Note: K12, inc operates Insight of Ohio, and Ohio Virtual Academy…

William Phillis of the Ohio Coalition for Equity and Adequacy, has been tracking the movement by school districts to bill the state for money lost to charters. Ohio has many charters rated D or F by the state that divert funding from public schools.  Be sure to read the linked letter.

He writes in his latest post:

“Morgan Local School Board invoices the state for $1,138,235 in local funds deducted for charter schools


“School districts continue to invoice the state. The Morgan invoice is for local levy funding only. Superintendent Lori Snyder-Lowe’s thoughtful letter to the state emphasizes the education abuse suffered by charter students residing in the Morgan Local School District. The dismal performance of charters should be of grave concern to all local district officials and educators. Is it not a fiduciary responsibility of local school officials to ensure their students the most efficacious educational opportunity possible?


“State officials have the constitutional responsibility to secure a thorough and efficient system of common schools. The Ohio system was declared unconstitutional four times by the Ohio Supreme Court. Since those declarations, $7 billion has been deducted from school districts for the parasitical charter industry.”

William Phillis

Virtual charter schools in Broward, Palm Beach could close following audits

Broward committee recommends closing virtual charter school

A pair of virtual charter schools in Palm Beach and Broward counties may soon shut down, following complaints of poor student performance, allegations of ethical breaches and hostility between the schools’ governing board and management company

An audit committee for Broward County schools recommended Thursday that the district terminate its contract with Florida Virtual Academy at Broward, which has been operating for three years.

The school’s governing board, the South Florida Virtual Charter School Board, also oversees Florida Virtual Academy at Palm Beach, which has been under review since Octoberby the Palm Beach County School District’s Inspector General. Together they serve about 350 students.

The charter schools are not affiliated with Florida Virtual School, the longtime state-run online education program.

“Our intent is to move forward with the recommendations and come to some kind of closure process, either voluntary or otherwise,” Broward Schools Superintendent Robert Runcie said.

And indeed, the schools in both counties may close voluntarily, said Philip Morgaman, president and CEO of the South Florida Charter School Board.

“Voluntary dissolution is a viable alternative, and it’s certainly one of the alternatives our board will consider, and it may very well be the most likely,” he said.

Morgaman said he wants to receive the Palm Beach County audit before holding a special board meeting. He said that would likely happen at the end of the school year, so students wouldn’t be displaced mid-term.

The Broward auditfound numerous academic deficiencies at the school. It said the school failed to provide evidence that students were receiving the required instructional time for reading, failed to provide a “clear and comprehensive grading system,” and failed to show it was following state law in regard to serving students with disabilities and limited English skills. The state is also penalizing the school by $200,000 because too many students failed their end-of-course exams.

Both schools received grades of D in 2013-14. The state hasn’t released grades for the 2014-15 school year.

Jeff Kwitowski, a spokesman for management company K12 Inc., which oversaw the school’s academics, declined to comment on the Broward audit or the possibility that the two schools may get shut down. The company also runs online charter schools in six other counties in the state, but they would not be affected by the actions of the South Florida board, Kwitowski said.

Problems involving the two schools came to light in October after K12 Inc. sent a letter to the Broward and Palm Beach counties’ superintendents accusing Morgaman of violating Florida’s ethics laws.

At issue were a $60,000 check written from the schools’ account to the United Schools Association, a Deerfield Beach-based nonprofit for which Morgaman serves as chairman and CEO, and a $40,000 check paid to Dane G. Taylor, the nonprofit’s chief administrative officer.

The letter prompted investigations from both counties. The Palm Beach County School District’s inspector general is still reviewing it but Broward County auditors agreed the board’s actions violated state statutes.

Morgaman said the United Schools Association served as the pass-through for the $60,000, and that the money actually went to other vendors. He said the board was trying to find consultants to help improve the schools, whose students have performed poorly.

He said the company agreed to repay the $60,000to avoid an appearance of a conflict of interest.

Morgaman said Taylor’s employment with the charter school board was independent of his work with the nonprofit association. Taylor’s work has included radio spots and other aspects of an advertising campaign, communicating with K12 and doing research.

The auditors found the money was paid to Taylor before he provided services, a violation of state rules. or 561-243-6637 or 954-425-1421

K12 Inc. (LRN) Hits New 52-week Low During January 20 Session

Equities Staff
Thursday, 21 January 2016 07:00 (EST)

K12 Inc. (LRN) established a new 52-week low yesterday, and could be a company to watch at the open. After opening at $7.40, K12 Inc. dropped to $7.11 for a new 52-week low. By the closing bell, the company’s stock was at $7.67 a share for a gain of 2.27%.

Falling to a new 52-week low is never fun for company’s shareholder, but, depending on who you ask, it can be either a buy or a sell signal.
Someone bearish on the stock might see it reaching its lowest price in a year as a sign of growing downward momentum and make sure they sell their
shares. Bulls, though, are more likely to see a new 52-week low as the stock hitting its low point and anticipate a bounce in the share price.

However one plays it, it’s often a critical moment for any stock and should be noted by investors.

K12 Inc. saw 85,104 shares of its stock trade hands, that’s out of 38.94 million shares outstand. The stock has an average daily
volume of 211,053 shares. After hitting a new 52-week low, K12 Inc. enters the new trading day with a market cap of 298.67 million, a 50-day SMA of $9.17 and a 200-day SMA of $12.66

K12 Inc. now has a P/E ratio of 57.7.

For a complete fundamental analysis analysis of K12 Inc., check out’s Stock Valuation Analysis report for LRN. To see the latest independent stock recommendations from’s analysts, visit our Research section.

K12 Inc is a technology-based education company. It offers proprietary curriculum, software systems and educational services designed to facilitate individualized learning for students primarily in kindergarten through 12th grade or K-12.

K12 Inc. has 4,800 employees, is led by CEO Nathaniel A. Davis, and makes its home in Herndon, VA.

K12 Inc. is also a component of the Russell 2000 Index, which is generally viewed as the most reliable indicator of the health of the broader small-cap market. Using a rules-based methodology, it creates a simple, unbiased view of how America’s stable of smaller publicly traded companies are performing in the stock markets.

The index consists of the 2,000 smallest companies of the 3,000 largest publicly-traded companies in the country as judged by market cap. It’s constructed by Russell Investments, which also builds and maintains the Russell 3000 (an index consisting of all 3,000 biggest companies by market cap) and the large-cap Russell 1000 (which has the 1,000 largest companies from the Russell 3000).

For more news on the financial markets, go to Also, learn more about our independent proprietary equity research reports and our robust do-it-yourself Stock Valuation Analysis reports in our Research section.

All data provided by QuoteMedia and was accurate as of 4:30PM ET.

The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

Kansas Virtual Academy and Insight School of Kansas Begin 2016-2017 Enrollment Tuition-free online public schools welcome both K-12 and adult students

OLATHE, Kan., Jan. 20, 2016 /PRNewswire-USNewswire/ — Kansas Virtual Academy and Insight School of Kansas, public online schools serving students in grades K–6 and 7–12, respectively, have opened enrollment for fall 2016. As programs of Spring Hill School District, the two online schools are available to any student residing in Kansas and are tuition-free.

“This is our 8th year of providing online learning as an option to Kansas families,” said Cassie Barton, head of school of Kansas Virtual Academy and Insight School of Kansas. “We get students from all walks of life, from those who need more of an academic challenge than they are getting in their current academic setting to those who need an environment with fewer distractions and more individualized support. Online learning can be a great choice for many students, especially when the parents are interested in becoming more involved in their child’s education.”

Both schools give students the opportunity to learn in the ways that are right for them, while covering both core subject areas and electives. Lessons are delivered online using award-winning curriculum and tools provided by K¹².

Kansas Virtual Academy provides an active, supportive community and an opportunity for students to socialize through online clubs and events, as well as monthly face-to-face outings.

Insight School of Kansas offers targeted support for students who have struggled academically, expert programs and assistance in helping students fill in skill gaps and move toward graduation, Honors and Advanced Placement courses for students who are looking to be challenged, and a social and emotional learning program.

Insight School of Kansas also supports  an Adult Learner program, which gives students who have not earned a true high school diploma the chance to do so, no matter their age.  The Adult Learner program is backed by the strong K12 curriculum and high Kansas standards.  Adult learners can call ISKA at 913-592-4600 to take advantage of a new in-year enrollment option that allows them to start school as soon as mid-March.  

Online and in-person information sessions are being scheduled throughout the state. Families and adult students who are interested in enrolling for a September 2016 start should visit or for details.

About Kansas Virtual Academy

Kansas Virtual Academy is a full-time, online public school in Kansas. It is tuition-free for Kansas students in grades K-6. For more information, please visit or call 855-243-1908.

About Insight School of Kansas

Insight School of Kansas is a full-time, online public school in Kansas. It is tuition-free for Kansas students in grades 7-12 and adult learners seeking a high school diploma. For more information, please visit or call 800-260-0438.

About K12 Inc.

K12 Inc. (NYSE: LRN) is leading the transformation to technology-powered individualized learning, which aims to customize instruction to meet each student’s unique capabilities, interests, and needs. As the nation’s leading provider of online education solutions for students in pre-kindergarten through high school, K¹² empowers states, districts, and schools to offer their students the broadest array of options for learning in a flexible, individualized, and innovative way. K¹² provides online curricula, academic services, and learning solutions to public and private schools and districts, traditional classrooms, blended school programs, and directly to families.

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SOURCE Kansas Virtual Academy


K12 Inc. Announces Launch of The Foundation for Blended and Online Learning

K12 Inc. Announces Launch of The Foundation for Blended and Online Learning

PR Newswire

K12 creates an independent charitable educational organization to advance and improve online and blended learning
January 19, 2016: 09:30 AM ET

HERNDON, Va., Jan. 19, 2016 /PRNewswire-USNewswire/ — K12 Inc., America’s leading provider of K-12 online school programs, today announced the creation of The Foundation for Blended and Online Learning – an independent charitable educational organization.

K12 Inc., a company of educators, is leading the transformation to individualized learning as the nation's foremost provider of technology-powered proprietary online solutions for students in pre-kindergarten through high school.

The mission of The Foundation for Blended and Online Learning is to empower students through personalized learning by advancing the availability and quality of blended and online learning opportunities and outcomes. 

The Foundation will be a completely independent organization with its own Board of Directors and staff.

“K12 is proud to launch The Foundation for Blended and Online Learning.  This independent organization will help to improve the national educational landscape for all children and educators,” said K12 Chairman and Chief Executive Officer, Nate Davis, “We are proud to have recruited a dynamic Board of Directors who can utilize their experience to move our shared vision forward.”

The Board of Directors of the Foundation consists of prominent industry leaders and experts.

Kevin Chavous (Chairman)Founding Board Member and Executive Counsel for the American Federation for Children
Robyn BagleyFounder and Principal, Early College High School
Kenneth CampbellFounding Board Member for the Black Alliance for Educational Options
Allison ClevelandExecutive Vice President of School Management and Services, K12 Inc.
Mary GiffordSenior Vice President of Academic Policy and External Relations, K12 Inc.
Linda Lopezformer Arizona State Senator 
Dr. Rod Paigeformer U.S. Secretary of Education
Caroline Vander ArkCOO of Getting Smart

The Foundation will strive to achieve three main goals: to provide post-secondary scholarships to students, to institute a grant program for individuals and organizations making progress in teaching in digital and blended learning, and to bring together key stakeholders on educational advancement through intentional collaboration.

“K12 puts students first and maximizes their potential through the use of innovative, next generation technology.  I can’t think of a better way to give back than to support those that help advance the field of digital and blended learning. We invite others to join us in sponsoring The Foundation to help foster student, teacher, and academic advancements in the world of blended and online education,” said Davis.

Through multi-faceted giving program, The Foundation for Blended and Online Learning seeks to build out scholarship programs to include educational endowments for undergraduate juniors/seniors pursuing teaching degrees, academic achievement tuition scholarships for online and blended students, as well as technology stipends for materials.  Additionally, The Foundation’s grant program will be designed to provide financial support to teachers working in blended and virtual schooling environments or using digital content.  The Foundation will provide grants to educators for professional development, graduate coursework completion, development and replication of best practices for teaching in virtual environments.

“Thanks to K12’s vision and financial generosity, we are excited to launch The Foundation,” said Board Chairman, Kevin Chavous. “Through our work we have an opportunity to shine a new light and illuminate blended and online learning advancements in education.”

For more information or how to become involved with The Foundation for Blended Learning, visit

About K12 Inc.
K12 Inc. (NYSE:  LRN) is driving innovation and advancing the quality of education by delivering state-of-the-art, digital learning platforms and technology to students and school districts across the globe. With nearly a half-billion dollars invested in developing award winning curriculum, K12 serves over 2,000 schools and school districts and has delivered more than four million courses over the past decade. K12 is a company of educators with the nation’s largest network of K-12 online school teachers, providing instruction, academic services, and learning solutions to public schools and districts, traditional classrooms, blended school programs, and directly to families. For more on K12 Inc., visit

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To view the original version on PR Newswire, visit:



K12 Inc. Second Quarter Fiscal 2016 Earnings Conference Call Details

January 14, 2016, 05:19:00 PM EDT

HERNDON, Va., Jan. 14, 2016 (GLOBE NEWSWIRE) — K12 Inc. (NYSE:LRN) announced today it plans to host a conference call to discuss its second quarter fiscal year 2016 financial results during a conference call scheduled for Thursday, January 28, 2016 at 8:30 a.m. eastern time (ET).

A live webcast of the call will be available at To participate in the live call, investors and analysts should dial (877) 407-4019 (domestic) or (201) 689-8337 (international) at 8:15 a.m. (ET). No passcode is required.  Please access the web site at least 15 minutes prior to the start of the call.

A replay of the call will be available starting on January 28, 2016 at 11:00 a.m. ET through February 28, 2016 at 11:00 a.m. ET, at (877) 660-6853 (domestic) or (201) 612-7415 (international) using conference ID 13627926. A webcast replay of the call will be available at for 30 days.

About K12 Inc.

K12 Inc. (NYSE:LRN) is driving innovation and advancing the quality of education by delivering state-of-the-art, digital learning platforms and technology to students and school districts across the globe. K12’s award winning curriculum serves over 2,000 schools and school districts and has delivered more than four million courses over the past decade. K12 is a company of educators with the nation’s largest network of K-12 online school teachers, providing instruction, academic services, and learning solutions to public schools and districts, traditional classrooms, blended school programs, and directly to families. The K12 program is offered through K12 partner public schools in 33 states and the District of Columbia, and through school districts and public and private schools serving students in all 50 states and more than 100 countries.  More information can be found at

K12 Inc.
Investor or Press Contact:
Mike Kraft, 571-353-7778
VP Finance & Corporate Treasurer

Source: K12 Inc.

Craig Barrett Makes $190,000 As a K12 Inc. Board Member


By David Safier

on at 2:30 PM

click to enlarge


Over the years, I’ve written many posts about the shoddy corporate practices and poor student performance at schools run by K12 Inc., the for-profit, publicly traded online education corporation (Its Arizona charter school, Arizona Virtual Academy, has 4,600 students sitting behind their computers at home, if, that is, they actually take the time and effort to log in and do the work). I wrote my most recent post about the corporations’s sinking stock value a few weeks ago. And I’ve written a few times that Arizona’s Craig Barrett sits on K12 Inc.’s Board of Directors. But this is the first time I’ve written about his compensation. For the fiscal year 2015, Barrett received $190,000 from the corporation. Barrett is a very, very busy man with his fingers in a whole lot of pies. You can be certain he didn’t put in 40 hour weeks to earn his Board pay.

Why, you may ask, should we care about Barrett’s involvement in K12 Inc.? The answer is, Barrett is a powerful voice in Arizona education, advocating for what he says are necessary reforms to improve our schools. He’s not shy when it comes to talking about his connections and accomplishments. For instance, he’s happy to announce that he’s President and Chairman of BASIS Schools, Inc., the for-profit Education Management Organization that runs the chain of BASIS schools. But so far as I know, he never talks about his connection to the shoddy, failing K12 Inc. I’ve looked hard on the internet, read his op eds, listened to some of his interviews and speeches. When it comes to K12 Inc. — nothing but crickets. A man as proud of his accomplishments as Barrett should be more open about this aspect of his educational life, and more forthcoming about what he, as a board member, is doing to improve the corporate and educational culture at K12 Inc.

Craig Barrett’s list of connections and accomplishments is vast. He’s the retired CEO of Intel, and he’s worth hundreds of millions of dollars. As I mentioned earlier, he’s President and Chairman of BASIS Schools Inc. He’s also a board member of Achieve, Inc., which was instrumental in creating and promoting the Common Core standards, as well as an influential member of any number of education-related organizations. He travels around the world promoting STEM education (Science, Technology, Engineering, Mathematics), and he’s very outspoken about what he thinks is wrong with Arizona education and what should be done to fix it. His ideas fall squarely in the privatization/”education reform” camp. During Jan Brewer’s governorship, he chaired her Arizona Ready Education Council which worked to steer the state’s education priorities, most of which are being carried forward by Gov. Ducey’s Classrooms First Initiative Council. It’s fair to say he’s the most powerful unelected individual in Arizona education.

So if he sees himself a good-education advocate, especially an outspoken one who touts the successes of BASIS schools as a model for other schools, he should feel a duty to explain the way his $190,000 a year position on the K12 Inc. board is part of his commitment to improving education in Arizona and nationwide. Maybe there’s more value in the corporation’s online school model, which has been so regularly and roundly criticized, even from people within the “education reform” movement, than we know. Maybe he’s working inside the corporation to improve its operations and education delivery system. A man as well spoken as Barrett, a man who writes as well as Barrett, a man who can command a public forum as easily as Barrett, should really make an effort to explain this questionable aspect of his educational involvement.

BASIS BOARD MEMBER Bonus News:  How much does Craig Barrett make as President and Chairman of BASIS Schools Inc.? I don’t know, because it isn’t a matter of public record. BASIS Schools Inc. is a for-profit Education Management Organization, so, though nearly all of its income is taxpayer money which the state gives to its charter schools, once the money that flows from the state budget to charter schools is sent upstairs and hidden behind a for-profit pay wall, it disappears from view. We don’t know if Barrett and other board members are paid, and if so, how much. We have no idea how much money BASIS founders Michael and Olga Block make. We used to know back when BASIS was entirely nonprofit and the Blocks had to report their salaries on the nonprofit’s publicly available 990 tax forms, but no more.

But it’s interesting to see who sits on the board of BASIS Schools, Inc. Of course, there’s Craig Barrett, a man whose political and educational priorities lean conservative. And there’s co-founder Michael Block, who has worked as a consultant for ALEC (the American Legislative Exchange Council), an organization whose main mission is to create conservative legislation which can become state law across the country. Also sitting on the seven member board is Clint Bolick, whom Gov. Ducey just appointed to the Arizona Supreme Court. Bolick is currently the head of the Goldwater Institute’s constitutional litigation team. Another board member, Terry Sarvas, is a member of the Goldwater Institute, and yet another, Steve Twist, is a founder of the Goldwater Institute.

BASIS’s conservative credentials run wide and deep — which is fine, of course, perfectly acceptable, but well worth noting.

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K12 Inc. Tries to Pivot from Virtual School Failures to Profit from “Non-Managed” Schools

By Dustin Beilke on January 7, 2016 – 9:01am



If you were a public school and Wall Street didn’t like you that might not seem like such a big deal. What do financiers know about educating children? It’s a big deal, however, if you are K12, Inc., and enticing investors to buy into your low-cost, high yield “cyber school” idea is key to your bottom line.

At K12, Inc.’s stockholder meeting in December, its own investors criticized the schools’ lamentable academic performance and voted down its executives’ proposed salary increases. This is just the latest piece of bad news, which has been coming in rafts for K12 since 2013.

As K12’s executives were being rebuffed by stockholders inside the law offices of Latham & Watkins, in Washington, D.C., outside K12 was picketed by members of the California Teachers Association for more or less the same list of educational shortcomings, as Diane Ravitch noted.

Some editorial boards crow when they receive criticism from two opposing sides of a controversial issue. “If both sides are unhappy we must be doing something right” is the familiar refrain, as if there are only ever two sides to an issue or the sides have equal merit.

In the case of K12, however, it is hard not to wonder how much longer the company can withstand this loud unanimity of animus–even a firm Wall Street insiders like convicted fraudster Michael Milken helped launch, as the Center for Media and Democracy (CMD) detailed in “From Junk Bonds to Junk Schools: Cyber Schools Fleece Taxpayers with Phantom Students and Failing Grades.”

No major supporters have yet publicly called for pulling the plug, but anti-public education zealots like the billionaire Walton family and the Koch brothers have plenty of other places to invest in to try to bring down “government schools.”

Big, Big Payouts to Execs at Taxpayer Expense

In its recommendation that shareholders vote against the pay proposal, the advisory firm Glass Lewis & Co. said K12 exemplifies a “substantial disconnect between compensation and performance results.” Glass Lewis gave the company an “F” for how it paid its executives compared to peers.

In 2015, K12 CEO Nathaniel Davis was making $5.3 million and CFO James Rhyu was making $3.6 million. Their base salaries were $700,000 and 478,500, respectively, which were dwarfed by additional pay and stock for their “performance.” (See more details on their total compensation in the pdf uploaded below.)

In all, K12’s five highest paid executives received a total of more than $12 million in compensation last year. That’s one of the reasons CMD has called K12 Inc.’s former CEO, Ron Packard, the highest paid elementary and secondary school educator in the nation.

Nearly 90% of K12’s revenues–and thus its huge pay for executives–come from Americans’ state or federal tax dollars.

K12 Inc. also pays each member of its Board of Directors between $155,000 and $216,000 annually for a few hours of work each year—far more than local school board members make for much more time spent in general. (See uploaded K12 proxy filings below for the details.)

While K12’s promoters love to mention that it is a publicly traded company, it is also trading at its lowest stock price since 2010, down 75 percent from its September 2013 peak.

Meanwhile, a new report from Stanford University’s Center for Research of Education Outcomes (CREDO) found that online charters do a very poor job of educating children. In general, students in online charters lose 42 days of reading in a year, and 180 days of instruction in math. And there are only 180 days of instruction in most public school years.

Enrollment has also dropped almost 5 percent from its peak. No less a business authority than Bloomberg Business investigative reporter John Hechinger presented grim prospects for K12 as of late 2014, and no one has revised them upward.

Millions in K12 Ads at Taxpayer Expense Too

This decrease in business has come despite massive advertising and marketing expenditures by the virtual schools industry. K12 has spent untold millions in public funds on ads—a luxury budget item that traditional public schools are not permitted even when competing with K12 for students.

It spent at least $20 million on ads in 2012 alone, but it has not publicly disclosed ad spending in recent years even as its ads have become more ubiquitous in markets like Wisconsin and Arizona, for example. K12 does not disclose its ad budget in its public annual report.

Plus Taxpayer Money Helps K12 Pay to Play with ALEC Politicians

K12 also spends taxpayer money lobbying state and federal officials. It recently got a seat, for example, on the corporate board of the American Legislative Exchange Council (ALEC), where for years it has also paid for a seat and vote on ALEC’s “Education and Workforce Development” Task Force, which advances a “cash for kids” lobbying agenda.

ALEC corporations spend tens of thousands of dollars each year for such access to lawmakers, and K12 has also paid many thousands of dollars to underwrite some of ALEC’s docket of events for legislators and lobbyists.

Through the ALEC Task Force, K12 has actually had an equal vote with state legislators on so-called “model” bills to divert taxpayer funds away from traditional public schools toward the objectives of ALEC’s private sector funders, to help their bottom-lines and/or legislative agenda.

ALEC’s “Virtual Public Schools Act,” for example, even allows virtual schools to be paid the same amount per pupil as traditional public schools even though operations like K12 have no bricks and mortar school house or desks or air-conditioning or gyms, etc., to maintain.

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As CMD’s SourceWatch has documented:

“In 2004 when the ‘model’ bill was drafted and approved, both K12 Inc. and Connections Academy were part of the ‘School Choice Subcommittee of ALEC’s Education Task Force, according to an archived version of ALEC’s website from February 2005. The subcommittee recommended six bills for adoption, including the ‘Virtual Public Schools Act.’ According to ALEC, the bill was drafted by Bryan Flood of K12 along with Mickey Revenaugh of Connections Academy, then-Colorado Representative Don Lee (now a lobbyist for K12, see [below]), ‘and the rest of the Subcommittee.'” (Connections is now part of Pearson PLC, a British mega-corporation headquartered in London.)

K12’s reps at ALEC Education Task Force meetings have been its Senior VP for Government Affairs (lobbying), Bryan Flood, along with its VP for Government Affairs, Don Lee, and its Senior Director of Government Affairs, Bob Fairbank.

ALEC’s Education Task Force is co-chaired by Utah state Sen. Howard Stephenson (R-11). Through the ALEC corporate bill mill, Stephenson has even done a roadshow with K12’s Don Lee to drive more business to K12 through legislation. Given his advocacy of efforts to divert tax dollars from traditional public schools to charters and virtual schools, some press in Utah have questioned whether Stephenson is a public servant or a lobbyist for outside interests. (There is no way to independently verify whether Stephenson has actually ever invested in K12 or Pearson, or not.)

Notably, Lee and Fairbank are both former Colorado state legislators who took the revolving door out of public service into well-paid gigs, like peddling what K12 is selling to legislatures across the country. And, the head of their lobbying shop, Flood, is the former flack for then-Gov. John Engler of Michigan, who is now pulling down big bucks for sitting on K12’s Board of Directors: $55,000 in cash plus $100,000 in K12 stock for a few hours of his time last year.

Making “Friends” Everywhere K12 Goes….

Utah, Arizona, and Wisconsin are not the only states where K12 is active and facing criticism. The “Ohio Virtual Academy,” for example, which accounted for 10 percent of K12’s revenue in 2014, received failing grades on a state report card for student test-score progress and graduation rates. A state analysis found that only 37 percent of K12’s Ohio ninth graders earned diplomas within four years.

K12’s operations in California have produced similar results, as In the Public Interest (ITPI) has documented, despite K12’s efforts to blame the state. (CMD has partnered with ITPI on research previously.)

Several online charters have cancelled their contracts with K12, and in Tennessee, education commissioner Kevin Huffman called for shuttering the Tennessee Virtual Academy because it had test results “in the bottom of the bottom tier” and is an “abject failure.”

Altogether, K12 has lost management contracts or been threatened with school shutdowns in five states.

The National Collegiate Athletic Association (NCAA) also ruled last April that prospective students from 24 K12 Inc. high schools can no longer count credits toward athletic scholarships.

A pro-union decision by the California Public Employment Relations Board no doubt came as more bad news for K12’s brass. The board ruled that the California Teachers Association (CTA) is the exclusive bargaining agent of the more than 750 teachers at the Simi Valley-based California Virtual Academies (CAVA). Teachers have been seeking a stronger voice in improving working conditions and student learning for CAVA’s 15,000 students.

CAVA teachers had been calling for improvements for years. In March 2015 a study of CAVA by ITPI called for better oversight. In June 2015, CTA filed complaints with school districts that authorized CAVA charters throughout California.

K12 Hoping “Non-Managed” Schools Will Save It?

While no one is publicly calling for K12 to shut down, K12 itself is “diversifying its portfolio” in an apparent effort to ease out of the online charter school business.

K12 has built its brand by operating “managed schools” in which K12 runs and profits from all of the programs at a particular K12 school. In a managed school, the company does all of the teaching, curriculum, assessment for the customers—er, students—who choose it over attending a public school or participating in a traditional home-schooling arrangement.

The new revenue stream K12 is pioneering is in what it is now calling “non-managed schools” in which K12 sells the digital content and platform for a school for some other company or entity to run (and be responsible for the results). Non-managed programs have been growing by leaps and bounds as managed virtual schools have fallen on hard times.

The only problem with this model is that managed schools still bring in much more money than the non-managed kind. Some managed schools, for example, bring in $1,849 per student while non-managed schools bring in only $462 per pupil on average.

But, getting some revenue without being responsible for results may be the way for the future of K12: an analysis of K12 figures comparing September 2015 to the prior year showed that enrollment at “managed” virtual schools was declining 12 percent while it is increasing 34.5 percent at “non-managed” schools.

Non-management could take profiting from taking money out of traditional public schools without real accountability to a new level for K12.

CMD’s Executive Director Lisa Graves contributed research to this report.

Attachment Size
Attachment Size
End of Year 2015 Proxy Statement with Exec Compensation for K12 1.13 MB
Dustin Beilke

Dustin Beilke is a freelance writer from Madison, WI. He has written for a number of publications, including Newsday,, The Nation, The Progressive, In These Times, Mother Jones, The Capital Times, and The Onion.


Maine’s new virtual charter school sees 25% enrollment drop since opening

The Maine Charter School Commission may explore ways to better inform students about what to expect, perhaps with a ‘tryout’ week.

Staff Writer

AUGUSTA — Maine’s newest charter school, Maine Virtual Academy, has seen 25 percent of its student body withdraw from the school since it opened this fall and continues to have a high number of “truants” who are not logging on enough for their lessons, school officials say.

At the 90-day mark for the school year, 76 students in the initial class of 297 had left the school, according to a Dec. 31 report by three members of the Maine Charter School Commission who are assigned to oversee the school.

On Tuesday, commission Chairwoman Shelley Reed said representatives of K12 Inc., the for-profit online education company that was contracted to provide Maine Virtual Academy’s curriculum, told the commission they should expect to see an initial 20 percent to 25 percent withdrawal rate.

But Reed said the commission may explore ways to better inform incoming families about what to expect, to lower the withdrawal rate. Suggestions include requiring students to take a “tryout week” in the school.

“People have to have a general understanding of what to anticipate,” she said, after the commission’s regular monthly meeting at the State House.

“We need to find a better way,” said commission member Jana Lapoint, agreeing that a tryout period is a good idea. “Maybe a better screening job.”

Maine Virtual Academy board member Peter Mills said Tuesday that school representatives explain to prospective students and families what the school will be like, but the school must, by Maine law, accept any applicant. As more successful students return in subsequent years, the withdrawal rate is expected to decline, he said.

Mills said Tuesday that some students left because they weren’t prepared for a virtual school experience, which requires each student to log on from home, be self-directed and work closely with an at-home learning coach, usually a parent or relative. The school, like all charters, has attracted students who are unhappy with their previous schooling, or have had trouble at previous schools, he said.

“We’re dealing with a certain segment of the student population that has apparently got some problems and they have come to us as a last resort …” he said, adding, “I’m deeply concerned about this phenomenon.”

Supporters of virtual schools say they are good for students who may not fit in at traditional schools, such as athletes in training or students who have been bullied or have special needs. But virtual charter schools also have drawn criticism, in part because local school boards outsource their management to for-profit companies that are beholden to shareholders.

Maine Virtual Academy holds exit interviews with departing students, and reports those results to the commission. That information includes how long the student was enrolled, their reasons for leaving and where they will go to school next. The information wasn’t available for public release Tuesday because students’ names and other identifying information hadn’t been removed, said Bob Kautz, the commission’s executive director.

Some students who were listed as having dropped out never even logged on – so they effectively never attended the school but are still registered as withdrawals, he noted.

Mills didn’t have details from the exit interviews, but the board had requested that information from school officials.

Maine Virtual Academy has a contract with K12 Inc. of Herndon, Virginia, the nation’s largest online education company, for academic services. The state’s other virtual charter school, Maine Connections Academy, contracts its services from Connections Academy, a division of Maryland-based Connections Education, a for-profit company that is owned by Pearson PLC in London, a multinational corporation that formulates standardized tests and publishes textbooks for many schools in the United States.

A spokesman for K12 Inc. didn’t return calls Tuesday regarding the national average for the first-year withdrawal rate at their other schools nationwide.

According to a research study in July 2012 by the National Education Policy Center at the University of Colorado, virtual schools tend to have higher withdrawal rates than physical schools, indicating parents may see virtual schools as a temporary service. Citing a K12 Inc. report on student performance, the study said that 23 percent of students in K12 schools around the country were enrolled for less than a year and 67 percent had been enrolled for fewer than two years.

The withdrawal rate at Maine’s other virtual charter school, Maine Connections Academy, was 11 percent 90 days after it opened in the fall of 2014. This year, its 90-day withdrawal rate had dropped to 7 percent.

Mills said K12 provided the school with a locally hired family support liaison at no cost whose responsibility is to support the students and family, and address the withdrawal and truancy issue.

The school’s exact truancy rate was not available Tuesday, commissioners said.

The school also is struggling to get students tested, officials said. Only about 60 percent of students this fall took the NWEA test, which is supposed to be used to set a baseline for assessing student growth – a key factor in evaluating whether a charter school is successful and whether its contract with the state should be renewed.

Mills said that he thought the testing rate was related to the issues with the truancy and withdrawal rate, and that many of the families who are attracted to charter schools also dislike standardized testing and traditional education.

Commission chairwoman Reed said the commission intends to request more data from Maine Virtual Academy and continue site visits and meetings.

The school has kept a steady enrollment because it filled vacant positions with students on a waiting list, Mills said. That means its overall enrollment, used to calculate state payments, has not changed significantly and there is minimal impact on its budget.

While state funding for Maine students follow the student, there is no significant impact financially on MVA students’ traditional school districts if they return, because the state budgets payments based on an estimated enrollment for the school year, and then on actual headcounts of students Oct. 1.

A 2012 Maine Sunday Telegram investigation of K12 and Connections Education showed that Maine’s digital education policies were being shaped in ways that benefited the two companies, that the companies recruited board members in the state, and that their schools in other states had fared poorly in analyses of student achievement.

Both Maine Connections Academy and Maine Virtual Academy received approval to open only after significantly changing their business plans to require more direct management by the Maine-based boards, and decreasing the role and authority of K12 and Connections Education.

Also Tuesday, the commission said the state was withholding $441,000 earmarked for the commission, requiring it to tap into its surplus to make up for a higher-than-expected per-pupil cost.

The state had estimated paying $14 million overall to the charter schools, but the actual cost was $14.7 million. Kautz, the executive director, said the commission could afford the one-time cost while the state Department of Education works out whether the funds were considered a loan to be repaid by the state or a permanent one-time cost to the commission.

Kautz said the main reason for the higher-than-expected costs was that the charter schools enrolled more special education students, who have a higher per-pupil rate – about $8,000 more per student.

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K12 Inc. Continues Its Downward Bounce


By David Safier

on at 5:00 PM

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I’ve been following the fortunes of K12 Inc., the for-profit, publicly traded, online school corporation, since 2008 when I broke the story that it had been outsourcing student essays to an essay-grading company in India without informing the parents. (K12 Inc. said it stopped the practice soon after the story broke). The corporation is the poster child for everything wrong with the for-profit education model where profits, rather than education, drive the enterprise. For awhile, K12 Inc. was flying high despite its reputation for low student achievement and high student turnover. That all changed in the middle of 2013 after the stock peaked at 36. As you can see from the chart at the top of the post, it’s taken a bumpy downhill ride since them. Current stock price is in the nine dollar range.

Local angle: K12 Inc. operates Arizona Virtual Academy (AZVA) which has about 4,600 students statewide.

You never know, the stock prices could reverse themselves and head upwards again—which, after all, is the primary purpose of any publicly traded corporation—but I doubt it. K12 Inc. is facing a whole lot of obstacles, all of which help tamp down investor confidence.

A recent study concludes that online charter schools in general, K12 Inc. included, are doing a lousy job of educating their students. Three research institutions participated in the study, including CREDO out of Stanford University, which tends to be pro-privatization and whose last comparison of charter and district schools had charters coming out a little ahead. (In its previous study, district schools came out a little ahead.) The academic growth of online school students is so low that, according to CREDO, it’s as if students missed half a year’s learning in reading and a whole year’s learning in math compared to district schools. This shouldn’t come as much of a surprise. Online schools like those run by K12 Inc. amount to home schooling with benefits. If you have motivated students whose parents keep them on task, they’ll learn from the parent-assisted curriculum. But because of the need to keep student numbers growing in the face of one-third of the students leaving every year, K12 Inc. actively recruits students who are unsuited for education that comes to them through a computer in their homes. Yet those students are encouraged to stay enrolled because, like other charter schools (and district schools as well), online charters get money from the state on a per student basis. Lose students, lose money.

Currently, K12 Inc. is being investigated over possible securities laws violations. It’s been alleged that there is a “substantial disconnect between compensation and performance results.” This isn’t the first time stockholders have complained about the company. Previously, stockholders sued because they said K12 Inc. inflated its schools’ academic results. During the most recent shareholder meeting, investors voted down the corporation’s plan for executive pay. The previous year, the CEO received $5.33 million and the CFO received $3.6 million.

Some teachers are none too happy with their online schools, most vocally at California Virtual Academies (CAVA), where teachers have been complaining for years about the school. In The Public Interest wrote an in depth study of CAVA detailing problems with student performance levels and poor teaching environment as well as the use of revenue for advertising, executive pay and profit.

Finally, some schools have left or are considering leaving the K12 Inc. fold as their contracts with the corporation expire. The latest is Massachusetts Virtual Academy (MAVA) whose contract is up in June, 2016. It’s considering two other online curriculum providers.

Put this all together, and you have a corporation in serious trouble.