Teaching Profession

Strange Bedfellows: Many AFT Members’ Pensions Invested in Pearson

By Stephen Sawchuk — March 21, 2016 2 min read
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Here comes a truly bizarre story from our little corner of the universe: The American Federation of Teachers and other teachers’ unions, here and abroad, are pressuring Pearson PLC, the oft-villainized global education company, to review how it does business so that it becomes more profitable.

That’s because, as my colleague Michele Molnar reports, the union has 27 affiliates whose pension funds are partly invested in the education behemoth.

Say what?!

The AFT and its affiliates have relentlessly slammed Pearson for making allegedly poor-quality tests, for supposed “gag orders” on teachers, for its role in scoring a performance-based teacher-licensing test, and countless other things. But the AFT and its fellow unions aren’t threatening to divest from the corporation. They are in essence telling Pearson that it needs to make more money, though they don’t want it to be via standardized tests.

Their shareholders’ resolution, to be introduced in April, would require that Pearson’s board of directors to “immediately conduct a thorough business strategy review of Pearson PLC, including education commercialization and its support of high-stakes testing and low-fee private schools and to report to shareholders within six months.”

The National Education Association is joining the fight, although it isn’t clear how many of its members’ pension investments include Pearson holdings.

Unions typically don’t themselves make pension-investment decisions—that’s done by the boards that oversee the pension systems. And it’s also not clear whether the pension holdings by AFT and its fellow unions, which amount in total to some 193,000 shares, are directly invested in Pearson or whether they’re part of a larger index of funds, as is so often the case.

Still, union members have some say: Three-quarters of the board of trustees of the Chicago Teachers Pension Fund are current or former educators who are in essence approving the pension fund’s contribution decisions. (The Chicago Teachers Union, long a critic of “corporatization” in education, has been one of the primary drivers behind the new shareholders’ resolution.)

The unions argue that these shares give AFT a voice, and that the union is exercising it to encourage Pearson to focus less on testing and engage in more kinds of other activities. Pearson, for its part, says it’s already doing business differently. “We are refocusing our business on fewer, bigger, global opportunities: creating a single global product organization for our courseware business; integrating our assessment operations in North America; focusing on digital services in a scalable and profitable way; and making productivity improvements across our technology, HR and finance functions,” it said in a statement.

It’s curious why the unions have chosen to publicize this squabble. They seem to be banking on the idea that it will reduce Pearson’s role in the testing market. But the situation also underscores that, for all the talk of privatization and corporate influences in education, teachers’ unions are more closely tied to businesses and Wall Street matters that they sometimes like to admit.

A version of this news article first appeared in the Teacher Beat blog.