No Child Left Behind: Where Does the Money Go? Part 1
Susan Notes: Unfortunately, I can't fit all this blockbuster piece in one piece so I'm doing it in two parts. The tables and Notes read much better at the EPRU website, but I want to be part of spreading the word, and so I post it here.
End of Year 5
The school must opt from a variety of corrective actions:
Annual Reports from All Schools, Districts and States
In addition to the annual assessments in grades three through eight, states must produce and disseminate annual report cards that provide information on the results of such assessments. The state report cards must show the trends for the state in the subcategories listed earlier, and a comparison of the state's performance to the state's goal. The state must also provide data on district progress listing the schools in each district that failed to make AYP. The report cards must also show the high school graduation rate, the professional qualifications of the teachers in the state, the percentage of teachers with emergency or provisional credentials, and the percentage of classes not taught by highly-qualified teachers as defined by NCLB. Descriptions must compare these indicators separately for high- and low-poverty schools.
School districts must prepare similar report cards showing district-level data and data for each school.
NCLB Dollar Consideration Year By Year
Year Zero: Testing
At the time the No Child Left Behind Act (NCLB) was passed, very few states maintained sufficiently large testing programs to satisfy the law's requirements. Table 1 shows the number of additional tests needed to comply with the law varied from state to state as reported by the Government Accounting Office (GAO) report.
Table 1: Number of Tests States Needed to Add to State Testing Programs to Comply with Title I
Number of Tests Needed Number of States
13 or more 10
Source: Government Accounting Office. (2003, May). Characteristics of tests will influence expenses; information sharing may help states realize efficiencies (GAO-03-389). Washington, DC: Author Note: Presence of the District of Columbia and Puerto Rico brings total to 52
The GAO estimated that if states used only multiple-choice questions, they would spend $1.9 billion over a six-year period (from 2002 to 2008) to develop, score, and report results. If they used all open-ended questions, they would spend $5.3 billion. Testing with the then-current mix of multiple-choice and open-ended questions would cost $3.9 billion. NCLB would provide sufficient funds to cover the costs of the multiple-choice-only option, but not the other two. One study from Accountability Works argued that funds for testing would be sufficient, but many dismissed the study's assumptions as unreasonable. Note that the projections are for meeting the Title I requirements. The number of Title I schools varies a great deal from district to district. If districts test all schools and not just Title I schools, the cost of testing would rise substantially, even using only multiple-choice tests.
No doubt the projections from both the GAO and Accountability Works greatly underestimated how much money states would actually spend over the period. They estimated only compliance costs, not performance costs. That is, they did not take into account what expenditures would be required to bring all children to a level near 100 percent proficiency. The National Council of State Legislatures concluded that at best, the federal funding would come close to covering compliance costs, but not begin to touch the far more expensive performance costs.
The projections did not take into account the extensive purchase of "test prep" materials. In addition, at the time the reports were published (early 2003 for the GAO study, early 2002 for that from Accountability Works), the use of "formative evaluation" had not taken hold the way it has now. Formative evaluation uses tests to diagnose particular problems a student is having, or to measure progress on the objectives that will be covered by the "big" test used for NCLB. It is not clear that the tests now being offered as "formative" differ in any meaningful way from the "summative" tests that are used to determine if the school has made AYP except that it is often easier to get individual student data from the formative assessments. In any case, ETS' John Oswald said, "The formative-assessment market is a big one, and it's growing like crazy, and it's accompanied by a lot of professional development to help teachers use those."
In late May 2005, two of the largest players on the testing scene, Harcourt Assessment and McGraw-Hill, rolled out on-line testing systems that make extensive use of so-called formative testing. The Harcourt system has two components, "periodic assessments called Class Links that are guided by each state's academic content standards, and annual tests called Class Views that are guided by the blueprints for state accountability tests." The McGraw-Hill system contains "timed assessment of weekly reading passages to help diagnose students' overall reading ability, fluency, decoding skills and comprehension skills." McGraw Hill's system also contains a weekly assessment for language arts.
Eduventures, a Boston-based education industry, marketing, and research firm, projected that annual industry revenues from state assessments would grow from $572 million in 2003 to $810 million in 2006. The projections for this period are linear. If one assumes the same growth rate for some years not in the Eduventures projection, then revenues for state testing programs come to about $5.4 billion over the same period as the GAO spending projections (2002 to 2008). In 2003, Eduventures put the total spending on K-12 testing, including test prep in 2003, at $1.81 billion with a projected rise to $2.29 billion by 2006. Of the $1.81 billion, Eduventures estimated that $334 million would go to the larger companies' subcontractors.
Eduventures contends that nine companies currently account for approximately 87 percent of the market:
Harcourt Assessment is linked to the various Harcourt publishing houses and all are part of the Reed Elsevier empire that earned $5.6 billion in sales in 2001. CTB/McGraw-Hill is linked to the various other McGraw-Hill publishing endeavors. For the nine months ending September 30, 2004, McGraw-Hill enjoyed revenues of $3.84 billion and net profits of $566 million. Pearson has seen rapid growth including the acquisition of the test-scoring firm, NCS Corporation. It recently passed Riverside to become the third largest company in the field.
Riverside's best known product, no doubt, is the Iowa Tests of Basic Skills, but it recently entered the online arena with the purchase of Edusoft which permits teachers to make "mini-tests" that will estimate how close children are to passing the state test. According to Edusoft's website, its data warehouse contains 100,000,000 student scores from 500,000 assessments. The website also states that 300 districts signed up "last year."
A few other players have substantial contracts. Educational Testing Service returned aggressively to the K-12 market. Its state testing contracts garner about $90 million a year with $275 million arriving from California over a five-year period. ETS made its move shortly after abandoning its tradition of having educators run the company and installing a marketing executive as president. Data recognition has been growing and now has about $100 million in annual revenues (not all from state testing), and the American Institutes for Research has entered the field with yearly revenues of about $40 million.
Observers have often noted that the testing industry is virtually unregulated. Said Walt Haney of Boston College, "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." The industry is not accountable for the tests that are used to hold schools accountable.
It is only when someone accidentally discovers an error that quality control procedures and accountability enter the picture. Martin Swaden, a Minnesota lawyer and father of a public school student, threatened to sue the state of Minnesota for refusing to let him look at his daughter's test and answer sheet at the same time. The state yielded. The daughter had failed the state's then-high school exit test and the father reasoned that the best way to help her pass was to see what items had caused her difficulties. What he found, though, was that the answer sheet had been mis-keyed. Some 47,000 Minnesota students received lower scores than they deserved, 8,000 failed when they should have passed--including Swaden's daughter--and 525 seniors had been wrongfully denied diplomas. NCS Corporation, later purchased by Pearson for $2.5 billion, eventually settled for $8 million. This is one example of several instances where a testing company error has punished students.
The probability of mistakes has likely increased since the arrival of NCLB. Test use was already growing and the various testing companies were raiding each other for talented employees. In the opinion of some, the increase in testing has pushed the companies beyond capacity. An April examination of the "employment opportunities" window of the ETS website found 98 professional openings, 65 of which were still available in May. States now insist on obtaining results from scoring-reporting services in time frames "weeks" that were heretofore considered impossible and, indeed, might have been before recent technological advances. States have begun to build substantial penalty clauses into their contracts covering not only errors but specific dates by which the companies must have satisfactorily completed specific services.
Gerald W. Bracey, George Mason University
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