Students Head Back to School by Staying Home

<i–< School begins August 29 for online public school students

August 25, 2016 04:30 PM Eastern Daylight Time

SIMI VALLEY, Calif.–(BUSINESS WIRE)–Local students in the areas of Kern, Inyo, Santa Barbara and San
Bernardino will begin their first day of the 2016-17 school year on
August 29 from the comfort of their own homes, choosing to attend the
full-time, tuition-free, online public charter school California Virtual
Academy @ Maricopa (CAVA @ Maricopa).

CAVA @ Maricopa is one of 10 independent charter schools in California
that uses the K12
online curriculum
 to offer students in grades K–12 a unique learning
experience. The virtual school setting allows both advanced learners and
those students who need additional assistance the support to find the
individualized learning experience they seek. The K12 online
curriculum enables teachers, parents and the students to build an
individualized learning plan, and provides support and flexibility in
the structure of the school setting.

“The students that enroll in California Virtual Academy @ Maricopa seek
a personalized learning experience that enables them to excel and
explore their own learning style,” said Kimberly Odom, Director of
Special Education. “Each student receives quality instruction and
support in a one-on-one setting as they grow throughout the year.”

Additionally, the schools offer a unique program called Community Day
that combines the best of online learning with weekly face-to-face
interaction. During Community Days students receive instruction from
teachers in math and language arts and participate in various other
educational activities, such as PE and science fairs, while parents
receive support and network with other parents.

CAVA @ Maricopa is still accepting enrollment of students for the
2016-2017 school year. In-person and online information sessions are
being held throughout the month.

For a complete list of back to school events and information sessions or
to learn more about enrolling, visit http://cava.k12.com
or call (866) 339-6787.

California Virtual Academy @ Maricopa

California Virtual Academy @ Maricopa is a tuition-free, online public
schools serving students in K-12 who are residents of Kern, Inyo, Santa
Barbara and San Bernardino counties. California-credentialed teachers
deliver lessons in an online classroom platform provided by K12 Inc.
(NYSE: LRN) with a combination of engaging online and offline
coursework—including a wide variety of books, CDs, videos, and hands-on
materials that are delivered to the student and make learning come
alive. Common household items and office supplies such as printer ink
and paper are not provided. California Virtual Academy @ Maricopa
provides opportunities for advanced learners, and prepares students to
be college and career ready at graduation. Learn more at http://cava.k12.com.

Contacts

Team SoapboxAnne Heavey, 206-528-2550anne@teamsoapbox.com

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

Submitted 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</a–<comes 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.

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.

k12inc 2.pdf

K12 education company settles case with Calif.

Local Education

By Ty Tagami


The Atlanta Journal-Constitution

Updated: 5:08 p.m. Thursday, July 28, 2016Posted: 2:47 p.m. Thursday, July 28, 2016

A company that is paid tens of millions of dollars to provide educational services in Georgia has settled a legal case in California after a state investigation into allegations of improper billing there.

There’ve been no public allegations of impropriety in Georgia, where the company, K12 helps operate Georgia Cyber Academy. The academy has come in for criticism over student results: in 2015, the school earned a D for its academic performance with more than 13,000 Georgia students, as reported by The Atlanta Journal-Constitution.

The Georgia academy is among the five biggest schools managed by K12, officials said. The company educates about as many students at a collection of 14 schools in California called the California Virtual Academies, or CAVA.

K12 was the target of a civil investigation by California Attorney General Kamala D. Harris, whose office alleged that K12 exploited weak charter school oversight in her state to excessively bill CAVA schools by pressuring teachers to sign “doctored” attendance records. Her office also accused the school of telling people it thought were prospective parents that classes were smaller than they really were.

On July 8, K12 agreed to settle for millions of dollars, without admitting to the alleged facts or to wrongdoing. Harris issued a statement saying the company had agreed to a settlement of $168.5 million, which K12 CEO Stuart Udell characterized as “shameless and categorically incorrect” in a conference call afterward with financial analysts.

The company did agree to pay $2.5 million to the state and $6 million to the attorney general’s office. But K12 objects to the way Harris described the other $160 million.

She called it “debt relief to the non-profit schools it manages.” Udell called it “the difference between K12’s contractual price and what the schools can afford to pay” based on their state funding.

“While K12 has a contractual right to recover these balanced budget credits, in all the years that K12 has worked with the CAVA boards we have never sought to recover those amounts,” Udell said on that conference call, according to a transcript provided by K12.

The final judgment in the case describes the $160 million agreement this way: an expungement of a decade’s worth of “credits against amounts otherwise due under managed school contracts.”

Neither the conference call nor the attorney general’s news release addressed another payment: $80,000 to a former CAVA teacher turned whistleblower. She alleged she was fired because she complained about the way K12 changed the attendance records she had submitted. The attorney general intervened in her case and K12 agreed to give her $50,000 to settle her employment-related claims and $30,000 for her legal fees.

Udell told the analysts that the company settled with the attorney general to avoid a “multiyear distraction” and litigation costs that would have been many times what it agreed to pay. He also said the company plans to fight legislation in California that would prohibit charter schools from using for-profit companies like his. And he said K12, which runs some 80 schools in 33 states, has plans to expand, going statewide in Alabama and Virginia and adding schools in other states, including Indiana, Michigan, Nevada and Maine.

K12 education company settles case with Calif.

5:08 p.m. Thursday, July 28, 2016

| Filed in: Education


Comments
0



A company that is paid tens of millions of dollars to provide educational services in Georgia has settled a legal case in California after a state investigation into allegations of improper billing there.

There’ve been no public allegations of impropriety in Georgia, where the company, K12 helps operate Georgia Cyber Academy. The academy has come in for criticism over student results: in 2015, the school earned a D for its academic performance with more than 13,000 Georgia students, as reported by The Atlanta Journal-Constitution.

The Georgia academy is among the five biggest schools managed by K12, officials said. The company educates about as many students at a collection of 14 schools in California called the California Virtual Academies, or CAVA.

John Amis

Graduate of Georgia Cyber Academy Brycen Walker of Savannah throws up his hands in jubilation as he follows Tyriq Wade of Columbus to the stage during commencement, Saturday, May 21, 2016, held at Cobb Galleria Centre in Atlanta. The statewide charter school educates more than 13,000 students a year, as young as 5 years old, all online and at about half the cost of traditional public schools. (Photo/John Amis)

K12 was the target of a civil investigation by California Attorney General Kamala D. Harris, whose office alleged that K12 exploited weak charter school oversight in her state to excessively bill CAVA schools by pressuring teachers to sign “doctored” attendance records. Her office also accused the school of telling people it thought were prospective parents that classes were smaller than they really were.

On July 8, K12 agreed to settle for millions of dollars, without admitting to the alleged facts or to wrongdoing. Harris issued a statement saying the company had agreed to a settlement of $168.5 million, which K12 CEO Stuart Udell characterized as “shameless and categorically incorrect” in a conference call afterward with financial analysts.

The company did agree to pay $2.5 million to the state and $6 million to the attorney general’s office. But K12 objects to the way Harris described the other $160 million.

She called it “debt relief to the non-profit schools it manages.” Udell called it “the difference between K12’s contractual price and what the schools can afford to pay” based on their state funding.

“While K12 has a contractual right to recover these balanced budget credits, in all the years that K12 has worked with the CAVA boards we have never sought to recover those amounts,” Udell said on that conference call, according to a transcript provided by K12.

The final judgment in the case describes the $160 million agreement this way: an expungement of a decade’s worth of “credits against amounts otherwise due under managed school contracts.”

Neither the conference call nor the attorney general’s news release addressed another payment: $80,000 to a former CAVA teacher turned whistleblower. She alleged she was fired because she complained about the way K12 changed the attendance records she had submitted. The attorney general intervened in her case and K12 agreed to give her $50,000 to settle her employment-related claims and $30,000 for her legal fees.

Udell told the analysts that the company settled with the attorney general to avoid a “multiyear distraction” and litigation costs that would have been many times what it agreed to pay. He also said the company plans to fight legislation in California that would prohibit charter schools from using for-profit companies like his. And he said K12, which runs some 80 schools in 33 states, has plans to expand, going statewide in Alabama and Virginia and adding schools in other states, including Indiana, Michigan, Nevada and Maine.

California Looks Into K12 Inc. The Result: a $168.5 Million Settlement (or $2.5 Million, Depending on Who’s Counting)

Posted

By David Safier

on Tue, Jul 12, 2016 at 9:00 AM

click to enlarge

  • Courtesy of PhotoSpin

Imagine a group of students walk through the school doors sometime during the day, spend a few minutes lounging around the office, then leave. The school marks them present and collects their per-student money from the state.

According to an investigation by California’s Attorney General, that was business as usual at K12 Inc.’s online school, California Virtual Academy—emphasis on the word “business,” because K12 Inc. is a publicly traded, for-profit corporation. Students would sign into school on their home computers, then leave a few minutes later, and they would be marked present. That’s not just a problem at the California school. According to a number of investigative articles about K12 Inc.’s online schools around the country, teachers are urged to hang onto students who are enrolled but don’t spend enough time online or do enough work to pass their classes. Once they’ve been around long enough to qualify for state funding, they can be cut loose.

Misreporting attendance was only one issue that led California to reach a $168.5 million settlement with the company. According to the Attorney General,

“K12 and its schools misled parents and the State of California by claiming taxpayer dollars for questionable student attendance, misstating student success and parent satisfaction and loading nonprofit charities with debt.”

The settlement is $2.5 million plus $6 million to cover legal costs to the state, and $160 million to wipe out debts CAVA owes to K12 Inc. 

Charter school supporters aren’t complaining about the ruling. The California Charter Schools Association joined the California Teachers Association in applauding the decision. K12 Inc. is a major reason why some pro-charter organizations recently published a paper demanding improvement of online charter schools.

K12 Inc. hates that $168.5 million figure. According to a corporate press release, it’s really only a $2.5 million settlement with no admission of liability or wrongdoing. As for that $160 million in debt relief to CAVA,

“There is no ‘debt relief’ to the CAVA schools. The balance budget credits essentially act as subsidies to protect the CAVA schools, its students and teachers against financial uncertainties. CAVA schools have not paid that money to K12 and K12 never expected to receive it given California’s funding environment.”

I’m not savvy enough about how K12 Inc. operates to know why it keeps those “subsidies” on the books if it doesn’t expect them to be paid, but I know that another national charter chain, Imagine Schools, also shows outrageously high debts individual schools owe the parent company. It may look good on the books to list it as money to be collected at a later date rather than writing it off, or it may be a way of making sure the schools are too financially indebted to declare their independence from the larger corporation and go their own way.

Problems with CAVA and K12 Inc. were exposed in an excellent series of investigative reports by San Jose’s Mercury News, but the publicly traded corporation has been the subject of continued scrutiny by journalists across the country for years without resulting in state investigations. One probable reason is, K12 Inc. has less political clout in heavily Democratic California than in other states like, say, Arizona, where Craig Barrett, ex-CEO of Intel and current president and chairman of BASIS Schools, Inc., sits on the K12 Inc. Board and is compensated $190,000 for a few hours work. Also, California Attorney General Kamila Harris is running for the U.S. Senate, so a high profile case like this can only help her campaign in a progressive state.

Tags: K12 Inc., California Virtual Academy, Kamila Harris, Craig Barrett, Image

Sort

Showing
1-
of

Add a comment

I work for K12 as a contractor. I can say I have only seen full commitment and dedication to the real and true value online education offers. In my view K12 as a whole and the folks I worked with do their best to produce a product which enhances choice, success and moves education forward.

Posted by

Dylan

on 07/12/2016 at 7:38 PM

Do you think K12 Inc. is one of those companies that would hire a social media company that hires individual contractors to monitor online postings and websites to make positive remarks repudiating anything negative posted about the company?

Posted by

sgsmith

on 07/13/2016 at 12:38 AM

No. That sounds like something the NEA or public school hacks would do. What made you ask?

Posted by

Larry McNeil

on 07/13/2016 at 5:33 AM

Comment

Add a comment

(comments policy)

Subscribe to this thread

California Reaches Settlement With K12 Inc Over Fraudulent Claims, K12 Inc Responds

Jul 11, 2016

TARNISHING THE GOLDEN STATE: California Attorney General Kamala Harris announced on July 8 that her office had reached a $168.5 million settlement as a result of its investigation into K12 Inc and its affiliate, California Virtual Schools (CAVA). K12 Inc, a for-profit online charter school operator, and CAVA, a collective of nonprofit online charter schools serving 13,000 California students, will forgive $160 million in debt, pay $6 million to cover the costs of the investigation and pay $2.5 million in response to several private lawsuits. 

The Bureau of Children’s Justice and False Claims within the California Justice Department alleged that K12 Inc and CAVA presented false and misleading statements about class sizes, fees and students’ progress. K12 and CAVA will also be subject to contract reform and independent reviews.

K12 Inc has responded to the Attorney General’s statements by saying that it has neither admitted nor committed wrongdoing. The company said Harris’ settlement figures were incorrect and emphasized that it would only be paying $2.5 million to settle cases. K12 Inc CEO Stuart Udell told the Wall Street Journal that Harris “grossly mischaracterized the value of the settlement, just as her office did with regard to the issues it investigated.”

Add Comment

Close

Comments

Online school operator agrees to $168.5 million settlement after being accused of manipulating records

July 9, 2016

Updated 4:48 p.m.

SACRAMENTO – A for-profit company that operates online charter schools in California has reached a $168.5 million settlement with the state over claims it manipulated attendance records and overstated the academic progress of students.

The deal announced Friday by Attorney General Kamala Harris also requires Virginia-based K12 Inc. to take a slew of corrective actions, the East Bay Times reported Saturday.

The settlement comes almost three months after the Bay Area News Group published an investigation of K12 Inc., which received more than $310 million in state funding for its profitable but low-performing network of California Virtual Academies, or CAVA, which serve about 15,000 students.

Harris’ office found that K12 and its 14 “virtual” schools in California used deceptive advertising to mislead families about students’ academic progress, parents’ satisfaction with the program and their graduates’ eligibility for admission at the University of California and California State University.

The Attorney General’s office also found that K12 collected more state funding than it was entitled to by submitting inflated student attendance data.

“K12 and its schools misled parents and the State of California by claiming taxpayer dollars for questionable student attendance, misstating student success and parent satisfaction and loading nonprofit charities with debt,” Harris said in a statement.

Under the settlement, K12 will pay $8.5 million to settle the state’s claims. It also agreed to expunge about $160 million in credits it has issued to the California Virtual Academies since 2005 that have helped the schools cover the cost of the contracts they hold with the company.

K12 said in a statement it had admitted no wrongdoing and insisted it had already planned to take up several of the corrective actions required under the agreement.

“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,” K12 Chief Executive Officer Stuart Udell said in the statement.

Udell said that the credits should be called subsidies, not debts, and that the company’s commitment to expunge them shouldn’t be used by Harris to hike the size of the settlement. He also defended the credits, saying they had protected the schools against financial uncertainties.

California Reaches Settlement With K12 Over False Claims Allegations

The online charter-school operator was accused of violating advertising and competition rules

By

Ezequiel Minaya


Updated July 8, 2016 6:34 p.m. ET



2 COMMENTS

California Attorney General Kamala Harris said Friday her office reached a $168.5 million settlement with K12 Inc.,
a remote-learning, charter-school operator that was accused of violating advertising and competition rules.

The settlement also covered 14 nonprofit schools known as the California Virtual Academies, or CAVA schools, affiliated with K12. The company manages 15 nonprofit virtual charter schools throughout California serving about 13,000 K-12 students, the attorney general said in a press release announcing the settlement.

As part of the agreement, the attorney general’s office maintains that K12 will forgive about $160 million in debt accrued by the nonprofit schools it manages, which was a result of the fee structure in the K12 contract. The company also will pay $8.5 million to address all claims.

The attorney general’s office alleged that K12 and the CAVA Schools published misleading advertisements about students’ academic progress, class sizes and hidden costs, among other aspects of the schooling.

The attorney general’s office added that authorities were informed by a whistleblower that K12 inflated attendance figures to collect more state funding than was due.

K12 said in response that the attorney general’s office “mischaracterized” the settlement and the company added that it has made no admission of wrongdoing. According to the Herndon, Va., company’s statement, the $168.5 million figure cited by California authorities was “flat wrong.” The company said that the settlement was only $2.5 million.

“K12 will be making an $8.5 million payment to the state,” it said. “Of that amount, $6.0 million is to defray the cost to taxpayers of the Attorney General’s investigation, and $2.5M are settlement costs related to the separate private lawsuit alleging misreporting of attendance at the CAVA schools.”

K12 said the implication that it was paid $160 million by the California schools is false.

CAVA schools have not paid that money to K12 and K12 never expected to receive it given California’s funding environment,” said Stuart Udell, K12’s chief executive.

A representative for the attorney general’s office said it stood by its earlier statement.

California authorities also said the agreement with K12 calls for the company to reform its contracts, undergo independent reviews of its services for students with disabilities and ensure accuracy of all advertisements, among other changes.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

Advertisement

Recommended Videos

Most Popular Articles

K12 Earnings Call

This week CAVA’s management company K12 Inc. held its third quarter earnings call with executives, reporting revenue growth of 4 percent “year over year” and operating income (profit) of just about $19 million for the quarter.  On the conference call, recently-hired CEO Stuart Udell expressed his delight with being one of the newest members of the K12 executive team as well as his excitement about what he sees as K12’s potential to deliver for students.  It’s no surprise that Udell, whose pay and employment depends on improving K12’s stock performance and investor satisfaction, presented an extremely optimistic front as he speculated that K12’s fourth quarter will be even better.

This despite a rough start for the company’s current fiscal year – one that essentially began with a shareholder revolt that resulted in the voting down of K12’s executive compensation proposal, CAVA

teachers delivering a report card of straight F’s to K12’s leadership for its failure to invest in students and teachers, the removal of Nate Davis as the company’s CEO, and sharp criticism of the for-profit company following the release of a series of studies pointing to problems with virtual charter schools due to weak oversight and the industry’s misplaced priorities.

But, if you ask Stuart Udell, at K12 everything is awesome.  This is an interesting contrast to the doom and gloom the company sought to broadcast as early as last week in response to the recent articles published by the San Jose Mercury News, which raise very serious questions about how CAVA and K12 are using the public education dollars they receive – millions of dollars intended to provide instruction to our kids but instead funneled out of the state.  CAVA and K12 have yet to respond to the actual merits of the news story, instead opting to blame it all away on teachers who have stood up for our students by forming a union.  Hmmm.

Oh, and speaking of contradictions, did you know that one of K12’s newest ventures is in partnership with – wait for it – a labor union?!  That’s right.  Executives on this week’s conference call also touched on their excitement around K12’s Destinations Career Academy – a new technical education online high school in Wisconsin that offers a construction apprenticeship program in partnership with the International Union of Operating Engineers Local 139.  Imagine that – K12 seeking to deliver for students in partnership with organized labor.

We sincerely look forward to the day decision-makers at our school embrace a partnership with teachers and our union too – not only for the benefit of shareholders and the bottom line, but for the success of CAVA’s students.  Now, talk about awesome.

Like this:

Teachers claim virtual charter school company inflates enrollment

By Jane Meredith Adams | | 5 Comments

More than 30 teachers at the largest online charter school network in California filed complaints against their employer on Thursday, alleging that the schools violated state and federal laws by failing to provide special education services, inflating enrollment figures and paying for conferences in Yosemite and Palm Springs with federal money intended for students from low-income families.

The teachers filed their complaints – 69 in all – with the California Department of Education, county superintendents and nine school districts that oversee nine branches of the California Virtual Academies schools. The network operates 11 schools in California with an enrollment of 14,500 students.

“There is little oversight of virtual public schools in California,” said Cara Bryant, a longtime California Virtual Academies teacher and current teacher trainer based out of the branch known as CAVA @ Sonoma, in a statement.

“I do not believe all students are getting the education they need enrolled in CAVA,” Bryant said.

K12 Inc., the parent company of California Virtual Academies, denied the allegations and suggested they were part of an effort to unionize teachers at the schools. Other allegations included the illegal sharing of confidential student information, such as Individualized Education Plans for special education students, with all teachers; failing to keep adequate financial reserves; and failing to improve a pattern of sub-par student academic achievement and graduation rates.

At the CAVA@Los Angeles school, for example, 274 students were enrolled in the 12th grade in 2012-13 but none of those who graduated had completed all the courses required for UC or CSU admission.

“The latest round of complaints filed by a small group of individuals are consistent with prior complaints brought against the California Virtual Academies by various labor organizations seeking to represent CAVA certified teachers,” said Katrina Abston, head of schools for the network, in a statement from K12.

Some teachers at the California Virtual Academies have formed a group known as the California Virtual Educators that is seeking to unionize and affiliate with the California Teachers Association, according to Stacie Bailey, a high school science teacher at California Virtual Academies.

“As with the prior complaints, CAVA absolutely believes these current complaints are without merit,” Abston said. The charter schools undergo annual financial audits by independent external auditors, Abston said, and have “a strong record of compliance.”

David Thoming, superintendent of the New Jerusalem Elementary School District, said the district would investigate the complaints and asked the letter writers to send evidence of non-compliance. Families in the New Jerusalem district have been very happy with the CAVA@San Mateo school, he said, which provides homeschool families a structured curriculum and high school students a more flexible schedule. One student in the district is an accomplished gymnast who is enrolled in CAVA@San Mateo so she can take classes around her workout schedule.

“They love it,” Thoming said. “They wouldn’t be as large as they are if families didn’t like it.”

He added, “No one’s forcing them to go there and along the same line, for the teachers, no one’s forcing them to work there.”

Links to the complaints can be found on the California Virtual Educators website. The California Virtual Academy schools named in the complaints and the districts that oversee them are:

  • CAVA@Fresno – Orange Center School District
  • CAVA@Jamestown – Jamestown Elementary School District
  • CAVA@Kings – Armona Union Elementary School District
  • CAVA@Los Angeles – West Covina Unified School District
  • CAVA@Maricopa and CAVA@Maricopa High – Maricopa Unified School District
  • CAVA@San Diego – Spencer Valley Elementary School District
  • CAVA@San Joaquin – New Jerusalem Elementary School District
  • CAVA@San Mateo – Jefferson Elementary School District
  • CAVA@Sutter – Meridian Elementary School District

Jane Meredith Adams covers student health and well-being.