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Testing companies score big profits
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Thousands of students all over Minnesota including kids at Jackson Preparatory Magnet school in St. Paul are taking state and federal mandated tests (MPR photo/Dan Olson)
Passage by Congress three years ago of the No Child Left Behind law has been nothing short of a windfall for testing companies in this country. This is the peak of testing season. All across Minnesota students are getting ready to take tests required by state and federal mandates. That means more business for the companies that create, publish and score the tests.

St. Paul, Minn. — Testing company founder and president John Adams is smiling, as well he should.

"We said we wanted to be a $25 million company in five years. We wanted to be a $50 million dollar company in 10 years. So far we are right on target to hit the five year forecast," he says.

John Adams and his fellow investors took a risk four years ago when they created Questar Educational Services, and the risk is paying off.

The Apple Valley-based test publishing company saw a market. Even before No Child Left Behind, states all around the country began giving their public school students more tests to measure performance.

Then, the year after Adams founded Questar, Congress passed NCLB. The federal law mandates a new batch of tests for elementary and high school students. Some of the tests are already in place. More are on the way.

The result, Adams says, is a brisk demand and bright outlook for the products his and the other testing companies in this country sell.

"That just really added more fuel to the fire and accelerated the opportunities that were out there," he says.

Questar, in partnership with two other companies, Ithaca, Ill.-based Riverside Publishing and Pacific Metrics of Monterey, Calif. won a big testing contract with Minnesota worth $57 million over the next five years.

Questar is one of 17 companies in this country that creates, prints and scores tests. The companies sell a range of products from the basic skills tests to college entrance and state bar exams. By one estimate they do about $2.2 billion of business a year.

There's always been a measure of profit in the business but nothing like the money being made these days.

Officials for the trade group which represents the testing companies declined to be interviewed about the growth of the business.

J. Mark Jackson, the senior analyst for Boston-based Eduventures, a company which follows the testing business, says the growth in public school testing requirements makes the testing business very profitable.

"We've seen margins in excess, gross margins in excess of 80 percent which are very attractive numbers," he says.

A decade ago elementary school students took a basic skills test once a year and high schoolers took an aptitude or achievement test or two.

This year about half of Minnesota's 840,000 elementary and high school students are taking tests required by their districts, by the state and by the federal government. The tests measure reading, math and science skills. The federally required tests are being given to students in grades three, give, seven, 10 and 11. Next year students in grades four, six and eight will be added.

The tests required by the state and federal government this year cost Minnesota's districts $18 million in addition to what they were already spending.

Education officials say that will grow to $25 million next year with the addition of new tests.

Who pays? Taxpayers obviously.

The NCLB act supplies states with a portion but not all of the money needed to cover costs of the federally mandated tests.

Three years from now state officials estimate Minnesota taxpayers will spend $39 million to cover the unfunded portion of federal testing requirements.

Could the state and school districts save money by creating and publishing their own tests and by having the state's thousands of public school employees administer and correct them?

Minnesota Department of Education testing director Tim Vansickle says the answer is no and the reason is volume. He says only the testing companies have the capital to hire the hundreds of seasonal workers for scoring and the muscle to handle the weight of all the other testing responsibilities.

"We're talking millions of sheets of paper to make test booklets. We're talking of millions of sheets of paper to send reports back (and) electronic infrastructure to house these things, handscorers, people who read the constructed response item," he says.

The cost of buying all the new tests can be measured. But there are big hidden costs for districts that are just beginning to be calculated.

First, there's time.

Many Minnesota school districts now have two testing seasons. Districts typically give their own tests in the fall and the state and federally required tests later.

White Bear Lake schools superintendent Ted Blaesing says the level of testing in his district has more than quadrupled since he came on the job just over a decade ago.

He says the district spends $100,000 a year on its own tests to measure student progress. Blaesing says that's a fraction of the district's cost for all the new testing requirements.

"I have no idea of how many times to multiply that but it would be significantly higher," he says.

Could money be saved if districts drop the tests they give?

Blaesing says the district's tests measure where students need help, and they get results much faster, often within 24 hours.

He says it takes one to two months to get results from state and federal mandated tests.

Blaesing says he and the school board will meet soon to estimate the indirect costs of new state and federal testing requirements.

The problem is where to begin.

Do districts, for example, include as a cost what happens in a school during test days? Blaesing says, "When test days approach it literally takes over an entire office in a school."

A major hidden expense, he says, is training the teachers how to give the tests. The companies don't do that.

Blaesing says his principals tell him it now takes 100 hours a school year, about or about two and a half weeks, to train staff.

"(In)some grade levels there are two different testing companies involved so they have different protocols depending upon their specific tests. So you have to prepare the teachers on what that protocol might be, (we) can't leave it to chance because it's too high stakes," he says.

All the new testing requirements and those on the way are just business as usual for many students.

Robbinsdale Cooper High School 10th grader Monisha Dillard simply goes with the flow.

"We're just used to taking tests so it's just something normal, another test day," she says.

However many students and educators wonder if the tests are getting in the way of education.

Sarah Hutson, also a 10th grader at Robbinsdale Cooper, says test preparation is time consuming, and she questions the value of the information gathered.

"Teachers have to catch up with classes and everything, and sometimes you don't even know what it's for like I say and just seems kind of pointless," she says.

However, for the federally mandated tests there's a very sharp point. Under the NCLB act all students must meet proficiency levels in reading and math by 2014.

The law's defenders say the beneficiaries will be the students whose reading, math and science skills have been brought up to a passing level.

The other beneficiaries are the companies reaping profits from the fast growing testing business.