Pearson Foundation to Pay $7 Million Settlement over For-Profit Common Core-Aligned Courses

In a case that has drawn attention to the highly competitive and lucrative world of educational assessment and technology associated with the Common Core State Standards, the Pearson Foundation, the non-profit arm of one of the country’s largest educational publishers, has agreed to a settlement of $7.7 million after accusations by the attorney general of New York that it helped develop Common Core-aligned courses for Pearson, Inc., its corporate parent.

According to a report in the New York Times, an inquiry by New York State attorney general Eric T. Schneiderman found that the Pearson Foundation helped develop course materials and software aligned with the Common Core State Standards, and assisted in luring clients to Pearson’s for-profit corporate parent by funding travel to education conferences attended by its employees.

“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,” said Schneiderman in a statement. “I’m pleased that this settlement will direct millions of dollars back to where they belong.”

According to a press release, Schneiderman said that no later than 2010, Pearson, Inc. worked to develop a series of courses, instructional materials, and software aligned with the Common Core standards. School districts in states that have adopted the Common Core will be required to use materials “aligned” with the new academic standards:

Pearson, Inc. decided to develop its Common Core aligned course offerings within the Foundation, with substantial funding by Pearson, Inc., in order to attract foundation support and credibility for its commercial products. 

Pearson, Inc. and the Pearson Charitable Foundation planned that the courses developed within the Foundation would be sold commercially by Pearson, Inc. Internal business analyses prepared by Pearson, Inc. projected that potential profits from sales of the courses and related offerings could be in the tens of millions of dollars.

The press release also stated that the Pearson Foundation “provided grants to an independent organization of school officials in the United States” for a jointly-sponsored series of international educational conferences. The school officials who were invited were from areas in which Pearson, Inc. actively conducted business and sought further contracts. The travel and lodging of the school officials to attend the conferences were financed by the Pearson Foundation.

The Times notes that Schneiderman’s report asserted Pearson, Inc. had planned to use its charitable foundation “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.

As states signed onto the new Common Core standards – many after being enticed to do so by the Obama administration’s competitive grants through the Race to the Top stimulus program – educational companies and others became eager to secure lucrative contracts for assessments, textbooks, software, lesson plans, and teaching guides.

The Pearson Foundation and Pearson, Inc. said in their own defense:

Pearson and the Foundation maintain we have always acted with the best intentions and complied with the law. However, we recognize there were times when the governance of the Foundation and its relationship with Pearson could have been clearer and more transparent.

According to the terms of the agreement, except for $200,000 in legal expenses, the settlement will be directedto recruiting and retaining high-quality kindergarten through 12th grade teachers. In addition, the Foundation will adopt program changes and governance reforms to ensure that charitable assets of the Foundation are not improperly used for the private benefit of Pearson, Inc.”

The Pearson Foundation website indicates that the $7.5 million will be directed to a fund, managed by Schneiderman’s office, that will support 100Kin10, a national organization led by the Carnegie Corporation, which supports the Common Core standards, to train STEM (Science, Technology, Engineering, Math) teachers.

Other funders of 100Kin10 include Chevron; the Bill and Melinda Gates Foundation; the Gay & Lesbian Fund for Colorado, a Program of the Gill Foundation; Google; and the JP Morgan Chase Foundation.

In addition, former President Bill Clinton gave the support of the Clinton Global Initiative to 100Kin10.


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