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drmichellemaher

~ Advocating for vibrant public education that supports youth to make the changes the adults can’t seem to make~

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October 2013

Who Can We Boycott?: Who Benefits from or Invests in Pearson and Teach for America?

Common Core’s Corporate Relations with Pearson and Teach for America (TFA)

by Michelle Maher, Ph.D.

Teachers and their networks constitute enormous collective financial power.  This essay encourages public school teachers, administrators, and counselors’ networks to boycott and resist organizations that invest in and/or benefit from the (uninvited) corporate takeover of public education. Diane Ravitch’s new book Reign of Error outlines how hedge fund managers and investment advisors have organized a private corporate takeover of public education, through the leveraging of NCLB funding and “privatization options” in by the Federal Department of Education, public schools are being pushed out of “business.”  But teachers know the rules of “just business” often do not result in justice for public school youth, particularly those who attend low-income schools.

To deal with teachers’ resistance to new regimes, given the very real impact by massive strikes in Philadelphia, Seattle, Tucson, and  New York City, Teach for America organizes the replacement of certified teachers with under-trained and under-qualified instructional staff.  While NCLB is touted as helping children compete in the global market, it seems that (multi)national/global companies are interested in a monopoly of public school curricula and testing dissemination.

With this in mind, I have gathered a few of the (multi)national organizations that contribute to, invest in or benefit from Pearson and Teach for America. These are companies that stand to benefit from the privatization of public education. After the name of the firm, I indicate how it is related to either Pearson or Teach for America. Please consider letting them know that you are withdrawing YOUR business. Amana Mutual Funds Trust-Income Fund: Top mutual fund  holder in Pearson AT&T—donor for Teach for America BB&T Securities and Corp: Top institutional stock holder in Pearson Bank of America—Corporate Partner/Sponsor/Supporter/Investor with TFA Bertelsman (and by extension Time Warner, Sony, BMG)—Pearson Board Member’s Corporate Relationship Bill & Melinda Gates Foundation—Pearson Board Member’s Corporate Relationship Blue Cross Blue Shield of Arizona—donor for Teach for America British Petroleum—Pearson Board Member’s Corporate Relationship Cisco—Corporate Partner/Sponsor/Supporter/Investor with TFA Citigroup, Citibank, CitiCorp —Pearson Board Member’s Corporate Relationship Coca-Cola Foundation—Corporate Partner/Sponsor/Supporter/Investor with TFA Credit Suisse Americas Foundation—Corporate Partner/Sponsor/Supporter/Investor with TFA DFA International Value Series: Top mutual fund  holder in Pearson Dimensional Fund Advisors, LP: Top institutional stock holder in Pearson General Mills Foundation—donor for Teach for America Goldman Sachs Gives—donor for Teach for America ExxonMobil Foundation—donor for Teach for America FedEx Corporation—donor for Teach for America Fidelity Investments/Internation—Corporate Partner/Sponsor/Supporter/Investor with TFA Freddie Mac Foundation—donor for Teach for America The Hartford—donor for Teach for America Hellman Family Foundation—donor for Teach for America Hewlett-Packard—donor for Teach for America Hostess Brands—Corporate Partner/Sponsor/Supporter/Investor with TFA Invesco Ltd.: Top institutional stock holder in Pearson JPMorgan Chase—donor for Teach for America, Top institutional stock holder in Pearson Lincoln VIP tr-SSgA Developed International 150 Fund: Top mutual fund  holder in Pearson Lowe’s—Corporate Partner/Sponsor/Supporter/Investor with TFA Michigan State Treasurer: Top institutional stock holder in Pearson Monsanto—donor for Teach for America Morgan Stanley—donor for Teach for America Nokia Corporation —Pearson Board Member’s Corporate Relationship Penguin Random House —Pearson Board Member’s Corporate Relationship PGA Tour—donor for Teach for America Power-GEN—Pearson Board Member’s Corporate Relationship Powershares Engh Traded Fd: Top mutual fund  holder in Pearson Ridgeworth Mid & Large Cap Value Equity Fd.: Top mutual fund  holder in Pearson Seventh Generation—Corporate Partner/Sponsor/Supporter/Investor with TFA Sterling Capital Management Company: Top institutional and mutual fund stock holder in Pearson Suntrust Banks, Inc.: Top institutional stock holder in Pearson SurveyMonkey—Corporate Partner/Sponsor/Supporter/Investor with TFA Symantec Foundation—donor for Teach for America Thornburg Investment Management Inc.: Top institutional stock holder in Pearson U.B.S. Financial Services: Top institutional stock holder in Pearson U.S. Bank—donor for Teach for America Vanguard International Stock Index-MSCI EUrope ETF: Top mutual fund  holder in Pearson Wells Fargo—Corporate Partner/Sponsor/Supporter/Investor with TFA Williams-Sonoma, Inc. —Corporate Partner/Sponsor/Supporter/Investor with TFA Visa, Inc. —Corporate Partner/Sponsor/Supporter/Investor with TFA Yale University—donor for Teach for America

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Public Education as a “Market:” Pearson’s Corporate Network

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Bill Gates: The new curriculum for the common core will line up with the testing standards, “and it will unleash a market for people providing services for better teaching.” http://www.glennbeck.com/2013/09/24/did-bill-gates-admit-the-real-purpose-of-common-core/

This exposé names the corporate relationships represented on Pearson’s board of directors,  which includes representation from some of the most influential financial advising/risk management firms, banks, power industries, publishers, mass media, technology manufacturers, and pharmaceutical industries. Common Core and Race-to-the-Top are federal reforms that require national annual testing.

On the one hand, those in support of reorganizing public education into a market-driven corporate model argue that the inherent competition offered by the structure of the “free” market and high-stakes testing of students will raise children’s achievement. The problem with that whole line of thought, on the other hand, is that public education is not just for those who excel at standardized tests in reading and mathematics. What will keep companies who monopolized the educational materials’ market from abandoning the many other things schools do, including the other subject areas, the socialization component that occurs when kids bond to their elementary school teachers, services for kids who struggle, learning support, teachers and career development services?

The most concerning issue is that publicly traded companies serve stake-holders, not the children and their parents as so-called “customers” of public education. Corporate education executives by-definition, serve stakeholders first. Stakeholders, in their financially-driven position, are less concerned about children’s achievement and more concerned with profit. With this in mind, I began to consider whose interest corporate schooling serves and exactly which corporate interests were at the table.  Given the current focus on testing and that Pearson is a primary provider of that testing, I decided to begin with them.

A quick investigation of Pearson’s corporate relationships shows that Pearson: Always Learning board’s associations are nose deep with the mightiest of the U.S.A.’s and the U.K.’s financial advisors and investors, multi-national media and technology firms, and energy-related companies. First, I consider the associations that the current board members of Pearson: Always Learning (hereafter “Pearson”) bring to Pearson’s table because elite business networks must carefully select and draw from associations that can jointly organize the investments they make in the corporate markets created from taking over public institutionalized k-12 education.  Who was involved in organizing this takeover? Whom private companies choose to contract is often private information. Thus, the by-association approach is an initial step. I believe that the biographies of board members from the companies that have benefited from the corporatization of public schools, will begin to demonstrate a network. This network will be among the pool of potential contractors and negotiators at their tables.

Government: John Fallon, Chief executive of Pearson, occupied senior communications and public policy roles in the British and UK local governments. David Arculus, non-executive director of Pearson, served from 2002 to 2006 as chairman of the British government’s Better Regulation Task Force, which worked on “reducing burdens on business.”

Publishing: Two board members, John Fallon and Will Ethrige have significant ties to the publishers Prentice Hall/Random House, Little Brown and Co., Addison Wesley, and CourseSmart. Will is a board member and former chairman of the Association of American Publishers (AAP) and board chairman of CourseSmart, a consortium of electronic textbook publishers. On John Fallon’s first day as the new Chief Executive of Pearson on January 1, 2013, Pearson announced a merger with Penguin Random House, where John Fallon was the former director. No surprise since, the centralization of corporate power is key to monopolizing the new educational markets.

Financial Advising: I expected financial investors to be guiding the process of the educational takeover because they probably provide the financial risk management advising to determine and organize the legal chess moves required to legally takeover a public institution.  (No surprise that many board members have connections to pharmaceutical industry as a model, but those connections are below.) I found Pearson’s board top heavy in this regard, including connections to Fidelity, CitiCorp, Citibank, Citigroup, McKinsey & Company, Liechtenstein Global Trust, Hundred Group of Finance Directors, and the U.K.’s Financial Reporting Council, to name just a handful. A look at the boards that the Pearson board serves on shows likely suspects in media, marketing and electronics like Time Warner, BMG, Sony, Racal Electronics and Bertelsmann.  John Fallon has significant ties to the Bertelsmann Corp. Bertelsman is a German multinational mass media, broadcasting and publishing corporation reporting 16 billion in consolidated revenue, who has regularly participated in joint ventures with Time Warner, Sony, BMG, according to their 2012 Annual Report. Such associations, like those with mass media giants, shows whose fat fingers are in the pie prior to public input to this publically funded enterprise.

Here’s how Pearsons board’s experience divides up:

Glen Richard Moreno is not only the Deputy Chairman of Pearson but the Deputy Chairman of the U.K.’s Financial Reporting Council whose 2011-2012 annual report states they provide high quality corporate governance with areas of expertise in the actuarial/auditing/ accounting maneuvers often known as the “risk-management” required to make it through the legal system. Moreno is a non-executive director of Fidelity International Limited, whose website describes their bottom line as “Our investment process take environment, social and governance issues into account when, in our view, these have a material impact on either investment risk or return.” Moreno is also a former executive or board member associated with Fidelity International, Citigroup, Citibank, CitiCorp, Lloyds TSB Bank, Lloyds Banking Group PLC, Bank of Scotland, HBOS PLC, Fidelity Corp, Prince of Liechtenstein, Man Group PLC, Toolex International NV, LGT Gruppe Stiftung, and Liechtenstein Global Trusts.  It is worth noting that Liechtenstein is the largest privately owned private banking and asset management group in Europe.

Robin Freeston, Pearson’s Chief Financial officer, occupied senior financial positions with pharmaceutical giants. He joined Pearson in 2004 as deputy chief financial officer and became chief financial officer in June 2006. Robin qualified as a chartered accountant with Touche Ross (now Deloitte), and is currently a non-executive director and founder shareholder of eChem Limited. Deloitte is audit, financial advisory and risk management firm. eChem Limited is a chemical manufacturer for process industries, construction, plastics and surface coatings. Robin sits on the Institute of Chartered Accountants (ICAEW), Financial Reporting Committee and is chairman of the Hundred Group of Finance Directors, which is a group of British financial directors operating as an unofficial mouthpiece of the finance function of the FTSE-100. The FTSE helps investors worldwide make informed investment decisions and benchmark the performance of their investments.

David Arculus, Non-executive Director, Chairman of the remuneration committee and member of the audit and nomination committees of Pearson. David has experience in banking, telecommunications and publishing in a long career in business. Currently he is chairman of Numis Corporation plc, which describes itself as a “leading independent investment banking and broking group.” David is also the chairman of the Advisory Board of the British Library. David’s previous roles include the chairmanship of O2 plc, Severn Trent plc and IPC Group, as well as chief operating officer of United Business Media plc and group managing director of EMAP plc. David served from 2002 to 2006 as chairman of the British government’s Better Regulation Task Force, which worked on reducing burdens on business.

Sir Michael Barber, Chief Education Advisor Pearson. Prior to Pearson, he was a Partner at McKinsey & Company and Head of McKinsey’s global education practice.

Mass Media and Technology

Clearly technology and mass media are key to connecting the current age’s informational systems and transmitting them to youth. New Penguin/Random House Board, of which John Fallon, Chief Executive Officer is a board members, boasts Markus Dohle, Dr. Thomas Rabe, Dr. Judith Hartmann, Dame Gail Rebuck and Dr. Thomas Hesse, all of whom occupy high ranks in Bertelsmann. Markus Dohle who was most recently Chairman and CEO of Random House, has been an Executive Board member of Bertelsmann since 2008. Bertelsman is a German multinational mass media, broadcasting and publishing corporation reporting 16 billion in consolidated revenue, who has regularly participated in joint ventures with Time Warner, Sony, BMG, according to their 2012 Annual Report. Such associations, like those with mass media giants, shows whose fat fingers are in the pie prior to public input to this publically funded enterprise.

Power Industry & Pharmaceutical Giants

I can only hypothesize the payoff for energy giant’s, like BP, Vallorec, eChem and Powergen, mining corporations, and manufacturers for brand name products, and phone giants, like Nokia and V, and pharmaceutical’s like the GE owned Amersham, PLC, ICI PLC, Zeneca and Henkel UK.

John Fallon, Chief executive of Pearson, was a former communication specialist for power plant construction/engineering corporation, named Powergen in Glenwood Springs, Colorado. Powergen, it should be noted, “has contributed to the success of over 100 power plant and fuel conversion projects” and “provides technical services of experienced engineers and technicians to assure transition from construction to commercial operation,” including fuel conversion projects that include coal, wood, gas, wind, agricultural waste, oil and refuse-fired electrical generating and cogenerating plants. Vivienne Cox is a Pearson Non-executive Director, Senior independent director and member of the audit, remuneration and nomination committees. Cox was newly appointed Chairman of the Supervisory Board of Vallourec in Boulogne, France, which makes tubular structures for energy companies. Prior to that, she was BP’s executive vice president and chief executive of BP’s Gas, Power & Renewables business and ran BP’s commodity derivatives trading team.  Robin Freeston, Pearsons’ Chief Financial officer, was a group financial controller of Amersham plc, a pharmaceutical giant now part of General Electric, and occupied senior financial positions with ICI plc, Zeneca and Henkel UK. Zeneca was a multinational pharmaceutical company headquartered in London, UK, which was formed by the demerger of the pharmaceuticals and agrochemical businesses of Imperial Chemical Industries, according to the Independent., until Zeneca merged with Astra to become the largest-ever European merger, according to the BBC news. Imperial Chemical Industries was acquired by Akzo Nobel NV in January of 2008. Henkel UK “operates worldwide with leading brands and technologies in Laundry & Home Care, Beauty Care, and Adhesive Technologies.”

Higher Education 

Vivienne Cox, sits on the board of INSEAD: The Business School for the World, which describes itself as “one of the world’s leading and largest graduate business schools.” Linda Lorimer, Non-executive Director has a deep background in education strategy, administration and public affairs. She is vice president of Yale University in New Haven, Connecticut.

New Educational Service Industry

The plan to replace public education with new schools requires an organized strategy of educational services. Joshua Lewis, a non-executive director at Pearson is the founder of Salmon River Capital LLC, a New York-based venture capital firm focused on technology-enabled businesses in education. Joshua Lewis is on the board of the NewSchools Venture Fund and attended the 2011 NewSchools Venture Fund Summit. He has long been active in the non-profit education sector, with associations including New Leaders and the Bill & Melinda Gates Foundation. I began to footnote each organization’s url address on the NewSchools Venture Fund Summit’s attendee list.  Notice that almost all the websites look similarly, with African-American children and often, white teachers.

All of these corporate entities have the “market freedom” to form relationships that would otherwise demonstrate conflicts of interest in public education, non-bid contracts, and deny academic freedom.

References
[1] http://www.glennbeck.com/2013/09/24/did-bill-gates-admit-the-real-purpose-of-common-core/ %5B1%5D Hess, F.D. & Finn, C.E. Jr. (2007, eds). No Remedy Left Behind: Lessons from a Half-Decade of NCLB. Washington, D.C.: AEI Press. [1] http://www.pearson.com/news/2013/july/pearson-and-bertelsmann-announce-the-completion-of-the-merger-of.html %5B1%5D Within a week Pearson also announced that 560 people would loose their jobs, when he decided to close Pearson in Practice, which provides adult education, as an estimated a one-time L120 million loss.[1]http://www.bertelsmann.com/bertelsmann_corp/wms41/customers/bmir/pdf/Annual_Report_2012.pdf[1] FRC website: http://www.frc.org.uk/ , FRC Board of directors: http://frc.org.uk/Our-Work/Publications/FRC-Board/FRC-Annual-Report-for-2011-12.aspx[1] corporate governance tab of their website https://www.fidelityworldwideinvestment.com/global/about/corporate_governance.page?[1] Glen Richard Moreno’s Businessweek profile and biography: http://investing.businessweek.com/research/stocks/people/person.asp?personId=7684629&ticker=PSON:LN&previousCapId=134992&previousTitle=PEARSON%20PLC-SPONSORED%20ADR[1] http://www.lgt.li/en/index.html%5B1%5D http://www.deloitte.com/view/en_US/us/index.htm%5B1%5D http://www.echem-group.com/%5B1%5D http://www.icaew.com/%5B1%5D http://www.ftse.com/%5B1%5D http://www.numiscorp.com/x/default.html%5B1%5Dhttp://www.bertelsmann.com/bertelsmann_corp/wms41/customers/bmir/pdf/Annual_Report_2012.pdf%5B1%5Dhttp://www.powergen.us/index.html%5B1%5D http://www.independent.co.uk/news/business/timetable-for-zeneca-demerger-spelled-out-1475344.html%5B1%5Dhttp://news.bbc.co.uk/2/hi/business/231213.stm%5B1%5D http://www.akzonobel.com/news/information_former_ici/%5B1%5Dhttp://www.henkel.co.uk/index.htm%5B1%5D http://www.insead.edu/home/%5B1%5D http://www.pearson.com/about-us/board-of-directors.html

WARNING: Corporate Charter Schooling Serves Stockholders First

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One way to consider who benefits from the corporatization of public schools is to analyze how corporate education is structured.  The structure of education organizes, but not necessarily determines, certain educational outcomes. Frequently we hear that corporate schooling will raise kids’ educational achievement.  But what happens when public schools are seen as a market by corporations? The restructuring of educational services as a market, alters the “customer” of education and in whose “interest” the service is provided. The customer of a privatized educational market is stockholders, not children, nor their parents.

In terms of the relationship between traditional funding structure of public schools and achievement, higher average educational achievement generally rises as the average per pupil expenditure rises. In other words, educational researchers have found that schools that receive more per pupil funding often enjoy higher academic achievement among their students than schools who receive less funding. There are some glowing exceptions to this trend.

However, transforming public education in order to, in Bill Gates’ words “unleash a market” to stakeholders in educational service providing companies, alters the beneficiary of education from children/parents to stakeholders. Because of this, teachers will be eliminated. This is why:  Corporate profits increase as costs are reduced and while sufficient demand remains constant or rises.  The demand for educational materials will level off or show only mild increases in student population, once the monopoly on educational materials has taken hold. Once the monopoly of educational materials evens out–stockholders will no longer be reaping increasing profits.  This means that there must be continued cuts in the cost of teaching and instruction to keep stockholders happy. This is why the push for online instruction in so pervasive. The sales pitch used to gain public buy-in to the private chartered schooling concentrates on ideas of rising achievement and ignores how important teachers–real caring human beings with whom kids communicate–are in kids’ lives.

The structure of corporately-organized education requires that stakeholders increase their investment. No matter how fantastic or dismal the quality of public education, corporate school stakeholders gain when teacher salaries are increasingly lowered, school funding rises and there are monopolies of providers of educational services, (e.g. publishers, test providers, hardware, software, media, etc). Educational material providers’ stakeholders gain when their companies monopolize curricula, online instruction and testing. Those that financially benefit, whether or not children’s achievement raises, are investors in computer hardware and software companies, publishers, test providers and school “service” corporations. Note that such “services” do not include school social workers, counselors, vocational services, nurses, lunch providers, and the like.

Recipients of public education, children and their parents, cannot return the damaged goods of their child’s experience of a narrowing curriculum and high stake testing and receive a new one.  In other words, kids, taxpayers and parents have a less voice and power upon stakeholders in the minds of corporate executives because the product of education, children’s learning, does not actually have to directly impact the financial bottom line.

 

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