Iowa City's ACT Marks 50 Years

ACT Anniversary is August 21

by Gigi Wood Corridor Business Journal

It’s based on a simple premise.

Although some think of the ACT test, the exam most high school upperclassmen take when applying to colleges, as an aptitude test, a company official said it should be considered a measurement of readiness for higher education.

“From our view, success is tied to many things, but probably the most prominent of them is whether students have the skills they need to be successful,” said Dick Ferguson, CEO of ACT, who joined the company in 1972. “We developed this system where millions of students each year take these tests and parents and teachers buy into it for its planfulness, rather than there’s this point in time where you measure someone and say ‘you’re good to go’ or ‘you’re cast away and we’re not going to help you.’”

ACT will celebrate its 50th anniversary on Aug. 21 at the Old Capitol on the University of Iowa campus. The company started from an idea by UI education professor Everett Franklin Lindquist during the 1950s to create a college entrance exam that was better than the Scholastic Aptitude Test, or SAT. It was first administered in 1959.

UI President Sally Mason is expected to attend the anniversary event.

“Our hope is that she will recognize the stepchild that we are and we hope they view that as very positive as well,” Mr. Ferguson said.

Local impact

The UI spinoff grew slowly at first, but for many years has served as an economic engine for the Iowa City area. The company is headquartered here, employs about 1,300 people globally and hires hundreds of part-time test scorers each year.

“We continue to see growth and potentially further growth in the coming year,” Mr. Ferguson said.

ACT’s buildings are assessed at more than $44 million and the company pays more than $1.8 million each year in property tax.   

“We’re a not-for-profit, but ACT pays property taxes. We’re close to being the No. 1 largest property taxpayer in Johnson County. We choose to do that as a corporate citizen,” he said.

The company also pays millions of dollars for needy students to take the test each year. ACT will also pay for those students to retake the test once.

“Last year, roughly 400,000 students who took the ACT did so without paying for it because they couldn’t afford it,” he said. “So ACT basically waived the fee. It wasn’t free. It’s an eight-figure cost.”

Locally, ACT contracts with Pearson for services and hires local firms for printing services. Its customer service and distribution facility, the McCarrel Center, 2727 Scott Blvd., is set for another expansion.

“We’ve run out of space. We’re going to increase the number of capabilities that we have there,” he said. “We put a lot of effort into the quality of our space and our buildings. Our view of that is we are in a business where attention to detail is very, very important and we don’t want to have a lot of slippage and mistakes because it will have consequences for people. We put a lot of extra energy in going the extra mile, in doing the right thing. We view our space as indicative of that.”

Nearby, ACT’s new data center has been awarded LEED Platinum-level certification by the U.S. Green Building Council (USGBC). The building is the first publicly announced LEED Platinum certified data center in the nation and the first LEED Platinum certified building of any type in Iowa. Platinum is the highest level of LEED certification.

The company is faring much better than some educational businesses and expects to post $250 million in revenue when its fiscal year ends Aug. 31. Conversely, Buckle Down Publishing, started in Iowa City 30 years ago, closed earlier this year citing declining revenue and shrinking state education budgets.

“(Schools), when they value what it is that you’re doing, they don’t give it up as easily,” Mr. Ferguson said. “So we have the good fortune of not having lost a single contract with any of the states with any of our programs this year. Looking ahead to the coming year, we don’t see any losses. In fact, we see continued growth.”

He credited the assessments’ basis in “real life consequences” for that success. If people lack the skills in those measured areas, it indicates they aren’t ready for college.

“People in the educational sector know that and understand that and that becomes a very significant factor if you’re being held accountable as a school for improving,” he said.

Although ACT staffs testing centers in 60 countries, it considers its Iowa City campus its international headquarters and plans to stay.

“We’ll continue to grow here, the question will be do we also grow in other places,” Mr. Ferguson said.

ACT will host its annual meeting in October at the Coralville Marriott. It will also mark its anniversary with the publication of the company’s first history book, due out in December.

Company evolution

When Mr. Ferguson joined the company in the early 1970s, it had a small staff that farmed out much of its work.

“That was when ACT was pretty much just the college admission test and even then we outsourced most of the work,” he said. “So it was a very small staff all housed in the Lindquist Building (101 ACT Dr.).”

He was charged with expanding the company.

“My first responsibility was to create a test-development part within ACT because we paid a Chicago-based firm to develop the college admission test,” he said. “So that was a step which at the time was a very good one for the organization because then it made it possible for us to expand our mission really well beyond that high school/college transition.”

ACT began creating tests for other grades to measure students’ achievement levels in order to catch gaps early on. That growth came from a concern about how to evolve the organization away from its college-admissions focus.

“Our orientation was really rooted in a different philosophy, which was provide information to individuals, to students, parents, school people regarding what students need to know and then establish whether they are learning the things they need to know, and if they’re not, let’s find out why and do what we can to help them get the skills,” he said.

Adding tests at the eighth and 10th grade levels transformed the company. To produce effective tests, ACT gathers data from colleges and universities across the country to determine what level of knowledge those institutions require of incoming freshman.

“We got away from this last-ditch moment where right before college all we could tell them is, ‘Sorry you’re not ready,’” Mr. Ferguson said. “At ACT our assessments are what we refer to as achievement measures, so we don’t measure aptitude, it’s not a hidden innate ability people have. We measure those things that people can learn… It’s a simple premise but it’s one that seems to be lost on a lot of people.”

That philosophy carries over into its workforce development division. ACT’s WorkKeys and National Career Readiness Certificate are two programs the company offers to employers and job seekers to measure skills needed within the workforce. The division, started in the early 1990s, now accounts for $40 million to $50 million of ACT’s revenue.

“We’ve seen more and more young people not taking the math and science courses and so forth in their K-12 experience, therefore not going into many of the fields where we have great needs from a workforce point of view,” Mr. Ferguson said. “So we get into this whole realm of students not doing things that we know eventually will be important to the options they have later, so we don’t see people graduating in many of these fields.”

As it does with schools, ACT collects data from employers nationwide to determine what skills are needed in various jobs. The company has profiled the skills needed for 15,000 jobs.

“We know more about what the jobs of the nation require and the foundational skills than our U.S. Department of Labor does by far because we’ve got it all documented,” he said. “We’re working literally with employers all over the nation and have gone into their companies and into their plants and into their workspaces and spent an enormous amount of time with the systematic approach we have, profiling all of their jobs.”

ACT has been part of policy discussions on the national level on improving education and workforce skills.

“ACT is an assessment organization and we measure things other than just skills, we measure interest and values and a whole host of personal skills, we do a lot of things here,” Mr. Ferguson said. “But it’s not just about the test. It’s what you do with the information. More recently, one of the things that we have concluded is that we can get good information into the schools, but we have to have teachers and administrators understand how to use it.”

The company is expanding internationally, and is offering a number of services to students and workers in other countries. Students can enroll in a year-long program that prepares them for attending college in the United States. More colleges in other nations are adding the ACT test to admission requirements, as well.

In Madrid, Spain, ACT operates its English WorkKeys business, a program that assesses the English reading, writing, listening and speaking skills of workers.

“We come up with a diagnosis of your speaking levels and can teach the skills that are lacking,” he said.

Because ACT is a nonprofit organization, it can funnel its revenue back into its business instead of distributing it to shareholders. That allows the company to continue its shift toward workforce readiness.

“We want young people to enjoy a better lifestyle than we as their parents have done,” Mr. Ferguson said. “That becomes increasingly difficult in a world in which maybe we’re not keeping up in the workplace or the educational environment. It’s not a zero-sum game; there are a lot of people who are doing the right things, doing all of the work. It just may be that we’re not at the levels we need to be.”