Waivers allowing all states to ignore federal requirements for testing in grades 3-8 and once in high school have been granted by the U.S. Department of Education due to the school closures from COVID-19.

Now, states, and the assessment contractors that work with them, are sorting through that policy change — which also covers the District of Columbia, Puerto Rico and the Bureau of Indian Education — and what it means for the multimillion-dollar agreements they have in place for testing work.

As schools across the country have moved to remote-learning, and reset their academic expectations for the year, many states have called off or suspended plans for end-of-year assessments they had scheduled for this spring. That has left some states wondering why they should have to pay for assessments that aren’t going to happen.

Scott Marion, the executive director of the Center for Assessment, co-authored an online post recently about how vendors and state officials can sort through the new landscape together. Marion was joined in writing the piece by Andy Middlestead, the state of Michigan’s assessment and accountability director.

EdWeek Market Brief asked Marion to explain some of the behind-the-scenes negotiation that goes on between states and vendors in this environment, since his organization represents more than 35 states in their pursuit of a fair resolution.

States are attempting to recoup some of what they are expected to pay vendors for end-of-year assessments, since those tests were not administered. What can you share about that?

They’re all negotiating. Some are approaching it more collaboratively than others. In other cases, the companies say, “Here’s what we could give you back,” and it’s a pittance to the state.

To what extent are testing companies in a strong position, when they approach negotiations that way?

I get both sides of this. I understand these companies are risking laying off people, too.

To be fair, if you order a nice meal in a restaurant and five minutes before dinner was to be delivered you get a call that you have to leave due to an emergency, you would expect to pay a chunk, and have the rest of the bill forgiven.

What’s a real example that you know of from your conversations with states?

One provider was talking about giving back one-sixth of the cost to the state. It ended up being a total of 5 percent. Now, how does this state assessment director go to her state board and say, “We only partially tested 10 percent of our kids. The rest got nothing. We have no scores.” Put yourself in her position.

Testing also requires significant preparation from companies that take place well before the actual exams are given in May. How does that play into the discussions between public officials and vendors that you’re hearing about?

Things like item development, in most cases, have to be done before January. Form development—even planning and designing for the reports—is done well before testing. But there’s going to be no psychometric analyses that have to happen. No QC [quality control]  or QA [quality assurance] that goes along with that. No field test meetings.

 How do you gauge the magnitude of such changes?

One thing I’ve said over the years—and a chief from a state I work with mentioned this recently too — If you ask to add X, Y, and Z into our contract—that’s $1 million. But take X, Y, and Z out of the contract and it’s $10,000. The asymmetry of putting stuff into an assessment contract vs. taking things out is mind-boggling.

It’s frustrating as a state person knowing your budget is going to get cut—and you could save a fair amount, which could mean [saving] positions. You also don’t want to put the companies out of business, because they’re needed.

If you ask any state person, they’ll tell you about this. Vendors will have a reason why, but I’ve never been satisfied with the response. I can understand some of it, but not all of it.

You paint a bleak picture of the negotiations. Are most situations like this?

There are vendors who are playing fair and recognizing that it’s the long game, because they’ve got to keep in mind these contracts come up for renewal or rebid every four or five years. You don’t have to be an elephant to remember four years ago. As a vendor, it’s in your long-term interest to treat states fairly.

We already have a shortage of vendors. If we get down to two, states will have a tough time getting a good price for their assessment system.

What do you think this means for the assessment market in the future?

In all likelihood—even with schools not starting up fully next year—people are still going to want some sort of assessment next year. This field could bounce back faster.

In general, how much do the millions of dollars end-of-year assessment contracts represent typically generate as a profit for businesses?

The reality is that everybody looks at the tens of millions of dollars states pay for these assessment systems and they think everyone’s making money hand over fist. The margins are much thinner than people would expect.

If everything’s going great, you’re doing fine. But, if you have a testing debacle and have to pay a penalty to a state, or if you don’t get some contracts you were expecting, those profits go fast in the state market that expects customization.

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See also:

• It’s Official: All States Have Been Excused from Statewide Testing This Year
• A Future Without Summative State Tests? NWEA Touts New Product
• HMH, Pearson Release Details About Impact of School Disruption from COVID-19 on Their Businesses