tests. The federal GAO report on state spending
on NCLB assessments from 2002-08, for example, used $5.3
billion as a high-end figure for tests that included essay
or open-ended questions. If only multiple-choice questions
are used on a test, costs could fall to $1.9 billion.
The reason is not so much in the tests as in the scoring,
administering, and reporting. The GAO report, for instance,
notes that in Colorado, developing the tests accounts for
only 11 percent of the expenditures for the state test,
with the remaining 89 percent going for test
administration, scoring and reporting.
Open-ended and essay questions˜which require more
analytical skills than multiple-choice questions and which
are considered educationally more sophisticated and
worthwhile˜cost far more to score. In Massachusetts, which
the GAO says uses more open-ended questions in its tests,
the cost was about $7 to score each test in 2002. In
Virginia and North Carolina, which used mostly multiple-
choice tests, the cost was less than $1 per test.
Given the financial crisis facing most state education
budgets, and the consistent complaints that NCLB does not
provide enough federal money to cover test costs, it's not
outlandish to predict that financial pressures may force
states to adopt dumbed-down multiple-choice tests
emphasizing rote memorization and regurgitation of
disconnected bits of information.
Which, of course, the testing companies will be happy to
Barbara Miner (email@example.com) is a freelance
writer and former managing editor of Rethinking Schools.