INVESTOR ALERT: Investigation of K12 Inc. Announced by Law Offices of Howard G. Smith

August 03, 2016 10:30 AM Eastern Daylight Time

BENSALEM, Pa.–(BUSINESS WIRE)–Law Offices of Howard G. Smith announces an investigation on behalf of
investors of K12 Inc. (“K12” or the “Company”) (NYSE: LRN)
concerning the Company and its officers’ possible violations of federal
securities laws.

online charter schools had significantly weaker academic
performance in math and reading, compared with their counterparts in
conventional schools.”

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On October 27, 2015, Stanford’s Center for Research on Education
Outcomes (“CREDO”) published a study concerning online charter schools
that specifically mentioned K12. Based on their findings, CREDO stated
that “online charter schools had significantly weaker academic
performance in math and reading, compared with their counterparts in
conventional schools.” Additionally, that same day, K12 revealed that it
had received a civil investigative subpoena from the Attorney General of
California on September 24, 2015.

Over the next three days, K12’s stock price fell $0.54 per share, over
5%, to close at just $9.71 on October 30, 2015.

If you purchased K12 securities, have information or would like to learn
more about these claims, or have any questions concerning this
announcement or your rights or interests with respect to these matters,
please contact Howard G. Smith, Esquire, of Law Offices of Howard G.
Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020 by
telephone at (215) 638-4847, toll-free at (888) 638-4847, or by email to howardsmith@howardsmithlaw.com,
or visit our website at http://www.howardsmithlaw.com.

This press release may be considered Attorney Advertising in some
jurisdictions under the applicable law and ethical rules.

Contacts

Law Offices of Howard G. SmithHoward G. Smith, Esquire215-638-4847888-638-4847howardsmith@howardsmithlaw.comwww.howardsmithlaw.com

Law Offices of Howard G. Smith

Release Summary

INVESTOR ALERT: Investigation of K12 Inc. Announced by Law Offices of Howard G. Smith

Contacts

Law Offices of Howard G. SmithHoward G. Smith, Esquire215-638-4847888-638-4847howardsmith@howardsmithlaw.comwww.howardsmithlaw.com

Robbins Arroyo LLP: K12, Inc. (LRN) Misled Shareholders According to a Recently Filed Class Action

July 22, 2016 07:59 PM Eastern Daylight Time

SAN DIEGO & HERNDON, Va.–(BUSINESS WIRE)–Shareholder rights law firm Robbins Arroyo LLP announces
that a class action complaint was filed against K12, Inc. (NYSE: LRN) in
the U.S. District Court for the Northern District of California. The
complaint is brought on behalf of all purchasers of K12 securities
between November 7, 2013 and October 27, 2015, for alleged violations of
the Securities Exchange Act of 1934 by K12’s officers and directors. K12
Inc., a technology-based education company, offers proprietary
curriculum, software systems, and educational services to facilitate
individualized learning for students primarily in kindergarten through
12th grade.

“In the Matter of the Investigation of:
For-Profit Virtual Schools.”

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View this information on the law firm’s Shareholder Rights Blog: www.robbinsarroyo.com/shareholders-rights-blog/k12-inc-july-2016

K12 Accused of Lying About The Success Rate of Its Students

According to the complaint, throughout the class period, K12 filed
several press releases and submitted multiple filings with the U.S.
Securities and Exchange Commission touting the company’s business
prospects. The company issued a press release on February 4, 2014,
stating, “Our Managed Schools are now…using many of the new educational
programs we put in place this year which we believe will improve
educational outcomes for all engaged families.” The company further
emphasized that improving academic outcomes is its number one priority
and that it would invest in new systems to drive further improvements
for its students. However, the complaint alleges that K12 officials
failed to disclose that: (1) K12 was publishing misleading
advertisements about students’ academic progress, parent satisfaction,
their graduates’ eligibility for University of California and California
State University admission, class sizes, the individualized and flexible
nature of K12’s instruction, hidden costs, and the quality of the
materials provided to students; (2) K12 submitted inflated student
attendance numbers to the California Department of Education in order to
collect additional funding; (3) as a result, K12 was open to potential
civil and criminal liability; and (4) the company would likely be forced
to end these practices, which would have a negative impact on K12’s
operations and prospects.

On October 27, 2015, Stanford’s Center for Research on Education
Outcomes published a study and a related press release about online
charter schools, including K12, stating, “Innovative new research
suggests that students of online charter schools had significantly
weaker academic performance in math and reading, compared with their
counterparts in conventional schools.” On the same day, K12 reported
disappointing first quarter 2016 financial results compared to the same
quarter in fiscal year 2015, including revenues of $221.2 million
compared to $236.7 million, Earnings Before Interest, Taxes,
Depreciation and Amortization of negative $3.9 million compared to $3.7
million, and an operating loss of $20.5 million compared to an operating
loss of $13.2 million. On October 27, 2015, K12 disclosed in its Form
10-Q that it received a subpoena from the Attorney General of the State
of California, Bureau of Children’s Justice in connection with an
investigation known as “In the Matter of the Investigation of:
For-Profit Virtual Schools.” On this news, K12 stock fell over 20% to
close at $9.71 per share on October 30, 2015.

K12 Shareholders Have Legal Options

Concerned shareholders who would like more information about their
rights and potential remedies can contact attorney Darnell R. Donahue at
(800) 350-6003, DDonahue@robbinsarroyo.com,
or via the shareholder
information form
on the firm’s website.

Robbins Arroyo LLP is a nationally recognized leader in shareholder
rights law. The firm represents individual and institutional investors
in shareholder derivative and securities class action lawsuits, and has
helped its clients realize more than $1 billion of value for themselves
and the companies in which they have invested.

Attorney Advertising. Past results do not guarantee a similar outcome.

Contacts

Robbins Arroyo LLPDarnell R. Donahue619-525-3990 or Toll
Free 800-350-6003DDonahue@robbinsarroyo.comwww.robbinsarroyo.com

K12 Inc.: California Virtual Academies’ operator exploits charter, charity laws for money, records show

By Jessica Calefati, jcalefati@bayareanewsgroup.com© Copyright 2016, Bay Area News Group

Posted:
 
04/18/2016 04:48:09 AM PDT

Frustrated with the quality of their neighborhood schools, parents, teachers and civic leaders have founded hundreds of California charter schools, combining locally sourced ingenuity with the public funding that state law allows them to command.

California’s largest network of online academies is different: Although the schools are set up like typical charters, records show they’re established and run by Virginia-based K12 Inc., whose claims of parental involvement and independent oversight appear to be a veneer for the moneymaking enterprise.

The company — the subject of a two-part investigative series by this newspaper — says the schools operate independently and are locally controlled. But the academies’ contracts, tax records and other financial information suggest something entirely different: K12 calls the shots, operating the schools to make money by taking advantage of laws governing charter schools and nonprofit organizations.

“What this company has done may make sense from a business perspective, but to me, it’s a sham,” said Renee Nash, a business and tax attorney and a member of the Eureka Union School District’s Board of Trustees.

“K12 is clearly taking advantage of the laws in California,” she said, “and the Legislature needs to put a stop to it.”

California law is silent on whether for-profit firms are even allowed to run charter schools. So before applying 14 years ago to open the state’s first online academies, K12 treaded cautiously into a new market, creating a series of nonprofit organizations whose names match those of the schools.

That means each California Virtual Academy is considered by the IRS to be a charitable organization that need not pay taxes, even though K12 effectively controls the schools by providing them with all academic services.

The structure, accounting experts say, makes it tough to tell where the nonprofit ends and where the company begins.

Mike Kraft, K12’s vice president for finance and communication, disputes that characterization. He said the nature of the relationship between the company and the schools is articulated clearly in documents.

“The contracts between K12 and each (academy) outline the parties’ obligations and expressly provide that the governing body of the school retains final decision-making authority and full control,” he said. Still, Kraft acknowledged that K12 personnel “may at times provide newly forming boards that lack any staff with administrative assistance on the organizational documents.”

Tax and education records show that K12 employees started each of more than a dozen online academies in California, even though the applications they filed to open the schools described the founders as a “group of parents,” none of whom were named. For several years, company employees even signed the nonprofit schools’ tax filings.

‘The law is clear’

Federal tax law prohibits charitable organizations from operating to benefit a person or company. And to that end, the online academies’ articles of incorporation vow that the schools’ money won’t be used to enrich “any shareholder or individual.”

“The law is clear: Charities may not use their resources to promote a business, even if that business’ services are helpful,” Eric Gorovitz, a San Francisco attorney who specializes in nonprofit tax law, said, speaking generally about charitable organizations. “And if the violation is bad enough, a charity could lose its exemption.”

According to the nonprofit’s application for tax-exempt status, California Virtual Academy at San Mateo has a board of directors whose members should be willing to cut ties with the company if they feel the school is getting a raw deal. Indeed, the application specifies that all agreements between K12 and the school are the result of “arm’s-length” negotiations.

IS AN ONLINE SCHOOL CASHING IN ON FAILURE?

Bay Area News Group

IS AN ONLINE SCHOOL CASHING IN ON FAILURE?

Bay Area News Group

But a review of minutes from the 2014-15 school year’s board meetings and records of the board’s relationship to administrators hand-picked by K12 suggest the board has little or no independence from the company. A K12 employee led the board meetings, and all 35 resolutions she encouraged the board to endorse won unanimous approval.

The board’s open public meetings are held during the workday in a conference room or around an administrator’s desk in the Daly City-based Jefferson Elementary School District, which authorized the academy’s charter. And board members rarely attend the meetings in person. They usually just call in from home.

All told, the board spent an average of 13 minutes in each meeting.

The board has four members. Two of them, President Don Burbulys, a resident of Soquel, in Santa Cruz County, and Stephen Warren, the board’s secretary, who lives in Riverside County, are related to high-ranking school administrators, who, under K12’s contract with the academy, are selected by the company.

Burbulys is married to Laura Terrazas, dean of student services, and Warren is related to Academic Administrator April Warren, according to a brief filed by teachers. Terrazas and April Warren on Sunday did not return calls or emails seeking comment. Burbulys, Stephen Warren and the board’s other two members have also declined requests for comment.

When K12 sought approval in 2009 to open a charter school for Contra Costa County students that featured a mix of online schooling and traditional classes in a brick-and-mortar setting, Mt. Diablo Unified School District denied the application, citing concerns about the company’s role in running the proposed school day to day.

“Not only does the charter school delegate all charter school-related operations, management and administrative functions to K12 California, but it inappropriately gives K12 California control over areas that should be the responsibility of school site staff and the charter school’s governing board,” the Mt. Diablo school board wrote in a report.

But Contra Costa County, as well as Alameda County residents, can still enroll in a K12 school because there’s a California Virtual Academy in San Joaquin County, and the state allows online students from adjoining counties to enroll.

A close look at the contract between California Virtual Academy at San Mateo and K12 raises questions about why a truly independent board of directors would ever agree to the terms, said Luis Huerta, a Columbia University expert on online schools.

Under the contract, which Huerta reviewed for this newspaper, K12 handles almost every aspect of the public school’s operations. It’s responsible for writing curricula, hiring principals, recruiting students and much more. In exchange, the company is entitled to compensation that can amount to as much as 75 percent of the school’s public funding.

Jefferson Elementary school trustees and administrators are tasked with reviewing the contract, but no state agency is required to examine it.

The school’s application for tax-exempt status states “the charter school determined that it paid no more than fair market rate for the services.” Yet in a bizarre twist, the rates outlined in the contract routinely exceed what the school can afford — by more than 25 percent.

K12 requires all its California academies to pay only what they can without going into debt. The company then issues “credits” to cover the balance.

California Virtual Academy at San Mateo, for example, hasn’t been able to pay its bill in full in a decade. So since 2007, K12 has given the school $8 million in credits. Over the past 10 years, the company has doled out more than $130 million in credits to all the California schools it operates.

Unique arrangement

Accountants and financial analysts interviewed by this newspaper, including several who specialize in school finance, say they’ve never seen anything quite like the arrangement between K12 and the public online academies.

“If the schools can’t cover their expenses and need K12 credits every year to balance their budgets, then the contingent liability to K12 just keeps growing,” said Charlene Podlipna, an accountant who works for Freeman & Mills, a Los Angeles-based litigation consulting firm.

Writing down the operating losses of the schools it manages in California and across the country has allowed K12 to reduce its taxable income by $179.5 million over the past three years, according to the company’s most recent annual report. That raises questions about why K12 consistently charges more than the schools can pay.

Kraft insisted the company doesn’t receive a tax deduction for forgiving the debts of the schools it operates. But when the newspaper presented Kraft with K12’s most recent Securities and Exchange Commission filing and asked him to explain whether K12 wrote off the losses, his answer was hardly straightforward: “A company’s tax provision is based on its net income. A component of net income is the revenue that a company records. Anything that increases or decreases revenue, and ultimately impacts net income, would therefore impact the taxes owed by that company. K12 is no different than any other company in this respect.”

Katrina Abston, K12’s senior head of schools for the academies, defended the credits, saying they “provide a high level of protection” for the schools against financial uncertainties.

Huerta, however, said taxpayers could lose out in the end.

Typically, he said, any extra taxpayer funding on hand when a charter school shuts its doors is returned to the state’s general fund. But tucked away on one of the final pages of the K12 contracts is a clause that requires a school that’s closing to repay the company with any money it has left — meaning it’s highly unlikely the state would recoup anything.

“These companies are exploiting the gray in the law and using clever legal teams to skirt public accountability,” Huerta said. “Taxpayers and policymakers should be alarmed.”

To address some of the thorny problems that can crop up when for-profit companies run nonprofit public schools, the Legislature last year approved Assembly Bill 787, authored by Assemblyman Roger Hernández, D-West Covina, that would have banned the practice.

But Gov. Jerry Brown rejected it, writing in his veto message: “I don’t believe the case has been made to eliminate for-profit charter schools in California.”

Read Part 1 of the investigation: Is online charter school network cashing in on failure?

Contact Jessica Calefati at 916-441-2101. Follow her at Twitter.com/calefati.

What our investigation found

  • Teachers employed by K12 Inc.’s charter schools may be asked to inflate attendance and enrollment records used to determine taxpayer funding.
  • Fewer than half of the students who start the online high schools earn diplomas, and almost none of them are qualified to attend the state’s public universities.
  • K12’s heavily marketed online model has helped the company reap more than $310 million in state funding over the past 12 years.
  • Students who spend as little as one minute during a school day logged in to K12’s school software may be counted as present in records used to calculate the amount of funding the schools get from the state.
  • About half of the schools’ students are not proficient in reading, and only a third are proficient in math — levels that fall far below statewide averages.
  • School districts that are supposed to oversee the company’s schools have a strong financial incentive to turn a blind eye to problems: They get a cut of the academies’ revenue, which largely comes from state coffers.
  • California’s Charter School Mugging

    Politicians punish a company for resisting unionizing its schools.

    ENLARGE

    Tom Torlakson, the superintendent of public instruction, during a meeting of the State Board of Education, Thursday, July 14, 2016, in Sacramento, Calif.

    Photo:

    Associated Press


    July 17, 2016 6:54 p.m. ET

    52 COMMENTS

    Our readers know about the coordinated assault on for-profit colleges. Now Democrats are ambushing a fast-growing online education startup that manages charter schools.

    The public company K12 operates 70 virtual and blended (online and traditional) schools nationwide, including 14 charters in California. K12 typically contracts with school districts or nonprofit charter organizations to operate schools. Students receive instructional materials in the mail and can log in online at any time to do work. Teachers record lectures, answer questions and assign and grade coursework. Parents of children with special needs or behavioral problems often prefer K12’s flexible format, as do many teachers. The virtual schools also provide options in rural areas with few charter schools.

    All of this is anathema to unions, and in 2014 the California Teachers Association (CTA) launched a campaign to unionize K12’s charters. The union claimed the schools saddled teachers with heavy workloads, skimped on instruction—e.g., computers sent to kids weren’t updated—and turned away hard-to-teach students.

    The union also flogged low graduation rates and test scores, though many urban public schools do much worse. Many K12 students enroll midyear and are behind on credits when they begin. Students who spend three or more years at the schools score 14 points higher in reading and 19 points in math than those who spend less than one year. The K12 charters don’t cherry-pick or discriminate among applicants, and more than 60% of students are low income.

    After K12 challenged the union petition, Attorney General Kamala Harris began a sweeping investigation—one of the first launched by her new Bureau of Child Justice. She alleged that the schools are scamming taxpayers by recording students who log on for one minute as present and misleading parents by advertising the benefits of online education.

    But this looks trumped up. In California, teachers at virtual schools record attendance based on educational activities that students complete, not the time they spend online. Like traditional schools, the virtual academies are compensated based on student attendance. Independent auditors approved by the state Education Department haven’t turned up any fraudulent activity in 10 years.

    Nonetheless, on June 23 Tom Torlakson, the state superintendent of public instruction, ordered another audit to ensure that K12 schools are “serving their students well.” Five days later the California Public Employment Relations Board certified the CTA and ordered the schools to collectively bargain with the union.

    Less than two weeks later, Ms. Harris proclaimed a $168 million settlement with K12, including $160 million in “debt relief” for “nonprofit charities” the company allegedly coerced into “unfavorable contracts that put them in a deep financial hole.” Those “charities” are the same charter schools that she accused of defrauding taxpayers. And the balance sheets of the nonprofit charters and K12 don’t show any debt. K12 typically charges more nationwide than California charter schools receive in per pupil allocations. Each year K12 forgives the difference, which has amounted to $160 million.

    To sum up: K12 stays in business, but because it resisted unionization it gets hit with a huge fine and must collectively bargain. If K12 doesn’t accede to the union’s demands, the state Board of Education could use the audit as a pretext to shut the schools down. Thuggish government marches on.

    Company with ties to NC virtual school accused of misleading parents in California

    Posted 4:53 p.m. yesterdayUpdated 5:57 p.m. yesterday

    Raleigh, N.C. — A company with ties to a North Carolina virtual charter school has reached a multimillion-dollar settlement with the state of California over claims it manipulated attendance records, misled parents and overstated the academic progress of students at its online charter schools in that state.

    The Virginia-based, for-profit company K12 Inc. has admitted no wrongdoing but will pay $8.5 million to California as part of the settlement.

    K12 helped start the North Carolina Virtual Academy, a taxpayer-funded online charter school that launched last year and serves about 1,400 students at any one time. The company provides the school with curriculum and other materials but does not operate the school, according to NCVA’s head of school Joel Medley.

    NCVA is governed by a board of directors made up of local community leaders, parents and state educators who oversee academics, staffing and other items for the school. Medley said it’s unfair to compare NCVA to K12-affiliated schools in other states.

    “We’re not California. We need to be careful with generalization,” he said, noting that states have different laws and policies for how online charter schools are run. “This has had no impact on us. We’re continuing to do business as normal.”

    North Carolina debuted two virtual charter schools last AugustNCVA and North Carolina Connections Academy, which has ties to Pearson, a London-based education company. The schools were launched as part of a four-year pilot program to determine whether virtual charters can succeed in North Carolina.

    Their first year has been marked with questions about their high student withdrawal rates. In March, a report to the State Board of Education found that about 500 students, or about 26 percent of those who had signed on to take courses, had withdrawn from each school in the first five months of operation.

    Virtual charter school leaders, including Medley, say those numbers are misleading because some students plan to take online classes for only a brief period.

    In a letter to state school board members in March, Medley said “higher withdrawals are not a testament to a virtual school’s quality but rather the nature of the online model.” He pointed to virtual schools in other states, including Florida, which he says have higher withdrawal rates.

    He urged people to be patient with NCVA.

    “With this being a pilot, we’ve got four years. Give us four years,” he said. “Give it time.”

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

    Posted

    By David Safier

    on Mon, Jan 11, 2016 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.

    Tags: Craig Barrett, K12 Inc., BASIS Schools, Inc., Arizona Ready Education Council, Classrooms First Initiative Council, Michael Block, Clint Bolick, Terry Sarvas, Steve Twist, Image

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    I am sure if you ask the BASIS bunch to work for nothing to support select student success, they would. After all the 1100 local PUBLIC school board members in 223 publically elected and transparent school districts in Arizona, DO work for zero dollars.

    Posted by

    Frances Perkins

    on 01/12/2016 at 7:54 AM

    It’s time for more transparency in the Charter for profit school industry. After all these are taxpayer dollars, how much is spent in the classroom vs. profit? Who knows ?
    I worked as an engineering consultant for many years most often on public projects. We had to disclose, salary info, overhead rates, cost data, profit and so forth. Why? Because public money was involved.

    Posted by

    Michael S. Ellegood

    on 01/12/2016 at 8:29 AM

    Sound like Mr. Barrett has set himself up with a pretty substantial retirement at taxpayers expense. I do not need to give you a lesson in civics but in order to put a stop to this rape of state revenues is very simple. A small change in the leadership of the State Senate. Senator Marco Rubio is absolutely correct when he defends himself for missing sessions of the United States Senate. Notwithstanding the rules of the U. S. Senate it’s a numbers game, it is not the number of NOs that pass legislation, it is the number of Yes votes. While it is true he is collecting pay for being a Senator, if he is going to vote NO, so what if he isn’t there. It is the 51 YES votes that passes legislation. Why is this important? Here in Arizona it is 31 Yes votes in the State House and 16 Yes votes in the State Senate. Right now the State Senate is split 17 Republican State Senators and 13 Democrats. That means a change of only four state senators and the control of the State Senate shifts to the Democrats. The committee majorities would be Democrat and the flow of legislation would be in the hands of the New Democrat power structure. That means without the approval of the State Senate no budget, no new laws or changes to current laws could take place. Before anything goes to the Governor for a signature to become law BOTH houses of the legislature must be in agreement. Getting back to Mr. Barrett and publicly fund education systems, no money would flow, no formula of distribution could be decided until the 16 Democrats in control of the State Senate voted YES. See how powerful only a change of four State Senators would be. With one or the other bodies of the State Legislature in control of the Democratic members, things could and would get done, but the name of the game then would be compromise. Working together to draft bills that could pass both house and then be sent to the Governor to become law. The Governor could of course veto the legislative action, then more compromise would be necessary to craft legislation but it sure would beat the five or six legislative kingpins dictating budget and other public decisions from a broom closet of the State Capitol Building which by the way doesn’t even belong to the state anymore. One state senate change to start with would be in Legislative District 11, North Pima and Pinal Counties. State Senator Steve Smith with his radical ideology desperately needs to be replaced. A very qualified and highly experienced in public affairs candidate has stepped forward named Ralph Atchue. Mr. Atchue is currently Secretary/Treasurer of the Casa Grande Democrats
    club. There is one recommendation only three to go. Wow, sounds simple doesn’t it, instead of tax cuts for the rich and powerful special interests, a new day, taxpayer funds invested in Arizona families and especially our kids. Educated and job trained citizens to bring economic prosperity to a flourishing and thriving Arizona.

    Posted by

    hakeson

    on 01/12/2016 at 8:38 AM

    $190K. Nothing close to the annual comp K12’s CEO tried to shovel pass the shareholders…

    Posted by

    Susan A Smith

    on 01/12/2016 at 9:19 AM

    This is the first time I have ever seen a salary of a charter school administrator published. Since charter schools are taxpayer funded, it would be good to see all administrative salaries published every year with the same formal transparency as public schools. Back to 1994 would be even better, whether the school failed, or whether the administrator retired with a golden parachute of his/her own design. When you read and watch mainstream news reporting administrative overhead not only as a percentage but also in dollar amounts, why have “reporters” refused to report charter salaries for so many years?

    Posted by

    Thinking_Aloud

    on 01/14/2016 at 8:27 AM

    David Safier wrote a short article about the “real” Craig Barrett in 2013 including this
    “… by Barrett, who stays under the radar except when he helped campaign against Prop 204, the one cent sales tax for education. But his real power isn’t in swaying public opinion. It comes from whispering in Governor Brewer’s ear and steering the legislature toward adopting his educational ideas ie:
    Don’t add a penny to K-12 school funding. Freeze it right where it is, even though we’re spending about 20 percent less than five years ago and we’re near the bottom of the nation in per-student funding.
    Send more money to charter schools. That, of course, would mean less for district schools. And districts can forget about trying to pass bonds or budget overrides. Those funding options would be wiped out. But charters would still be able to float bonds to build new schools. So if Arizona’s student population goes up, districts would have no way to handle the overflow, and charters would be more than happy to step in and fill the void.
    Set teacher salaries based on student performance, not experience or education. Those lucky teachers in high-performing, high-rent districts could expect their salaries to climb at the expense of teachers in low-income areas. And schools, like teachers, would get performance bonuses, meaning those same high-rent districts would find themselves with extra cash while districts with low-income students who need the most resources would see their allotments shrink. And if any district slips into failing territory, the state would take it over. No extra money would go along with the takeover, just loss of local control.”
    Now we are dealing with Prop123, that will lead to the death of public instruction in our state.

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    Charter School Must Pay California Millions

    By DON DEBENEDICTIS 

         LOS ANGELES (CN) — The operator of 14 online charter schools in California must pay the state $8.5 million, provide $160 million in debt relief and reform itself to resolve charges of false advertising and using misrepresentations to increase its taxpayer funding.     The settlement should end a July 8 lawsuit the attorney general filed against Virginia-based K12 Inc. and its 14 California schools, and a 2012 whistleblower lawsuit against K12 and its California Virtual Academy @ Los Angeles.     The profit-seeking K12 and its “virtual,” or online, schools, misrepresented their students’ achievements, test scores, class size, individualized instruction and parent satisfaction, the state says in its Superior Court complaint.     All 14 California defendants are named a variation of “California Virtual Academy”: California Virtual Academy @ San Mateo, California Virtual Academy @ Los Angeles, and so on. All 14 are organized as, or operated by, nonprofit California Public Benefit corporations.     “K12 ‘provides substantially all of the management, technology and academic support services in addition to curriculum, learning systems and instructional services’ for the virtual school defendants,” the attorney general says in the lawsuit, without specifying what she is quoting in the interior quotes.     The complaint continues: “The virtual school defendants receive funds from the State of California every year to pay for the education of the approximately 13,000 students attending these schools. Pursuant to the agreements, the virtual school defendants pay significant management and technology fees to K12 based on a percentage of the total funding the virtual school defendants receive.”     The fees include the cost of using K12’s software to take the Internet classes, for which students must pay, despite the defendants’ offer of a free education, according to the state.     Also, K12 et al. advertised that graduates would qualify for the University of California and California State University campuses, though they did not offer classes in several areas required for UC admission, according to the complaint.     At K12’s direction, the 14 schools inflated their daily attendance to collect unjustified funding from the state Department of Education: They credited students with a full day at school for logging in to class for as little as one minute, according to the whistleblower lawsuit.     “All children deserve, and are entitled under the law, to an equal education,” Attorney General Kamala Harris said in a statement. “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 put the total value of the settlement at $168.5 million because the agreement requires K12 to expunge about $160 million in so-called “balanced budget credits” the company provided the online schools under their contracts. Harris called the $160 million debt relief.     But in an angry retort, K12’s CEO said the company never sought or expected to collect on the credits, which he called subsidies, not debts.     “The attorney general’s claim of $168.5 million in today’s announcement is flat wrong,” Stuart Udell said in a statement. “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.”     Udell put the value of the settlement at only $2.5 million: the amount K12 will pay to resolve claims it inflated attendance figures. It will pay another $6 million to cover the costs of the attorney general’s investigation and to fund other “enforcement cases to protect the rights of children” by the office, according to the main settlement document.     K12’s attorneys, Timothy Hatch with Gibson, Dunn & Crutcher in Los Angeles and Peter Wald with Latham & Watkins in San Francisco did not respond to requests for comment. Neither did the attorney for the charter schools, Paul C. Minney, with Young, Minney & Corr in Sacramento.     K12 did not admit wrongdoing or liability in the settlement, but it had been under fire for some time. In addition to the attorney general’s months-long probe, the California Department of Education was monitoring it, and the San Jose Mercury News published a series of investigative stories on it this spring.     The case began with a whistleblower lawsuit filed under seal in 2012 by a teacher from the California Virtual Academy @ Los Angeles. Susie Kaplar claimed she had been fired for refusing to pad her attendance figures. Because she filed the suit on behalf of the state, the attorney general’s office was able to take it over and bring its own suit.     The settlement agreement for her lawsuit includes the $2.5 million payment on attendance data. Under state law, Kaplar should collect an undisclosed portion of the settlement. She also will receive $80,000 in damages and attorneys’ fees.     Kaplar’s attorney, J. Mark Moore in Canoga Park, did not return a call seeking comment.     The California Charter Schools Association, which usually supports charter operators, praised the attorney general’s actions.     “CCSA condemns the predatory and dishonest practices employed by K12, Inc. to dupe parents using misleading marketing schemes, siphon taxpayer dollars with inflated student attendance data, and coerce [the nonprofit schools] into dubious contracting arrangements,” the association said in a statement.     It also endorsed legislation pending in Sacramento to prevent for-profit companies from controlling or operating charter schools.

    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

    Ohio’s charter schools ridiculed at national conference, even by national charter supporters

    Children stands in line for a turn on a bounce house/obstacle course during the new Pearl Academy open house as a large banner encourages passers-by to sign up for classes Friday, June 21, 2013 in Lakewood. This is at the former Saints Cyril and Methodius school building. The open house was being hosted by White Hat Management, a company that operates lots of charter schools in Ohio.

    Plain Dealer photography staff

    By

    The Plain Dealer
    Email the author | Follow on Twitter

    on March 02, 2015 at 12:23 PM, updated

    DENVER, Colorado – Ohio, the charter school world is making fun of you.

    Ohio’s $1 Billion charter school system was the butt of jokes at a conference for reporters on school choice in Denver late last week, as well as the target of sharp criticism of charter school failures across the state.

    The shots came from expected critics like teachers unions, but also from pro-charter voices, as the state considers ways to improve how it handles charters.

    Ohio has about 123,000  kids attending nearly 400 charter schools – public schools that receive state tax money, but which are privately run.

    One after another, panelists at the conference organized by the national Education Writers Association targeted Ohio’s poor charter school performance statewide, Ohio’s for-profit charter operators and how many organizations we hand over charter oversight keys to as the sponsors, or authorizers, of schools.

    “Be very glad that you have Nevada, so you are not the worst,” Stanford University researcher Margaret “Macke” Raymond said of Ohio. 

    Places like Massachusetts and Washington, D.C., she told reporters from across the country, have high standards for charter school performance.

    “Then you have folks at the low end, of which Ohio is a strong case,” said Raymond, who released a report on Ohio’s charter performance in December.

    Stanford’s Center for Research of Educational Outcomes (CREDO), found that students learn less in Ohio’s charter schools than in traditional districts – the equivalent of 36 days of learning in math and 14 days in reading.

    The National Education Association’s David Welker, a member of NEA’s charter policy team, said Ohio’s system has been taken over by “grifters” and “cheats” – the for-profit companies that run many Ohio schools.

    He was suspect about Ohio’s attempts to rein them in, saying, “the horse has left the barn.”

    The National Alliance for Public Charter Schools, a major national organization supporting the charter school movement, didn’t disagree.

    “There are some operators who are exploiting things,” said Todd Ziebarth, a vice president of the Alliance.

    He specifically named K12 Inc. and White Hat Management as major offenders. K12 is the nation’s largest provider of online charter schools and runs Ohio Virtual Academy, while White Hat is an Akron-based operator of many low-scoring charter schools that has regularly been a large donor to Republicans in Ohio. 

    As Ziebarth started naming White Hat and K12, panelist Michael Petrilli of the Fordham Institute jumped in to add The Electronic Classroom of Tomorrow (ECOT) to the list. That online school is run by William Lager, another major donor to Ohio Republicans.

    Just last month the Akron Beacon-Journal reported that former Ohio House Speaker William Batchelder formed a lobbying company that will have former House staffers lobby for ECOT.

    “Mike could probably go down a list of Ohio operators,” Ziebarth said.

    Petrilli nodded and added: “Ohio needs a top-to-bottom overhaul of its charter school sector.”

    Fordham is both a charter supporter and critic. It sponsors, or authorizes, some charter in Ohio and promotes school choice efforts, while also wanting better quality. Fordham helped sponsor the CREDO study in Ohio, as well as another study suggesting ways to reform charter laws in Ohio.

    Alex Medler of the National Association of Charter School Authorizers added his own criticisms of Ohio’s system, but far more subtle ones.

    But Medler had already made his views on Ohio’s charter system clear a year ago, when he derided Ohio’s charter school free-for-all as “the Wild, Wild West” of charters.

    Both Gov. John Kasich and Republicans in the Ohio House have made separate proposals to change the oversight and management of charter schools. A third proposal is coming soon from the Ohio Senate and State Auditor Dave Yost is expected to propose some additional changes this week.

    Some of the suggested that Fordham seeks have been incorporated into House Bill 2 or Kasich’s charter reform plan.

    While both proposals so far are receiving praise for taking on some important issues, some want them to go further.

    For another account of the criticism at the conference in Denver, see this report from the Akron Beacon-Journal.

    To follow education news from Cleveland and affecting all of Ohio, follow this reporter on Facebook as @PatrickODonnellReporter

    Ohio ignores online school F’s as it evaluates charter school overseers

    Online schools like Ohio Virtual Academy, ECOT and OHDELA with poor state report card grades won’t be counted in this year’s reviews of charter school oversight agencies.

    (LANCE MURPHEY)

    By

    The Plain Dealer
    Email the author | Follow on Twitter

    on June 14, 2015 at 8:00 AM, updated

    COLUMBUS, Ohio — It turns out that Ohio’s grand plan to stop the national ridicule of its charter school system is giving overseers of many of the lowest-performing schools a pass from taking heat for some of their worst problems.

    Gov. John Kasich and both houses of the state legislature are banking on a roundabout plan to improve a $1 billion charter school industry that, on average, fails to teach kids across the state as much as the traditional schools right in their own neighborhoods.

    But The Plain Dealer has learned that this plan of making charters better by rating their oversight agencies, known as sponsors or authorizers, is pulling its punches and letting sponsors off the hook for years of not holding some schools to high standards.

    The state this year has slammed two sponsors/authorizers with “ineffective” ratings so far. But it has given three others the top rating of “exemplary” by overlooking significant drawbacks for two of them and mixed results for the third.

    The state’s not penalizing sponsors, we found, for poor graduation rates at dropout recovery schools, portfolios of charter schools that have more bad grades than good ones and, most surprising, failing grades for online schools. 

    Online school F grades aren’t counted

    We found that the state isn’t counting the performance of online charter schools — one of the most-controversial and lowest-performing charter sectors —  in the calculations in this first year of ratings.

    That means that many F-rated charter schools that serve thousands of students won’t be included when their oversight agencies are rated this year.

    The Department of Education says recent drops in grades for online schools are “inexplicable” and that it has to develop a way to grade these “unique” schools. 

    The omission caught some of the state’s major charter supporters by surprise. The Ohio Alliance for Public Charter Schools, which says that a strong ratings plan is key to improving charters, was certain until recently that online schools would be a factor in the ratings.

    Consider the Ohio Council of Community Schools, which collects about $1.5 million in sponsor fees a year from the more than 14,000 students attending Ohio Virtual Academy and OHDELA, the online school run by White Hat Management.

    The F grades that the state gave those schools last year for failing to teach kids enough material over the school year didn’t count against the council when it was rated early this year. The result? A perfect academic rating of 100 percent and an overall rating of “exemplary,” the highest available.

    This year’s ranking also leaves out dropout recovery schools, another controversial group of 90 charter schools, because separate report cards for those schools aren’t complete.

    Mostly “ineffective,” but still “exemplary”

    Even without the online schools, the rating system doesn’t set a high standard for the schools a sponsor oversees. Instead of setting a high bar and challenging staff and overseers to meet it, The Plain Dealer’s review shows that the Department of Education set a low standard that’s met much more easily.

    In fact, a sponsor can oversee more students in schools that are “ineffective” than are “effective” and still be lauded as “exemplary” this year and next year. Sponsors only have to have 41 percent of students in “effective” schools to meet the state’s goal this year.

    Those standards will increase over time, with an eventual goal of 66 percent of a sponsor’s students in “effective” schools. But even by the 2016-17 school year, the state will only require 55 percent.

    So the Buckeye Community Hope Foundation, which sponsors 52 schools, wasn’t hammered in its rating this year despite having only 38 percent of students in “effective” schools. 

    Since 38 percent is so close to the 41 percent standard, the foundation only lost a few points in its rating and snagged an “exemplary” mark.

    Department of Education spokesman John Charlton said online and dropout recovery schools will be included in ratings next year, and that the target for having effective schools will increase over time.

    “Keep in mind this is the first year of the evaluation process, and we expect to make improvements to the system,” Charlton said.

    Ratings have high stakes

    Why do these ratings matter? Because supporters of the charter school concept have portrayed them as a way to put pressure on sponsors to make Ohio’s charter schools something to be proud of, not viewed as a drag on the state’s education system.

    Kasich and the legislature are considering tying some incentives and sanctions to the ratings in bills that could be passed by the end of this month. An easy path to the top rating of “exemplary” won’t separate strong oversight from mediocre when cash and other benefits are handed out.

    For example, Kasich proposed early this year setting aside $25 million in the state budget for charter schools to spend on new school buildings, but he wants the money to be available to schools with “exemplary” sponsors. His plan passed in the Ohio House,

    The Senate may change that plan in the next few days, making the money  available only to highly rated schools, not sponsors.

    Kasich and the House have proposed letting schools run by exemplary sponsors seek tax levies from voters, if the local school district agrees. That’s allowed only in Cleveland now.

    And Kasich and the House have proposed allowing schools run by exemplary sponsors to offer kindergarten and collect state tax dollars for each kindergarten student.

    As a penalty, Kasich and the House have proposed adding a lower rating of “poor” in the ranking, giving these sponsors one year to improve or be shut down.

    And though the standards will increase over time, the ratings completed this year will last for three years. Sponsors won’t face any effects from dropout schools, online schools or needing to have more “effective” schools until 2018.

    They won’t be rated under higher standards until after the state passes a new two-year budget in 2017 that could offer even more perks and penalties.

    Where do these ratings come from?

    The state legislature voted to start rating sponsors in 2012 and set up a basic structure in House Bill 555.

    Charter school supporters nationally look at sponsor/authorizers as fundamental to making charter schools run well. These agencies are usually local school districts that create one or two charter schools in their cities, but can be statewide charter boards, county Educational Service Centers or, in a national rarity, other nonprofit organizations.

    As we reported last year, observers in other states view Ohio as the “wild, wild west” of charter operations because it has so many sponsors and so few rules governing them. The new evaluation system in Ohio was viewed as a way to compel improvement in sponsor quality and, in turn, make schools better.

    As ordered in HB 555, academic performance makes up just a third of a sponsor’s rating. The other two components are compliance with all state and federal codes governing sponsors and how well they meet industry standards.

    As a result, one third of each sponsor/authorizer rating is based on the quality practices suggested by the National Association of Charter School Authorizers.

    How the academic portion would be handled was left up to the Department of Education.

    Not counting online schools is a surprise

    The state agency decided to drop online schools that serve 40,000 students across the state from the evaluations. In letters to sponsor/authorizers announcing the results of their reviews, David Hansen, executive director of the department’s  Office of Quality School Choice, said that the 2013-14 online school test results will simply be the “base year” to evaluate future performance.

    “I wasn’t aware that they (online schools) were not counted in the evaluation,” said Lenny Schafer, executive director of the Ohio Council of Community Schools.

    Chad Aldis, vice president of Ohio policy and advocacy of the Fordham Institute, the other charter sponsor that has already received an exemplary rating, said he was unaware of that too. Even though Fordham has been rated, it does have the academic scoring rubric used by the state.

    And Darlene Chambers, president and CEO of the Ohio Alliance for Public Charter Schools, said Thursday that she was sure online schools are being counted. She has told people for months, often in formal PowerPoint presentations, that Performance Index scores the state calculates for all of a sponsor’s schools were part of the evaluation.

    Performance Index combines test scores across multiple grades and subjects and is the state’s main measure of how much kids know. The sponsor PI scores include online schools.

    “E-school outcomes are not being ignored,” Chambers said. “It is captured in that now.”

    But when told that the state created a new academic measure that excludes online schools, Chambers said: “If it exists, I’ve not seen it. This is the first time I’ve heard of it.”

    Charlton said the Department of Education decided to use the value-added ratings of schools — a measure of student academic progress — instead of the Performance Index in the evaluations.

    And the department also chose to set aside value-added results for e-schools, he said, because of concerns over how those scores are calculated.

    Concern over scores for online schools

    Shafer said a change for the 2011-12 school year about which first-year students in online schools were counted in state report card results caused a dramatic lowering of scores for online schools. Data provided by him shows online schools mostly met or exceeded value-added targets for student growth before the change, but most failed to meet them after the switch.

    Charlton said the Department of Education dropped the online schools because of this concern.

    “Because the change in the system for measuring performance has had a significant and inexplicable impact on the e-school data, the department decided to take a year to look at those results, identify what caused the significant changes and address those causes by creating a more accurate performance evaluation system,” he said.

    It is unclear if there is a calculation “glitch,” as Schafer calls it, or if online schools saw lower grades because report cards started counting under-served kids that should have been counted all along.

    Dropout recovery ratings are incomplete

    Unlike the online schools, the state planned for a few years to exclude dropout recovery schools — charter schools that serve kids returning to school or at risk of leaving. The legislature decided in 2012 to keep them out because separate report cards for these schools would not be finished in time.

    These 90 schools don’t appear on regular state report cards because they serve a different type of student and the state has different expectations for them.

    Charlton said these schools will become part of sponsor evaluations next year, once measures of student academic growth there kick in.

    “There will be a learning gains measure available starting next year for dropout recovery,” Charlton said. “DOPR (Drop Out Prevention and Recovery) schools are being graded as soon as the grading system is in place.”

    For now, sponsors like the Ohio Council of Community Schools face no consequences for overseeing schools like the Life Skills Center of Toledo, that meets no graduation standards. The school graduates only 2.2 percent of students on time.

    A tough new growth standard

    Instead of using Performance Index as most expected, the Department of Education is using the value-added calculation of how much learning kids accomplish over a school year.

    The Department of Education has not published its academic rating criteria. Repeated requests to a link for it went unanswered.

    But Charlton said here’s what the department used in the sponsor evaluations:

    Charter schools with an A or B grade in value-added — scores that are above average — are counted as “effective” schools.

    Schools with a C in value-added — the average grade meant to show that a school met learning expectations — need to have an A, B, or C in Performance Index to be considered “effective.”

    If you have a D or F in value-added — grades that reflect kids making less than a year’s progress over a school year — your school is ineffective, regardless of performance score.

    That’s a strong departure from the state’s traditional focus on Performance Index, a measure of academic achievement.

    We have asked the department to explain why it made this choice, but have not heard back.

    To evaluate a sponsor/authorizer of multiple schools, the state counts the number of students in schools that meet the “effective” criteria vs. those in schools that are “ineffective.”

    It then looks at the ratio of “effective” school “seats” to “ineffective” ones.

    More “ineffective” than “effective”

    This first year, the state is asking sponsors’ to have a 0.7 to 1 ratio of effective to ineffective seats — less than one effective for every ineffective one — in their portfolios. As a percentage basis, that’s the 41 percent effective mentioned earlier.

    If a sponsor meets that target, it receives all 100 points for academic performance in its evaluation.

    That means that the Fordham Institute that had an almost equal number of ineffective seats to effective ones at the 10 schools it sponsors, met the state’s bar by 141 percent and earned a perfect academic score.

    That came despite overseeing schools with value-added F grades, like Sciotoville Community School in Portsmouth and Cleveland’s Village Prep, normally a well-regarded school for student growth that had abysmal results last year.

    And the low bar gave Buckeye Community Hope Foundation only a small penalty for having a ratio of 0.6 effective seats to each effective one.

    The target percentages are supposed to rise each year, Charlton said.

    Here are the expected ratios:

    2013-14: 0.7 to 1.

    2014-15: 0.85 to 1.

    2015-16: 1.05 to 1.

    2016-17: 1.25 to 1.

    Eventual goal: 2 to 1.

    Though sponsors have known that their academic performance would be evaluated since 2012, Charlton said the state agency is phasing in the standards because of the contracts that sponsors have with individual schools.

    Those contracts, which can last five years, spell out academic goals. Sponsors can’t change the expectations midway through, Charlton said.

    To follow education news from Cleveland and affecting all of Ohio, follow this reporter on Facebook as @PatrickODonnellReporter