California Settles with Online K12 Inc. for $168.5 Million

California Attorney General Kamala Harris reached a settlement of $168.6 million with mega-virtual charter K12 Inc. This settlement reflects the good investigative reporting of Jessica Calefati of the San Jose Mercury News, whose investigative reporting led to Harris’ review of K12’s finances and practices.

There are two more investigations underway: one by the California State Department of Education and the other by the State Controller. Now that virtual charters have been discredited by studies and thrown under the bus by the rest of the charter industry, this aspect of the industry may finally be on the skids.

“California Attorney General Kamala Harris announced Friday the state Department of Justice has reached a $168.5 million settlement with for-profit online charter school operator K12 Inc. over an array of alleged violations of false claims, false advertising and unfair competition laws.

“The settlement comes almost three months after the Bay Area News Group published a two-part investigative series on the publicly-traded Virginia company, which runs a network of profitable but low-performing online charter schools serving about 15,000 students across the state.

“Harris’ office found that K12 and the “virtual” academies it operates across the state used deceptive advertising to mislead parents about students’ academic progress, parent satisfaction and their graduates’ eligibility for University of California and California State University admission.

“The Attorney General’s office also found that K12 and its affiliated schools collected more state funding from the California Department of Education than they were entitled to by submitting inflated student attendance data and that the company improperly coerced the non-profit schools it operates to sign unfavorable contracts that put them in a deep financial hole.”

Politico reports that K12 Inc. disagrees with the characterization of the settlement:

– Speaking of charter schools, California Attorney General Kamala Harris said Friday that virtual charter school operator K12 Inc. will pay $168.5 million to settle [ http://politico.pro/29NP6eM] alleged violations of the state’s false claims, false advertising and unfair competition laws: http://politico.pro/29nJ0Nj . But K12 pushed back on the settlement amount – preferring not to include $160 million in financial relief that Harris’ office says will be provided to certain schools that K12 manages. Instead, K12 CEO Stuart Udell said the company will only pay $2.5 million to settle the case, and another $6 million for Harris’ investigative costs. Udell said his company admitted no wrongdoing. “The Attorney General’s claim of $168.5 million in today’s announcement is flat wrong,” Udell said. “Despite our full cooperation throughout the process, the Office of the Attorney General grossly mischaracterized the value of the settlement, just as it did with regard to the issues it investigated.”

– The settlement is another black eye for the virtual charter industry, which just last month had three reform-minded groups calling for it to be improved, or else problems such as low graduation rates will “overshadow the positive impacts this model currently has on some students.” [ http://politi.co/1tyKbnt] More from Kimberly Hefling: http://politico.pro/29ImzF8

via Diane Ravitch’s blog http://ift.tt/29sNUcE

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