McGraw-Hill Education Sells ‘Key Assets’ of Testing Business to DRC

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One of the biggest and best-known players in assessment industry, McGraw-Hill Education CTB, is selling off a big chunk of its testing business to Data Recognition Corporation, in a recasting of the landscape of companies that states and districts count on to deliver exams.

A McGraw-Hill Education official told Education Week that the deal will allow the company to concentrate on “products that focus on teaching and learning” rather than the summative-assessment market.

Those products include the development of instructional content—increasingly, digital content—curriculum, formative assessment, and tools and strategies focused on “personalized and adaptive” learning, said Catherine Mathis, a spokeswoman for McGraw-Hill Education, in an interview.

Both companies have been among those bidding for big-money state contracts over the past few years, as states rolled out plans to give new exams aligned with the Common Core State Standards.

The two vendors have collaborated on some of that testing business, and they discovered that they “worked well together,” which created momentum for the deal, said Sandy Wiese, the senior vice-president for government affairs and business development for DRC, based in Maple Grove, Minn.

DRC will acquire “key assets” of McGraw-Hill Education’s CTB assessment business, the organizations said. Those assets include McGraw-Hill’s existing state testing contracts, as well as a lineup of other assessment products, including TerraNova, LAS Links, and the Test Assessing Secondary Completion, or TASC, a high school equivalency exam, Wiese told Education Week.

“Our mission at McGraw-Hill Education is to improve educational outcomes, and we feel that we’re better positioned to accomplish this by focusing on supporting teaching and learning rather than the summative testing market,” David Levin, the president and chief executive officer of McGraw-Hill Education, said in a statement.

“We value the contribution that CTB has made to education, and we are pleased for the business to find such an excellent home at DRC.”

Officials from both companies said they believe both companies would benefit from assets the other brings to the fold—specifically citing DRC’s expertise in the technology needed to deliver online assessments.

Wiese said that DRC will be absorbing many of McGraw-Hill Education’s testing staff members—a “great group,” who will help “strengthen what we’re already doing.”

Not all of McGraw-Hill Education’s employees, however, will have a place in the new arrangement. Thirty-three of McGraw-Hill Education’s testing staff will be laid off in the initial period following the acquisition, and 78 others will lose their jobs in the 18-month period that follows, Mathis said. DRC has about full-time 550 employees.

Before the deal, DRC held 13 contracts for state testing, the organization said.

McGraw-Hill Education has 10 contracts for summative testing in eight states, along with one contract with a consortium, arrangements that DRC will be taking over, Mathis said. Those changes will need some measure of approval from individual states, both companies said.

CTB was acquired by McGraw-Hill in 1965. Collectively, CTB and McGraw Hill have been among the most recognizable names in the testing industry for decades.

McGraw-Hill Education CTB has aggressively pursued state contracts as recently as the past several months, losing out to ETS for a statewide testing deal in California.

Like many other big testing vendors, the company has also been blamed for testing delays that enraged teachers and policymakers in some states. But Mathis said those setbacks were not what led to the company’s shift away from summative-assessment work.

“The focus was really on doing what we do best,” Mathis said. “This was a strategic decision.”

Scott Marion, the associate director of the National Center for the Improvement of Educational Assessment, said McGraw-Hill Education’s decision was in one sense not surprising. It was known in industry circles that the company had recently lost some business and staff expertise in summative-testing work.

Marion said that criticism directed at McGraw-Hill Education following online testing problems in Oklahoma, Indiana, and Georgia almost certainly hurt the company, as it would any testing vendor. “I can’t imagine that it didn’t,” he said. “People had to be looking at that very carefully.”

But having McGraw-Hill Education exit the summative testing market wasn’t necessarily a good thing for consumers, he added. It leaves states, and ultimately schools and students, with one less vendor bidding for contracts, which will reduce competition among companies that promise to deliver high-quality assessments and keep costs in check, said Marion, whose Dover, N.H.-based organization consults states and districts on testing.

The decision by McGraw-Hill Education also signals vendors’ growing interest in non-summative testing work, including formative assessment, and products and services focused on the promise of enhancing “personalized learning,” Marion suggested.

Companies are always trying to gauge “where the market goes next,” he said. And the non-summative work is “the next frontier.”

UPDATE (July 6): This post has been updated with new information on the size of McGraw-Hill Education’s testing portfolio, provided by the company, and later, with comments from Scott Marion.

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