New education reforms often translate into big money for private groups. Following the 2001 No Child Left Behind Act, states paid millions of dollars annually to companies to develop and administer the standardized tests required under the law. Companies also cashed in on a provision mandating tutoring for students at struggling schools.
Now, a movement to overhaul the teaching profession is creating a new source of revenue for those in the business of education. More than half of states have changed, or are in the process of changing, their laws to factor student test scores into teacher evaluations. Most are also adding new requirements for the classroom observations used to rate teachers, which in many districts are often cursory and infrequent.
The main intent of the new laws is to help identify which teachers are doing a good, bad or mediocre job so that those struggling in the classroom can be given extra support or, if their performance doesn’t improve, fired. But one early outcome of recent legislation is a booming new market services and products to help states and school districts scrambling to meet the new legal requirements.
“It’s an incredibly heavy lift for states,” says Sandi Jacobs, vice president of the National Council on Teacher Quality, a Washington, D.C.-based advocacy group. “Some have contracted out big pieces of it, whether it’s someone internal in the state or an outside provider.”
The laws are based on the belief that school districts have traditionally done little to measure and improve the performance of teachers despite the proliferation of research showing a clear link between teacher quality and student success. In most cases, new teacher evaluations will consist of two parts: observations of classrooms, which look at how teachers teach; and outcomes on tests, including scores for students and value-added data, which measure how students progress.
“Most of the laws were not that specific,” said Timothy Daly, president of The New Teacher Project, a nonprofit advocacy group. “Most outlined a broad concept, but left a lot of details to be figured out.”
Nonprofit groups and for-profit companies alike are going after public contracts to design evaluations, train teachers and principals in how to use them, and set up online platforms to help sort all of the new data that schools will be collecting. Private foundation money is subsidizing some of the contracts, but districts are also spending millions of public dollars, much of it from the Obama administration’s $4.3 billion “Race to the Top” initiative.
In Florida, the state paid Houghton Mifflin Harcourt, a for-profit textbook publisher, $4.8 million to develop classroom observation methods and nearly $4 million to the American Institutes for Research, a nonprofit, to create a value-added model for grading teachers based on student test scores, according to state officials.
This summer, New York also signed a contract with the American Institutes for Research to design its value-added system, for $2.7 million over three years, according to the state. In addition, the state is requiring school districts to hire state-approved contractors—which include for-profits, nonprofits and the state teachers union—to design their observation rubrics. While most of the rubrics are free, schools may pay as much as $4,500 per day for training in how to use them.
On the upside, the private sector offers expertise that many school officials lack, but there are concerns that low-quality, prepackaged systems could proliferate, just as simplistic multiple choice tests did under No Child Left Behind.
“The marketplace has become very, very competitive. All these simplistic models are coming out of the woodwork,” said William Sanders, the Tennessee-based researcher who has sold his own value-added system to dozens of states and districts.
Teachers unions, some of which have designed their own teacher evaluations models, are also concerned. “Some providers do not have a track record of developing strong teacher evaluation systems,” said Randi Weingarten, president of the American Federation of Teachers. “Too often, their priority is to make money, not improve teaching.”
The New Teacher Project (TNTP) has been a strong advocate for changing evaluation systems to add student test scores into the mix and beef up teacher observations. In 2009, the group published a study called “The Widget Effect,” which helped jumpstart the national movement to overhaul how teachers are evaluated. The Obama administration’s Race to the Top grant competition, launched a month after the study’s release, embraced its ideas, and states passed new laws that would make them a reality.
Now, TNTP is among the groups vying for contracts to help create and implement the new evaluation systems.
“What we’ve been interested in doing is facilitating the design process for districts or states—ensuring when they select a design, not only is it sound but that it gets implemented the way it was intended to,” Daly said.
In Houston, TNTP was involved from start to finish in shaping a new system for judging teachers. In other places, such as Tennessee, it has acted in a consultant role. In Rhode Island, a state official said TNTP was paid $400,070 to train the evaluators—including principals and other school administrators—who will observe teachers. Private money has paid for part or, in a few cases, all of TNTP’s work in most places, Daly says.
Under No Child Left Behind, states spent more than $600 million annually on standardized tests, with the vast majority of the money going to the private sector, according to a 2009 Government Accountability Office report. Now, states say they are relying more on work by teachers, unions, school board members, principals and even parents as they design new teacher evaluations.
“There simply is not as much [money] to be made from professional development, or system design, as there is in testing students,” Charlotte Danielson, a researcher who developed a well-regarded teacher observation method that has been adopted by districts around the country, said in an email.
But private groups sense an opportunity nonetheless. “If these states could have bought something off the shelf, a lot of them would have,” said Jacobs, of the National Council on Teacher Quality. “It wouldn’t be surprising if people do look at how you can package this.”
Nonprofits like the National Institute for Excellence in Teaching, which created a teacher evaluation system used in Chicago and elsewhere, are offering their technical expertise to states. Mathematica, a research group that published a 2010 study warning about the use of value-added modeling in high-stakes decisions because of high error rates, was paid more than $500,000 to design the value-added model for the Washington, D.C. public schools, according to a DCPS spokesman. (About 275 teachers have been fired there because of low ratings.)
Pearson, a U.K.-based company with profits of more than $1 billion in 2010, began marketing Teacher Compass, a new teacher observation software program designed by researchers at Johns Hopkins University, in the United States last year.
Another company, Learning Sciences International, is selling iObservation, a computerized data system designed in collaboration with a group of researchers, including Danielson, who said she will earn a small royalty from any sales. On its website, the company is marketing the system as a solution to the new mandates facing Race to the Top winners.
Others are likely to follow in their footsteps. “I would think you’d see testing companies as well as the data-driven decision providers jumping in there,” said Trace Urdan, a research analyst who focuses on the business of education for Wunderlich Securities, a brokerage firm based in Memphis, Tenn.
Danielson says districts and states are doing the right thing by hiring outside experts as they design more rigorous classroom observations. “Entire states seem to be operating under the assumption that anyone can create a rubric. Then they want to use that for high-stakes decisions without having a clue what it takes,” she said.
But some observers worry that the fiscal crisis battering school districts could encourage administrators to seek out lower-quality products.
“There are real dangers,” said Monty Neill, director of FairTest, a group critical of standardized testing. “While observations make good sense, if you start bringing in outside people…you’re more likely to end up with arbitrary and capricious decisions from which someone makes money.”
A version of this story appeared on The American Prospect on October 24, 2011.