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

California’s Charter School Mugging

Politicians punish a company for resisting unionizing its schools.


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


Associated Press

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


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.

Charter Groups Want More Regulations for Virtual Charter Schools


By David Safier

on at 4:00 PM

click to enlarge

  • Courtesy of PhotoSpin

Now this is an interesting development. Some prominent charter school organizations have published a report advocating stricter regulations to improve the performance of virtual charter schools, also known as on-line schools. This isn’t an entirely new development. Charter school organizations have been trying to weed out poorly performing schools from the charter ranks, and this is their latest effort. More at the end of the post about the positives and negatives of this push.

Three organizations, National Alliance for Public Charter Schools, National Association of Charter School Organizers and 50CAN, joined together to publish A Call to Action To Improve the Quality of Full-Time Virtual Charter Public Schools. The organizations support virtual charters, but they’ve read the reports about how poorly students at those schools perform compared to students at other public schools and believe the schools should be more carefully regulated.

The facts about the virtual schools in the report look to me to be accurate. A vital bit of information is that 70 percent of the schools are run by for-profit organizations, directly or indirectly, which means the profit motive is going to trump education whenever the two are in conflict. Some other facts: there are 135 full-time virtual schools in the country; 79 percent of their students are in virtual schools with more than a thousand students; virtual school serve more students in poverty and fewer English language learners than traditional public schools.

The report’s recommendations are specific and, if implemented, could doom one of the biggest players, K-12 Inc., a publicly traded corporation (Arizona Virtual Academy, or AZVA, in one of its schools) whose many sins I’ve written about over the years and whose failings are being subjected to increasing scrutiny. The proposal is that enrollment be limited to hundreds, not thousands of students, and if the schools want to grow, they need to meet performance goals. That would be a stake in the heart of K12 Inc. whose profits are based on continual growth and whose stockholders are growing increasingly skittish (its stock is currently trading at about 11, down from a 2011 high of 36). AZVA has over 4,000 students. Another branch, Ohio Virtual Academy, has over 10,000 students. The corporation would crumble if it had to cut its schools’ student populations dramatically.

The report also recommends that virtual schools be funded based on their real costs, another potentialstake in the heart of the for-profit model. Right now, most virtual schools get close to the same per-student state funding as brick-and-mortar schools even though they don’t have physical buildings to pay for and maintain, and their teachers often have twice the student load of teachers in other charters and school districts (A 50-to-1 student-teacher ratio is the standard at K12 Inc. schools). The report estimates that per student costs at virtual schools are 60 percent of the costs at brick-and-mortar schools. Take away their inflated public funding—remember, taxpayers pay for charter schools, just like we pay for school districts—and they lose their profit margins.

It’s good to see charter school organizations actively pursuing some of the bad actors in their midst, and I agree with almost everything I read in this report. However, there’s a bit of a caveat I need to add. When they go after poorly performing charters, their targets are almost always schools with students from low income families. It’s true, some of those schools are doing a lousy job, just like some district schools do a bad job with their low income students, but some charters serving those students do terrific work, even though their test scores are at the low end of the spectrum because of socioeconomic factors beyond the schools’ control. If charter organizations work together with state regulators to carve out the genuinely bad schools, that’s a good thing. However, their motives may not be that pure. Every time a charter with low test scores is closed, regardless of the reason, the average test scores for the remaining charter schools rise. Closing charters serving low income students for any reason, good or bad, can give the charter PR people the kind of undeserved bragging rights they love. “Look at our scores! We’re more successful than school districts,” they can say, even though their higher scores may be a result of serving a different population. The poster child for this type of self congratulation is the BASIS chain which has a variety of ways to screen out academically undesirable students, then brags about its students’ academic achievement. The “education reform”/privatization folks would love to be able to say the same kind of thing about charters as a whole, and the easiest way to do that is to close schools serving low income students.

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


The Plain Dealer
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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

Charter Groups Call Out Virtual Schools

In August 2014, there were 135 full-time virtual charter schools operating in 23 states and the District of Columbia.

A coalition of charter school advocates banded together Thursday to take a shot at some of their own – virtual charter schools – and urged state policymakers to tighten regulations on their lesser-known school-choice stepsisters, which have come under fire for poor student performance.

“When national groups that advocate for and champion charter schools question the impact of virtual charter schools on student achievement, policymakers should take note,” said Chad Aldis, vice president for Ohio policy and advocacy with the Thomas B. Fordham Institute, a conservative-leaning education policy organization.


Propping Up the School-to-Prison Pipeline

The groups – the National Alliance for Public Charter Schools, the 50-State Campaign for Achievement Now and the National Association of Charter School Authorizers – published a set of sweeping recommendations for how states should overhaul their virtual charter schools, complete with calls for shuttering the poorest performers.

Among the many detailed recommendations, the groups called on states to set minimum academic performance standards for virtual charter schools whose charters are in the process of being renewed, and for enforcement mechanisms to ensure that all charter schools, including full-time virtual charter schools, meet those minimums.

In addition, the groups recommended that states create a method to hold charter authorizers accountable for results, and said an entity should be tasked with regularly monitoring those authorizers’ performance. States should also require charter authorizers to show via annual audits that they are using all of their oversight money for oversight functions.

“These provisions are tailored to the unique problems that have emerged among too many full-time virtual charter schools, which require states to enact significant policy changes,” said Todd Ziebarth, senior vice president for state advocacy and support at the National Alliance for Public Charter Schools.

Best High Schools: Top Charter Schools]

Greg Richmond, president and CEO of the National Association of Charter School Authorizers, urged those bodies also to work within existing state policy frameworks to close chronically low-performing virtual charter schools.

“Authorizers have a legal and a moral responsibility to close chronically low-performing charter schools of any kind, including full-time virtual charter schools,” he said. “In many cases, this would not require a change to state law.”


STEM Should Be Part of Every Pre-K Program

As of August 2014, there were 135 full-time virtual charter schools operating in 23 states and the District of Columbia – about twice as many as in 2008 – and serving approximately 180,000 students. A majority of the schools are run by for-profit organizations and serve large numbers of poor and white students.

The recommendations come on the heels of reports by the Center for Research on Education Outcomes, the Center on Reinventing Public Education and Mathematica Policy Research that showed when compared with their classroom-based traditional public school counterparts, full-time virtual charter schools fail across multiple metrics.

For example, in math and reading in a given year, full-time virtual charter school students learn essentially no math compared with their peers in classroom-based traditional public schools, according to the Center for Research on Education Outcomes report. In fact, students in virtual charters, the report showed, experienced the equivalent of 180 fewer days of learning in math and 72 fewer days of learning in reading in comparison with traditional public school students.

Moreover, all subgroups of students enrolled in virtual schools – including when students are broken down by race, economic background and native language, as well as students in special education – reportedly perform worse in terms of academic growth than their classroom-based peers.

“If traditional public schools were producing such results, we would rightly be outraged,” the groups charged in their set of recommendation. “We should not feel any different just because these are charter schools.”


The View From a Testing Giant

The recommendations underscore that there is a place for virtual charter schools, especially for rural students seeking to avoid a lengthy bus ride, home- or hospital-bound youth who want to stay in school despite an illness, and high school students looking for an alternative to dropping out.

Still, the groups called on state policymakers to ensure the sector is more tightly monitored so students are not slipping through the cracks.

“A few states have opted to simply ban full-time virtual charter schools, but this solution risks limiting parental choice without giving otherwise high-performing virtual charter schools a chance to operate,” said Nina Rees, president and CEO of the National Alliance for Public Charter Schools. “This is why we need a better regulatory framework to govern full-time virtual charter schools.”

Eight states do not allow full-time virtual charter schools, according to the alliance report: Delaware, Maryland, Massachusetts, New Jersey, New York, Rhode Island, Tennessee and Virginia.

Currently, enrollment in full-time virtual charter schools is highly concentrated in three states – Ohio, Pennsylvania and California – which collectively enroll over half of full-time virtual charter school students nationwide, according to National Alliance research.

In Ohio alone, some schools enroll upward of 10,000 students.

“If Ohio leaders are serious about improving student outcomes for virtual-school students, they’d be wise to consider these recommendations,” Aldis said.

Criticism escalates for online charter operator

By John Fensterwald | June 27, 2016 | No Comments

Credit: OJO for iStock.

(Updated  June 28 with statement from K12, Inc.)

A full audit by the state controller and legislation that will be heard this week could threaten the operation of California Virtual Academies, a network of nonprofit online charter schools tied to the publicly traded education company K12, Inc.

On Friday, the office of State Controller Betty Yee announced it will conduct a $300,000 audit of CAVA in the wake of news media reports of questionable attendance records, poor academic performance of its 14,000 students and evidence of a conflict of interest regarding the nonprofit school’s connections to its sole-source supplier and operator, K-12. If the audit substantiates mismanagement and improprieties, State Superintendent of Public Instruction Tom Torlakson could recommend that the State Board of Education revoke CAVA’s charters.

On Wednesday, the Senate Education Committee will take up Assembly Bill 1084, authored by Assemblywoman Susan Bonilla, D-Concord. Primarily targeting K12, Inc., it would ban nonprofit online charters from contracting with for-profit companies for instructional services. The bill also would eliminate for-profit online charter schools, of which there are a handful in California.

The bill stands a good chance of making it to Gov. Jerry Brown’s desk. The Legislature passed a less sweeping version – banning for-profit online charters but failing to address the K12, Inc.-CAVA connection – last year. But Brown vetoed AB 787, and in his veto message wrote, “I don’t believe the case has been made to eliminate for-profit charter schools in California.” And he cautioned about using “somewhat ambiguous language” that could be interpreted to “restrict the ability of non-profit charter schools to continue using for-profit vendors.”

Bonilla is convinced that mounting criticism of profit-driven online charters, CAVA in particular, and calls within the charter industry for reform warrant tight restrictions. And she said for-profit companies shouldn’t be running charter schools. “There is a conflict between making money for shareholders and spending it for educating students,” she said.

In a statement Tuesday, Mike Kraft, vice president of finance and communications for Virginia-based K12, Inc., wrote, “There has been an enormous amount of misrepresentations made about the California Virtual Academy, CAVA, schools as a result of unfair and biased reporting, and by the agenda of some Sacramento special interests. Each of the CAVA schools we serve are transparent and are also audited each year by the California Department of Education for compliance with state education laws and regulations.”

“The CAVA schools and their Boards will work with the Controller to review the various issues identified,” he continued, “and we believe the result of the audit will clarify the many inaccurate reports and allegations that are circulating about the CAVA schools.”

The California Charter Schools Association estimates that 2 to 3 percent of the state’s charter schools are affiliated with or run by for-profit entities and enroll 20,000 to 30,000 students – 4 to 5 percent of charter school students in 2015-16. Only one organization, Opportunities for Learning, with six schools, is an actual for-profit corporation, according to the association.

CAVA, with 14 schools, enrolls approximately 14,000 students. In a two-part investigation by reporter Jessica Calefati this year, the Mercury News reported that fewer than half of CAVA students graduate, and “almost none” pass the courses required for admission to the California State University and the University of California. CAVA told the newspaper that the graduation rate for students who stick with the program for all four years is 79 percent, about the state average. Go here for its response to the series.

The newspaper reported that CAVA teachers were instructed to record the attendance of students who check in online for as little as one minute daily, enabling the school to bill the state for a full day’s tuition payments. In June 2015, more than 30 CAVA teachers filed complaints with the state and charter authorizing districts charging that CAVA violated state and federal laws by failing to provide special education services and inflating enrollment figures. CAVA denied all of the charges, and suggested they were part of an effort to unionize teachers at the schools (see EdSource story).


A study of online charters in California by the Center for Research on Education Outcomes, or CREDO, at Stanford University found that online students were far behind their classroom-based peers. Based on test scores, CAVA students on average fell a third of a year behind their peers in math.

Virtual schools fall under the larger category of independent study schools under current state law. Because of how they are geographically located, CAVA’s charters can enroll students in all but remote counties in Northern California. The Mercury News reported that CAVA prefers to pursue authorizing approval through small districts without the capacity for effective oversight. The California Virtual Academy of San Mateo is authorized by the 7,000-student Jefferson Elementary School District in Daly City, which, the newspaper reported, has taken in more than $1 million in oversight fees during the past decade. The superintendent acknowledged that he knew little about the charter organization’s operation that his district by law is required to monitor.

Independence questioned

The state controller’s audit will examine whether the boards of trustees of the CAVA campuses have maintained the arm’s-length distance in their dealings with K12, Inc. that the law requires between charitable organizations and entities they contract with. The Mercury News investigation found that K12, Inc. named the trustees of the CAVA of San Mateo, who routinely approved all motions at meetings run by a K12 employee. By providing all instruction services, such has hiring and managing teachers and running the school operation, K12, Inc. is entitled to as much as 75 percent of a school’s revenue, the Mercury New reported.

In a report earlier this month, the National Alliance for Public Charter Schools and the National Association of Charter School Authorizers pointed to “significant problems” with online charter schools and concluded, “Left unchecked, these problems have the potential to overshadow the positive impacts this model currently has on some students. We urge state leaders and authorizers to address these problems head on instead of turning a blind eye to them.” The associations called for enrollment criteria for admission to online charters, caps on school enrollments and for regional charter authorizers with the expertise to oversee online charter schools.

Colin Miller, vice president of policy at the California Charter Schools Association, disagreed with the report’s recommendations but said that his association “shares some of the same concerns” about for-profit charters and is “open to middle ground” on restricting them.

AB 1084 would define online charters as schools in which “at least 80 percent of teaching and pupil interaction occurs via the Internet.” It would “prohibit a charter school from contracting with a for-profit entity for the provision of instructional services.” Bonilla said it was written this way to exclude the purchase of textbooks and curricular materials from for-profit companies.

But Eric Premack, executive director and founder of the Sacramento-based Charter Schools Development Center, said the bill raises “basic definitional issues” that Brown foreshadowed in his veto message last year.

“A lot of charters contract for special education services and for staff development. What do you mean by instructional services, and where do you draw the line?” he asked.

John Fensterwald covers education policy.

Take this article with a grain of salt.  It’s from K12 themselves.  Better put on your hip waders…

The three- volume Online Charter School Study (October 2015) prepared by Mathematica, the Center for Reinventing Public Education (CRPE) and the Center for Research on Education Outcomes (CREDO) provides the country’s most in-depth and systemic look into full-time public virtual charter schools. The report is a starting point with respect to the need for more and better analysis of student performance in virtual charter schools. For instance, the study demonstrates a high mobility rate and the unique nature of students within this sector of public schools, however the student matching process did not take into account the length of enrollment, reason for enrollment, effect of mobility, or persistence over time. With additional relevant data, the study can inform the next round of research.

The study also makes conclusions that affirm what leaders in virtual schools have known for more than a decade. It confirms that virtual charter school students are eligible for free/reduced price lunch at a higher rate than traditional students (48 percent compared to 39 percent). The study also demonstrates that students in virtual charters had lower than average test scores prior to enrolling in the virtual school. In fact, one-third fewer virtual charter students are in the top-scoring decile than traditional students and there are 40 percent more virtual charter students in the bottom decile.

Decades of research show the effects of income on student performance, and there is an emerging body of research showing prior state assessment performance is a strong predictor of future performance. While these conclusions are sobering for those of us who got into education to positively impact student performance, they demonstrate that students are disproportionately academically at-risk prior to enrolling in virtual charter schools.  In fact, academic struggles are one of the main reasons why parents choose to transfer their children to these schools.

The policy volume of the study, written by CRPE, offers several recommendations that are somewhat disconnected from the other volumes of the report. For instance, the CREDO volume on student performance concludes that “network” virtual charter schools managed mostly by private “for-profit” providers do not perform worse, on average, than non-network schools, yet the recommendation is to further regulate these providers, absent evidence related to student outcomes.

Perhaps the biggest disconnect between the volumes of the study is on student engagement. The Mathematica volume discusses in great detail the importance and challenges of student engagement in the virtual charter school model. This is not news to teachers or leaders within these schools who have been developing instructional strategies, technological tools, and support structures to improve student engagement. We had hoped the volume would include constructive policy recommendations in this area. Instead, it proposes a more crude approach:  screening enrollments to ensure students are the right “fit” before allowing them access to public virtual charter schools.

A fundamental principle for public schools — especially for public schools of choice — is equal access and opportunity for all students. Virtual charter schools are public schools. They offer families access to a full public education option regardless of their geographic location. They bring the school to the student wherever she lives, meaning that for millions of families across the country, virtual schools represent the only public school option available. Take that away – or restrict equal access through some type of selection process – and virtual schools no longer become public schools. Further, it is hard to fathom what type of admissions criteria could both safeguard equal access and parent choice, while also “filtering out” students who are somehow pre-determined not to succeed. This would inevitably lead to the most difficult-to-educate students never having the chance to try virtual schools, even though they may have the potential to succeed. And they can succeed.  We’ve seen thousands of students deemed “at-risk” thrive and graduate from virtual charter schools.

The focus must be on student engagement. Rather than denying equal access and opportunity to students on the front end, policies should be designed to enable online and blended schools to move students out who are unable or unwilling to engage in their individualized learning program.  Currently, public virtual schools are forced to use traditional, often arcane, attendance and truancy regulations to remove students, which rely on traditional “seat time” attendance measures instead of engagement. 

While CRPE calls attention to a provision in the Arizona law that relates to student performance while enrolled in the virtual school, there is no recommendation to leverage this type of policy to include engagement. States should consider expanding the Arizona policy to include student engagement. A follow-up study examining the impact of engagement on performance for all types of students in virtual schools would be informative. While virtual charter schools are not the right fit for all, experience has shown us that any student, regardless of her circumstances, who engages in the online learning model can succeed.

Another disconnect is the recommendation to move public virtual schools out of the charter school sector entirely. Advocates have touted the increased transparency within charter schools since 1995.  These public schools are required to comply with all state reporting requirements while serving students entirely based on choice. Charter schools do not serve students zoned in by zip code. Charters must be open to all students, and parents have the freedom to make choices based on school-level information. There is no greater form of transparency in public education than within the charter sector.

On the other hand, there is a lack of transparency and information available on the performance of state-run and district-run virtual schools. In fact, several reports, including Keeping Pace with K-12 Digital Learning, have pointed out that it is difficult to get visibility into the true number of students enrolled in these school programs or their academic performance due to lax reporting requirements. Would anyone expect greater transparency for full-time public virtual schools by placing them within these structures?

A final point from the policy section at odds with the historical record is the description that education service providers have supported poor regulations, while simultaneously pointing out strong laws that were the recommendations made by these same providers.  The states CRPE cites as having good laws — Arizona, Colorado, Florida, North Carolina and Oklahoma — have benefitted from the input provided by education service providers such as K12 Inc. In fact, traditional critics of charters and school choice have criticized the role that educators and practitioners from digital education service providers played in advocating for these policies.  Across many states, K12 has worked with policymakers to inform the process to ensure responsible, effective, and transparent policies are enacted. In every state cited by CRPE as a model, K12 has supported the specific policy provisions that are deemed worthy of replication. 

K12 continues to advocate for improved policies in digital learning. For example, K12 has proposed better and more reliable student-centered accountability frameworks for schools that experience higher rates of mobility through school choice.  Here are a few:

Reform Graduation Rates – Rather than 4-year cohort, create a value added approach to graduation rate by measuring student progress toward graduation requirements for the actual time the student is enrolled in a public school.

Full Academic year – The longer a student is enrolled in a school, the more the school should be held accountable for his or her performance. State accountability frameworks should therefore be weighted to measure student proficiency and growth based on number of full academic years students are enrolled in a school.

–      Less than 1 full year = 0

–      Two full years  = 1.0

–      Three full years = 2.0

–      Four or more full years = 3.0

Student Growth – Annual individual student academic growth measurements should carry more weight within a state’s accountability framework than static proficiency scores. Growth models should also be sufficiently sensitive to growth on the high and low ends of the spectrum.

Measure Student Engagement – No student should be denied equal access and opportunity to public schools of choice.  However, states can develop a definition of engagement for students enrolled in alternative public schools of choice (including online and blended schools).  Students who do not demonstrate sufficient and ongoing engagement may be dis-enrolled.

On funding, K12 has long advocated for models that fund schools based on students enrolled on a real-time or current-year basis. Schools should not receive funding for students they are no longer educating.  Funding models based on single student count dates, predominately advocated by traditional school systems, are incompatible in states where school choice is valued and multiple education options exist.  Funding should follow the child to their school of choice at any point during the year.

It is our hope the Online Charter School Study is the first of many analyses of public virtual charter schools. This report points out the need for additional studies based on the unique nature of these schools’ students and the quickly evolving online learning instructional model. K12 will continue to be transparent, share data, and seek opportunities to collaborate on research and policy.  Our goal is to constantly improve, raise outcomes, and help every student succeed.

Mary Gifford is Senior Vice President of Education Policy and External Affairs at K12 Inc.  Jeff Kwitowski is Senior Vice President of Public Affairs and Policy Communications. 

Jessica Calefati of the San Jose Mercury-News wrote a shocking series about the online charter schools of K12 Inc., which have the lowest graduation rate in the state, and which counts students “present” if they log on for only one minute.

Millions of public dollars fund the California Virtual Academies (CAVA), which operates for profit and is listed on the New York Stock Exchange. The company, founded by Michael and Lowell Milken, delivers a substandard education. It should be closely supervised or shut down.

Unfortunately, as Calefati discovered, the legislature is moving at a snail’s pace to authorize an audit of CAVA. Nothing seems to be happening. Much clucking of tongues, but no action.

CAVA is the lowest performing school in the state. Why hasn’t it been shut down long ago? If you recall, K12’s online charter in Tennessee was the lowest performing school in the state, and not even the State Commissioner Kevin Huffman was able to get it closed. Why?

Governor Brown likes charters. When he was mayor of Oakland, he opened two charters. The legislature has been unwilling to stand up to the rich and powerful California Charter Schools Association. CCSA should be demanding close scrutiny of CAVA, whose tactics embarrasses all charter schools. Their silence is deafening.

When the legislature dared to pass a bill banning for-profit charters, Governor Brown vetoed it. He also vetoed a bill to require charter schools to ban conflicts of interest.

So California has a greedy, rapacious charter industry, whose growth will continue unchecked until public schools enroll only students the charters don’t want. Fraud, waste, and abuse in the charter industry will grow without oversight. Conflicts of interest and nepotism will proliferate. Charters will continue to be run by entrepreneurs and speculators.

Does anyone think these developments are “reform”? From a distance, they look like graft and corruption.

via Diane Ravitch’s blog


K12 Inc.: Bay Area lawmakers call for audit of California Virtual Academies operator

By Jessica Calefati, jcalefati@bayareanewsgroup.com

05/31/2016 05:08:41 AM PDT

SACRAMENTO — A bipartisan group of lawmakers is calling for a state audit of a profitable but low-performing network of online charter schools following this newspaper’s investigation of K12 Inc., the Virginia company at the heart of the operation.

Published last month, the two-part series revealed that the Wall Street-traded company reaps tens of millions of dollars in state funding while graduating fewer than half of the students enrolled in its high schools. It also found that teachers at K12’s California Virtual Academies have been asked to inflate attendance and enrollment records used to determine how much state funding the schools receive.

California Virtual Academies teacher Julianne Knapp teaches her students during her online class on Nov. 18, 2015, at a public library in San Jose. (Dai Sugano/Bay Area News Group)
Dai Sugano

Assembly members Phil Ting, D-San Francisco, and Catharine Baker, R-San Ramon, say an audit is needed because the Legislature takes allegations of misspent public money seriously — and that any company profiting while students struggle deserves intense scrutiny. Lawmakers say its findings would likely set the stage for legislation aimed at addressing the problems at online schools.

“This reporting raises serious questions that demand a more thorough investigation, which is why I will work with my colleagues to pursue an audit of for-profit charter schools and the mechanisms in place to hold them accountable,” said Ting, who is joining with Assembly Speaker Anthony Rendon and other Assembly members to craft the audit request.

Nationally, 70 percent of students enrolled in online charters attend schools managed by for-profit companies such as K12 and its leading competitor, Connections Academy, while 30 percent attend charters that are independent or run by nonprofits.

Sacramento lawmakers aren’t the only ones troubled by K12’s track record. Tom Torlakson, California’s superintendent of public instruction, vowed last week to collaborate with the legislators on possible fixes.

“I am concerned by some issues and practices exposed in this article,” Torlakson said. “I am exploring options to investigate laws and regulations governing these types of charter schools and will work closely with legislators interested in this subject.”

But coming up with solutions to such politically charged problems won’t be easy.

Gov. Jerry Brown is a strong supporter of charter schools and has already vetoed bills that sought to force all charters to comply with conflict-of-interest and transparency rules and ban for-profit companies from operating them. And earlier this year, two bills that would have addressed some of the problems highlighted in this newspaper’s series stalled under pressure from interest groups.

The newspaper’s investigation found that students who spend as little as one minute during a school day logged on to K12’s school software may be counted as “present” in records used to calculate state funding. The investigation also revealed that the districts tasked with overseeing K12’s California schools have a strong financial incentive to turn a blind eye to problems because they receive a cut of California Virtual Academies’ revenue to oversee the schools, which now enroll about 15,000 students.

“Taking the bull by the horns and regulating these irresponsible for-profit companies shouldn’t be a wild idea,” said Bruce Fuller, an education policy professor at UC Berkeley. “If nothing happens and K12 faces no consequences, the company stands to poison the legitimacy of the whole (charter) movement.”

Asked about the possible audit, K12 spokesman Mike Kraft did not comment. But he argued in an email that a student logged onto the company’s software for a minute would not result in additional state funding for K12 without a determination by the student’s teacher that he or she had completed required work.

“In other words, a log on alone — regardless of duration — would not be submitted by CAVA (California Virtual Academies) nor be eligible for funding,” Kraft wrote.

Any bill that creates a new rule for charter schools will require Brown’s support. But a group of Assembly Democrats hope the weight of a Joint Legislative Audit Committee’s findings is what’s needed to draft something the governor finds “palatable,” said John Casey, a spokesman for Rendon, D-Paramount.

Members of the upper and lower house who sit on the committee meet several times a year to consider lawmakers’ audit requests. Once those requests are approved, they’re transferred to California State Auditor Elaine Howle, who is currently working on more than a dozen committee requests. Typically, audits take several months to complete.

“As a parent of school-age children and education advocate, I don’t see any integrity in counting a student who has logged in to an online class for as little as one minute as ‘present’ for instructional purposes or for calculating attendance funding,” said Assemblywoman Baker, the Bay Area’s lone GOP lawmaker.

Drafting legislation that the powerful California Charter Schools Association and California Teachers Association can both support will be another big hurdle to regulating schools run by companies like K12.

In March, Assemblywoman Patty López, D-San Fernando, introduced Assembly Bill 2242, which would have banned for-profit corporations such as K12 from operating charter schools. But the bill also sought to block charters from being part of a network that allows them to share administrators and pool resources to purchase curriculum, banning a structure used today by nearly half the state’s charter schools.

Lopez soon abandoned the bill after charter advocates flooded her district office with letters and calls urging her to drop it.

“After hearing many concerns from families in my district, many of them that I personally know, I have made a decision to not move forward with AB 2242 in the form that it is today,” López said in a statement. “My intent with the bill was not to harm charter schools, but to bring transparency when it comes to public funding.”

The California Charter Schools Association would support legislation that bans for-profit companies like K12 from operating charter schools, but so far no bills have been introduced that deal strictly with that topic, spokeswoman Emily Bertelli said.

Sen. Steve Glazer, D-Walnut Creek, encountered equally passionate opposition to Senate Bill 1434, which sought to impose new restrictions on the school districts that review prospective charter schools’ applications and oversee them once they open their doors.

Glazer’s bill, which was sponsored by the California Charter Schools Association, would have required all school districts that authorize charter schools to annually submit financial statements to the charters, showing how they spent the oversight fees collected. Once the California Teachers Association voiced numerous concerns with the sweeping proposal, which the union detailed in a lengthy April letter addressed to Glazer, the measure stalled before being heard by the Senate Education Committee.

K12’s critics such as Diane Ravitch — a New York University education historian and former U.S. Department of Education assistant secretary — say the company’s track record in California is so worrisome that there should be no excuse for lawmakers dragging their feet.

“The California Legislature should feel obligated to do something about it,” Ravitch said. “It’s incomprehensible that no one seems to care.”

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