Published: December 12, 2013 :: The Pearson Foundation, the charitable arm of one of the nation’s largest educational publishers, will pay $7.7 million to settle accusations that it repeatedly broke New York State law by assisting in for-profit ventures.
An inquiry by Eric T. Schneiderman, the New York State attorney general, found that the foundation had helped develop products for its corporate parent, including course materials and software. The investigation also showed that the foundation had helped woo clients to Pearson’s business side by paying their way to education conferences that were attended by its employees.
Under the terms of the agreement to be announced on Friday, the money, aside from $200,000 in legal expenses, will be directed to 100Kin10, a national effort led by a foundation, the Carnegie Corporation, to train more teachers in high-demand areas, including science, technology, engineering and math.
“The fact is that Pearson is a for-profit corporation, and they are prohibited by law from using charitable funds to promote and develop for-profit products,” Mr. Schneiderman said in a statement. “I’m pleased that this settlement will direct millions of dollars back to where they belong.”
Officials at Pearson and the foundation defended their work.
“We have always acted with the best intentions and complied with the law,” they said, in a joint statement. “However, we recognize there were times when the governance of the foundation and its relationship with Pearson could have been clearer and more transparent.”
The case shed a light on the competitive world of educational testing and technology, which Pearson has come to dominate. As federal and state leaders work to overhaul struggling schools by raising academic standards, educational companies are rushing to secure lucrative contracts in testing, textbooks and software.
The inquiry by the attorney general focused on Pearson’s attempts to develop a suite of products around the Common Core, a new and more rigorous set of academic standards that has been adopted by 45 states and the District of Columbia.
Around 2010, Pearson began financing an effort through its foundation to develop courses based on the Common Core. The attorney general’s report said Pearson had hoped to use its charity to win endorsements and donations from a “prominent foundation.” That group appears to be the Bill and Melinda Gates Foundation.
“Pearson Inc. executives believed that branding their courses by association with the prominent foundation would enhance Pearson’s reputation with policy makers and the education community,” a release accompanying the attorney general’s report said.
Indeed, in April 2011, the Pearson Foundation and the Gates Foundation announced they would work together to create 24 new online reading and math courses aligned with the Common Core.
Pearson executives believed the courses could later be sold commercially, the report said, and predicted potential profits of tens of millions of dollars. After Mr. Schneiderman’s office began its investigation, the Pearson Foundation sold the courses to Pearson for $15.1 million.
The attorney general’s office also examined a series of education conferences sponsored by the Pearson Foundation, which paid for school officials to meet their foreign counterparts in places like Helsinki and Singapore.
The trips were made public after a series of columns in The New York Times, which detailed the expensive hotels and meetings with corporate executives that were staples of the experience.
Several school officials who went on the trips represented education departments that had contracts with Pearson. The investigation did not determine whether those officials had awarded any new contracts based on any improper influence. But the report found that executives from other companies were not invited to attend, giving Pearson’s corporate side a clear advantage.
The attorney general portrayed a culture at Pearson in which the lines between business and charity were often blurred. Pearson remains the largest donor to the Pearson Foundation, and the staff of the foundation included several Pearson employees. The board was made up entirely of Pearson executives until 2012.
As part of the agreement, the foundation said it would alter its governing structure by appointing three board members to review any financial transactions that might benefit the business side. The foundation also pledged to bar Pearson executives, in most instances, from attending its education conferences, and said it would not feature Pearson products at such meetings.
A version of this article appears in print on December 13, 2013, on page A32 of the New York edition with the headline: Educational Publisher’s Charity, Accused of Seeking Profits, Will Pay Millions.
I’m not saying anything new here, I’m just asking questions. But we need to accept that sometimes, ladies and gentlemen, a non-profit can be a revenue engine. And that sometimes being fined is the cost of doing business.
The above is about New York. What about California? Los Angeles? LAUSD?
● There are allegations here in LA of crossover between Pearson Foundation and the parent company– with senior executives and senior executives of companies acquired by Pearson moving between the parent and the foundation. Who will connect the Pearson/Pearson Foundation/America’s Choice/LAUSD dots?
Judy Codding, the former President/CEO of America’s Choice, moved to the Pearson Foundation when AC was acquired. (The America’s Choice software product is the basis of Pearson’s Common Core Curriculum). Then – when the Pearson Common Core Curriculum became the presumptive education software of (Apples’) choice in LAUSD, Codding moved to Pearson Education, Inc. and to the LAUSD project. Where does Jaime Aquino (formerly of America’s Choice) figure in this? Or, for that matter, John Deasy? Does the name Sherry King ring a bell?
Blurring the lines:
|“||New York, NY – April 27, 2011 – The Pearson Foundation today announced a partnership with the Bill & Melinda Gates Foundation to support America’s teachers by creating a full series of digital instructional resources. |
Pearson, the nation’s leading education technology company, will offer these courses to school districts, complete with new services for in-person professional development for teacher transition to the Common Core and next-generation assessment. The Pearson Foundation will also work with other partners to explore opportunities for additional commercial development and distribution.
Judy Codding, former President and CEO of America’s Choice, is leading the course development effort - http://bit.ly/1bBzSO1
|Couriouser+Couriouser: Also in April of 2011 John Deasy became Superintendent of LAUSD . Prior to joining the District eight months before,Dr. Deasy served as Deputy Director of Education for the Bill & Melinda Gates Foundation.|
I know that conspiracy theorists grasp at straws and perceived coincidence. But how coincidental do they have to get before the dots cry to be connected? There has rarely been more than one degree of separation between Deasy/Codding/Aquino/King et al – dating back to Deasy’s tenure as superintendent of Coventry Public Schools in Rhode Island.
● How does a fine placed upon a foundation – where it has to give money to a charity it would normally support – punish the foundation? Microsoft, when caufgt breaking monopoly laws, was forced to give its software products to schools. How exactly did putting their products in the hands of children adversely impact Microsoft?
Maybe Joel Klien, the Microsoft prosecutor (before he became Bloomberg’s Chancellor of New York City Schools before he became Rupert Murdoch's attorney and education software/hardware/product chieftain) can answer that question?