California Virtual Academies: Is online charter school network cashing in on failure?

By Jessica Calefati, jcalefati@bayareanewsgroup.com

Posted:
 
04/17/2016 04:59:01 AM PDT

The TV ads pitch a new kind of school where the power of the Internet allows gifted and struggling students alike to “work at the level that’s just right for them” and thrive with one-on-one attention from teachers connecting through cyberspace. Thousands of California families, supported with hundreds of millions in state education dollars, have bought in.

But the Silicon Valley-influenced endeavor behind the lofty claims is leading a dubious revolution. The growing network of online academies, operated by a Virginia company traded on Wall Street called K12 Inc., is failing key tests used to measure educational success.

Fewer than half of the students who enroll in the online high schools earn diplomas, and almost none of them are qualified to attend the state’s public universities.

Elizabeth Novak-Galloway, 12, who used to be an A student, received C’s because she was missing work she never knew had been assigned, her mother said.
(Dai Sugano/Bay Area News Group)

An investigation of K12-run charter schools by this newspaper also reveals that teachers have been asked to inflate attendance and enrollment records used to determine taxpayer funding.

Launched with fanfare and promise, online schools such as K12 are compiling a spotty record nationwide, but highly motivated students with strong parental support can succeed in them. In California, however, those students make up a tiny fraction of K12’s enrollment. The result — according to an extensive review of complaints, company records, tax filings and state education data — is that children and taxpayers are being cheated as the company takes advantage of a systemic breakdown in oversight by local school districts and state bureaucrats.

At the same time, K12’s heavily marketed school model has been lucrative, helping the company rake in more than $310 million in state funding over the past 12 years, as well as enriching sponsoring school districts, which have little stake in whether the students succeed.

“Sometimes I feel like a terrible parent for enrolling them,” said Carol Brockmeier, a single mother from Santa Clara whose teenage daughters for a year attended K12’s San Mateo County-based academy, which serves an area stretching from Santa Cruz to San Francisco.

K12 is the nation’s largest player in the online school market. In California, it manages four times as many schools as its closest competitor, filling a small but unique niche among the state’s roughly 1,200 charter schools. And despite a dismal record of academic achievement in California and several other states — including Ohio, Pennsylvania and Tennessee — the business regularly reports healthy profits.

“This company has shown an inordinate level of failure, yet it’s continually given lifelines by policymakers who have irresponsibly ignored what’s going on,” said Luis Huerta, a Columbia University associate professor of education and public policy who is one of the nation’s leading experts on online education.

Taking a closer look

K12 was launched in 2000 by Ronald Packard, a former Goldman Sachs banker, and William Bennett, U.S. secretary of education under President Ronald Reagan, with seed money from Oracle chief executive Larry Ellison and disgraced junk bond king Michael Milken.

The company opened its first California Virtual Academies in San Diego, Kern and Tuolumne counties 14 years ago and has watched enrollment in the 17 schools it operates grow from several hundred students in 2002 to more than 15,000 today. Under state law, each academy may enroll students who live in adjoining counties. That means California children who live almost anywhere south of Humboldt County can sign up for one of K12’s schools.

To understand how the network of online academies operates, this newspaper reviewed hundreds of pages of education and tax records, examined complaints filed with public agencies and lawsuits, and interviewed dozens of parents, teachers and students affiliated, or once affiliated, with the schools. The investigation found:

• 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 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.

• Michael Kirst, president of the State Board of Education, worked for K12 as a consultant before Gov. Jerry Brown appointed him to the post in 2011. In March 2015, the board voted against shuttering a school run by the company that California Department of Education staff said should close because it was in financial disarray, marking the only time such a recommendation has been ignored.

K12 repeatedly declined this newspaper’s requests to interview its executives about its California schools’ academic programs and finances, citing an ongoing investigation by Attorney General Kamala Harris into California’s for-profit online schools. In a series of emails, however, K12 spokesman Mike Kraft defended the schools’ academic performance, arguing that “they will not have the same test scores as schools in high-funded districts with favorable demographics.”

“Many families choose online schools because they are fleeing a school or situation that wasn’t working for their child,” wrote Kraft, K12’s vice president for finance and communications. “Their academic performance expectations should be put into context.”

Students’ struggles

K12’s virtual schools have no classrooms, no buildings and no routine face-to-face interaction between teachers and students. Instead, teachers sign on mostly from home and connect to students over the Internet.

“Being in this school can feel so lonely,” said Alexandria Brockmeier, 17, who asked her mother to enroll her in an online school in late 2014 because she felt she didn’t fit in at Santa Clara High School.

Her school day began whenever she booted up her computer and logged on to the company’s programs. Since all lectures are recorded and can be listened to later, the students aren’t required to attend class or participate in real time. So, Alexandria said, she rarely did.

If questions popped up while she was working independently, she would often email her teachers seeking help. But Alexandria said they didn’t always respond and weren’t always available to tutor her one-on-one, even though the company heavily promotes personal attention in advertisements.

Kraft, K12’s spokesman, said the schools’ policy is for teachers to reply to student emails within 24 hours on school days, but most responses take far less time. Occasionally, however, responses take longer — for example, when teachers are out sick or on leave, he said.

Alexandria had been failing several of her classes when, in January, she suddenly lost access to K12’s software. Her mother, Carol, said she learned the following day that Alexandria and her sister, Jenna, had been locked out without warning because they’d fallen so far behind in their schoolwork.

“I’m disappointed in myself, my kids and this school system,” said Carol, who works full time at Mission College in Santa Clara and has been raising the girls on her own since her husband died in 2011 from early onset Alzheimer’s disease. “I’m stressed to the nth degree.”

As a special education student, Jenna — before she and her sister were forced to withdraw — was supposed to receive extra time to complete assignments and extra support from teachers. But, her mother said, she didn’t get it, and that made things even tougher for Jenna, 15.

“If I could stay home with the kids and say, ‘OK, let’s do this lesson,’ maybe it would have worked out for them,” Carol said.

Jenna isn’t the only K12 student in California who has gone without special education services, according to formal complaints filed by academy teachers with local school districts and county offices of education last year seeking investigations into the adequacy of special education provided by K12 schools. The services students are being denied range from speech therapy to counseling to daily in-person tutoring, the complaints allege.

Kraft said the company believes the complaints are “without merit.”

Not all parents and students are dissatisfied with the K12 model, which can work for highly motivated and closely monitored students such as Lillian Lewis, an 11-year-old Pleasanton gymnast who trains at least six hours a day and dreams of competing in the Olympics. That discipline, along with support from her parents, makes her a good fit for her online school, California Virtual Academy at San Joaquin.

“We didn’t know what to expect at first, but so far it’s working out great,” said Lillian’s mother, Milly, who signed her up last summer.

Elizabeth Novak-Galloway, 12, center, seen with mother Gabriela Novak and sister Kira, 8, was pulled from a K12 school by her mom. (Dai Sugano/Bay Area News Group)

But most students who end up in online schools are far less successful.

Gabriela Novak says she pulled her daughter Elizabeth from K12’s San Mateo County school after a year because the difficulty communicating with her overworked, disorganized teachers was maddening. Throughout sixth grade, Elizabeth’s teachers repeatedly assured her mother and Elizabeth that she was all caught up with her assignments.

But at the end of the year, her report card showed several C’s because she was missing work she never knew had been assigned, her mother said. The experience shot the confidence of the onetime A student and left her desperately behind her peers academically when she enrolled in a San Francisco Unified brick-and-mortar school.

“She doesn’t believe in herself anymore,” Novak said. “We’re trying to get her back on track, but it’s not going to be easy.”

Kraft said that since parents and students can track online classwork in “near real-time,” the final grades shouldn’t have come as a surprise.

Widespread problems

It’s not uncommon for students to struggle in online schools such as the ones run by K12, said Gary Miron, a professor of education at Western Michigan University and another leading expert in online education. He pointed to a study published in October by a research group called Mathematica that found the vast majority of students in online schools suffered because of the lack of a structured learning environment where live classroom attendance is required.

“A school that requires such little contact with teachers might be appropriate for students at the graduate level,” he said, “but it’s surely not appropriate for students in kindergarten through 12th grade.”

Kraft confirmed that the company’s schools do not require “live attendance.” Instead, he said, teachers work with students to develop a program that fits their individual needs.

A scathing report published in October by Stanford University’s Center for Research on Education Outcomes, or CREDO, found that most online charter students across the country had far weaker academic growth than their peers in brick-and-mortar public schools.

Each 180-day school year, students are supposed to gain an equivalent number of days of learning in each of their core subjects as measured by standardized state tests. Instead, online charter students nationwide are advancing the equivalent of only 108 days in reading compared with their peers. And they’re not advancing at all in math.

The students are learning so little in that subject that it’s as if they hadn’t attended a single math class all year. And in California, the Stanford report shows, the students attending online schools such as those operated by K12 and other smaller companies are falling 58 days of math instruction behind their peers rather than advancing 180 days.

‘Shocking’ numbers

“Some of these numbers are pretty shocking,” said James Woodworth, a senior research analyst at CREDO who noted that these learning deficits are the largest the group has ever recorded in any of its research on different types of charter schools over the past 15 years.

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.

Kraft criticized the Stanford report’s methodology, pointing out that it did not account for how late in the school year online students might have enrolled or the reasons they left their local districts. In addition, he said, the students that K12 schools serve are generally more at risk, more disadvantaged and more likely to enter online charters after having struggled or failed in traditional schools.

A report last year by the Colorado-based National Education Policy Center, however, shows that the share of online school students across the country who are living in poverty, struggling with a disability or learning English as a second language is substantially lower than the national average for all public schools. And an analysis of the most recent state data by this newspaper shows that K12’s schools actually enroll fewer low-income students, English language learners and students from minority groups than public schools as a whole.

K12’s California Virtual Academy at San Mateo’s graduation rate is 39 percentage points below the statewide average of 78 percent, and none of the graduates met the entrance requirements for enrollment at a University of California or California State University campus, according to data collected by the state over a five-period ending in the 2013-14 school year.

K12’s other 16 schools graduated a total of only 56 students who met the requirements. Across the state, just under half of all public school graduates meet the standards. Kraft said so few of K12’s students met the requirements because UC and Cal State don’t accept arts and laboratory science courses completed at virtual and home schools. As a result, students must seek out alternative routes to qualify such as SAT and Advanced Placement tests or community college courses.

Asked why graduation rates at the company’s schools dip far below the state average, Kraft said the types of students who enroll often arrive off track for graduation. He provided the newspaper figures that are not tracked by the state to show that the graduation rate in 2014 for roughly 200 students who remained enrolled all four years in K12-run California schools is much higher — 79 percent.

“By accepting all students, even those already well behind pace for timely graduation, online public schools are serving an important mission but may have a substantially negatively impacted graduation rate,” he said.

Attendance policy

Some K12 teachers point to the school’s attendance policies to explain students’ lack of learning.

A handbook distributed to teachers at the start of the school year says attendance credit may be given even if “very few lessons are completed daily,” so long as the student is “actively engaged in completing assigned schoolwork.”

In a training session during the last school year, a California Virtual Academies administrator told teachers that students need “at least one minute of attendance in order to satisfy the attendance portion of our requirement,” according to a recording of the training obtained by this newspaper.

The lenient policy may have more to do with funding than keeping the truancy officer off students’ backs. State funding for California schools is based on a metric known as “average daily attendance.” The closer schools get to perfect attendance, the more money they receive.

Funding is linked to attendance instead of enrollment because research shows a strong association between showing up at school and success in class. Students who are chronically absent are more likely to drop out, become unemployed and end up on welfare, according to a report on truancy released in February by the state Attorney General’s Office.

Kraft said it was “incorrect” that the academy allowed students to log on for only one minute for a day’s attendance. He said that teachers are trained to review each student’s work and determine how many days of attendance to credit. Still, several teachers interviewed by this newspaper confirmed the policy, and in June a group of them filed formal complaints with local school districts and county offices of education seeking investigations of the schools’ attendance practices.

“One minute of work establishes attendance at this school, and in my many years as an educator, I’ve never heard of that,” said Ellen Welt, of San Jose, a former California Virtual Academy at San Mateo teacher. She resigned last summer out of frustration with some of the school’s policies.

Julianne Knapp, who teaches at the San Mateo County school, said she also thinks her students would be better off if participation in class were required. She said only a fraction of her 75 or so students regularly attend class, and she has no way of knowing if the others watch her recorded lessons.

“A minute a day is not OK with me,” said Knapp, who boots up her computer from her home in Campbell or a cavernous meeting room at a nearby public library to teach students through a virtual blackboard.

Under California law, a student is considered truant if he or she is absent without a valid excuse more than three days in a school year. A student who misses 18 days of school or more is considered chronically absent and would be flagged for intervention.

In separate complaints filed in June, the teachers seek investigations into the schools’ withdrawal policies because “many students who are not sufficiently attending school stay on the rolls with no action taken to withdraw them.”

Kraft disputed those complaints, insisting “California Virtual Academies follow state rules and regulations regarding the reporting of student attendance and the enrollment of students in its schools.”

Since the teachers filed their complaints and the attorney general started investigating, the company has been cracking down harder on students, such as the Brockmeiers, who were chronically absent, Knapp said.

But during the last school year, she taught a student who was absent for 45 days straight, yet she was unable to remove him from her rolls or help him find another school that might have been a better fit. School administrators wouldn’t allow it, she said.

“For all I know, he was reading Russian novels this whole time,” Knapp quipped. “In reality, he wasn’t learning anything, and that’s not fair to him.”

Julianne Knapp, who teaches for the K12-run San Mateo County school, works alone, instructing her online students through a virtual blackboard. (Dai Sugano/Bay Area News Group)

Districts benefit

In California, bureaucrats don’t monitor the day-to-day operations of charter schools. Instead, state law requires districts that vet and approve charter applications to oversee the schools once they open. But there are no guarantees — and no monitoring from the Department of Education — to assure that is happening.

Jefferson Elementary School District is responsible for overseeing California Virtual Academy at San Mateo’s operations, and the duty comes with a reward. The school has paid the district more than $1 million in oversight fees since the small Daly City-based school system approved the academy’s application in 2006, allowing it to enroll students of all ages who live in San Francisco, San Mateo, Santa Clara and Santa Cruz counties.

Larger schools pay even more. The Los Angeles academy, which enrolls quadruple the number of students as the San Mateo academy, typically pays the West Covina Unified School District more than $1 million a year.

The academy in San Joaquin County — where Alameda and Contra Costa county students may enroll — has paid $763,000 to its sponsoring district since 2007. The Sonoma County academy, which serves students in the North Bay, has paid its sponsor $889,000.

Regular charter schools often pay similar fees, but their authorizers are more inclined to take the job seriously, experts say, in part because they have a financial incentive. San Jose Unified, for example, oversees brick-and-mortar charter schools that serve students who might re-enroll in the district’s schools and bring their per-pupil state aid with them if the charter fails. Districts that oversee online schools are looking after kids who hail from dozens of districts and who can become as invisible as the schools themselves.

In an interview last year, Jefferson Elementary Superintendent Bernie Vidales conceded that he knew very little about the online school for which he’s responsible. Vidales said he wasn’t sure how many kids were enrolled, where they lived or even how well they had done on the last round of state tests — even though the California Charter Schools Association insists state law requires authorizers to monitor student performance closely.

The test results are easily accessible online. During the 2012-13 school year, the last before California switched to a new state test, California Virtual Academy at San Mateo earned an Academic Performance Index score of 747 — below the state average of 791 and Jefferson’s average score of 815. The academy’s rating also ranks lower than each of the district’s 15 schools.

Vidales acknowledged that Jefferson Elementary is paid to look after the online school. With close to 1,000 pupils, it is easily the largest school the 6,000-student district oversees. But, he said, the district did little more than review the academy’s budget and make sure it has enough cash to cover costs.

In February, despite concerns raised by the school community, the Jefferson Elementary school board voted unanimously to approve the school’s charter to stay open another five years. At the meeting, it asked no questions after Vidales endorsed the school’s “reasonably sound education program with appropriate metrics to measure progress” and told the board he had turned down the school’s offer to supply documentation about its business practices because its auditors’ word “was sufficient for us, at least for me.”

When the newspaper asked Vidales last year about the district’s obligation to regulate the charter school, Vidales pinned the responsibility on the state.

“The biggest action we could take would be raising a red flag,” Vidales said.

But Cindy Chan, director of the California Department of Education’s Charter Schools Division, disputed this interpretation of state law and said the reverse is true: Authorizers such as Jefferson Elementary, not state bureaucrats, are primarily responsible for overseeing online schools.

“We support robust regulation,” but “when it comes to charter schools, state law provides (us) a very limited role,” Chan said.

When the newspaper last week asked Vidales about the state’s position, he agreed with Chan in part, acknowledging that the district would be required to address problems at the school, but he still believes the onus to investigate rests outside the district.

This disconnect exposes several gaps in state law, said Myrna Castrejón, who had been the California Charter Schools Association’s senior lobbyist before accepting a position in January as executive director of a charter advocacy organization called Great Public Schools Now. Schools that want limited oversight can seek approval from hands-off school districts, and no matter how little oversight the districts perform, most still get paid, she said.

One glaring example: In Southern California, a tiny district with 35 pupils called Spencer Valley Elementary is responsible for overseeing the more than 3,000 students who attend California Virtual Academy at San Diego.

Leniency in oversight

Another online academy’s overseer has been especially forgiving.

A few years ago, the California Charter Schools Association publicly called for California Virtual Academy at Kern to close because of low test scores. The request came three years after an investigation launched by the Kern County superintendent of schools revealed the school had falsely reported its teacher-student ratio on forms used to determine state funding, resulting in an overpayment of about $1 million.

But instead of closing the school, Maricopa Unified School District, the authorizer, allowed the academy to simply change its name to California Virtual Academy at Maricopa.

“Right now, we have no way to hold our authorizers accountable,” Castrejón said. “And that’s a problem.”

When the State Board of Education had the opportunity to revoke the charter of one of K12’s schools last year because of problems with its finances, something unprecedented happened. For the first time since California’s first charter school opened almost 25 years ago, state board members, including President Michael Kirst, ignored their staff’s recommendation to shut down the school and instead granted K12’s San Francisco Flex Academy — a school that combines online and regular instruction — an additional five years to operate.

Kirst, professor emeritus of education and business administration at Stanford University, sat on K12’s Education Advisory Committee — reporting between $1,000 and $10,000 of income in 2010 — before severing his ties to the company shortly before Brown appointed him to the Board of Education in 2011.

As part of his work for the company, Kirst spoke on behalf of K12’s San Mateo County school, among others, at public meetings. But he repeatedly declined to speak to this newspaper about K12’s track record in California.

Knowing that California’s top education officials supported the company responsible for her daughter’s academic woes makes Gabriela Novak’s blood boil.

“We trusted them,” she said, “and we feel totally betrayed.”

Database producer Daniel J. Willis contributed to this report. Contact Jessica Calefati at 916-441-2101. Follow her at Twitter.com/calefati.

Read Part 2 of this investigation: California Virtual Academies’ operator exploits charter, charity laws for money, experts say.

Virtual Academy in Greenfield seeks new content provider

By ANITA FRITZ

Recorder Staff

Wednesday, December 16, 2015

(Published in print: Thursday, December 17, 2015)

GREENFIELD — The Massachusetts Virtual Academy is looking at its options as its contract with Virginia-based K12 Inc. curriculum provider expires in June 2016.

Carl Tillona, executive director of the Greenfield-based virtual school, said MAVA received three proposals after issuing a request for proposals last month.

K12 was one of them, and Connections Academy and Edgenuity were the other two, said Tillona.

“We’re going to choose what’s best for our students,” said Tillona. “We want the absolute best curriculum for our students.”

The first diploma-granting virtual school in the state has a current enrollment of 651 students. Tillona said that includes 19 students from Greenfield. Local school districts pay $6,700 per student per year for those who choose the virtual route with MAVA.

Tillona said the virtual school, which teaches students across the state via the Internet, serves many different types of students, including those with medical problems, athletes who have to train during the day, and students who find brick-and-mortar schools are not a good fit for them.

In 2010, Greenfield School Committee voted to open the state’s first virtual school, but that same committee vote 7-0 unanimously to shut it down in 2013.

The virtual school, which is a public school controlled by the state and structured like a charter school, opened shortly after, changing its name to Massachusetts Virtual Academy, which is headquartered in Greenfield.

“There are a lot of great curriculum providers for virtual schools now, a lot more than when MAVA first selected K12,” said Tillona.

He said the contract that is expiring was for three years. He said he believes the next contract will be for one year with an option to extend it.

“We want to have the best curriculum alongside the best teachers in Massachusetts,” said Tillona. “To do that, we need to explore all of our options.”

The virtual academy currently takes an active role in all of the teacher hiring and training, and also in the curriculum choices that K12 provides, said Tillona.

The virtual school intends to continue those practices to ensure that its instructors, teaching materials and techniques meet and exceed state standards, he said.

Tillona said can’t be sure what, if any, changes there will be, because a provider has not been chosen, yet.

“We’ll have to see,” he said. “We could choose K12, or we could choose someone else. We could choose two providers. We just don’t know, yet.”

In October 2014, the Massachusetts Board of Secondary and Elementary Education placed the virtual school on a 20-month probation, after the department raised concerns about its academic programs and compliance with regulatory requirements. That probation will end in June 2016 — at the same time its new contract will begin.

Tillona said the virtual academy has worked hard to provide the best education possible to its students.

For more information about Massachusetts Virtual Academy at Greenfield, visit www.mava.k12.com.

Can California AG’s new bureau clean up for-profit virtual schools?

A K12 Inc subpoena revealed in an SEC filing reveals wider investigation of virtual charters

Inside a carefully decorated home, a young girl in a navy sweater and a plaid scarf sits in front of a roaring fire place. Two framed photographs of her sit in the background, perched on a granite mantel. This is Emma. She’s in sixth grade.

“I used to go to traditional schools, and I’d get left behind,” she says. “There’s 30 students in my class and there’s only one teacher, and she can’t always get to each student.”

Emma stars in a promotional video on the website for California Virtual Academies, a chain of online virtual schools run by the online school management company K12 Inc.

Yet it’s online students like Emma who are now reportedly getting left behind — one issue, among many, that may have helped spark a new state investigation of the virtual schools industry.

On September 24, 2015, K12 Inc. was subpoenaed by the California Bureau of Children’s Justice, a new arm of the California Attorney General’s Office. A K12 SEC filing revealed that the subpoena was related to an industry-wide investigation of for-profit online charter schools.

“At this early stage, the Company is not aware of any material adverse effect this industry-wide investigation would have on the results of its operation and financial condition,” the filing stated.

A history of controversy and complaints

This isn’t the first time that K12’s California branch has come under scrutiny .

Earlier this year, a searing report from In The Public Interest , a DC-based research and policy institute, found that California Virtual Academies (CAVA), a chain of 11 virtual charter schools in California, was “a failing system that consistently produces more dropouts than graduates.”

The report called CAVA’s San Diego branch, which serves around 3,000 students, a “low-quality education in a poorly sourced educational setting.” It also noted that CAVA only graduated around 58% of its students, as opposed to approximately 80% in California overall.

That’s a problem, in part, because high school dropouts cost the state a reported $46 billion dollars in decreased revenue annually.

Before the release of the report lambasting CAVA, the California Charter Schools Association (CCSA) included a CAVA school, CAVA Kern in Simi Valley, in its  recommendations of 10 schools to close due to academic underperformance and a failure to meet the association’s Minimum Criteria for Renewal.

The other nine charters on CCSA’s list included Los Angeles County Online High , run by Olin Virtual Academy, currently still in operation.

A total of 31 charters ranked “Below CCSA’s Minimum Criteria for Renewal.”

Thirty-six online charters operate in California, according to the National Education Policy Center.

California teachers have also spoken out against CAVA, banding together to stage protests complete with props like empty school chairs meant to represent CAVA’s low graduation rates.

“We need local school districts to hold CAVA administrators accountable, so our students can thrive,” CAVA Los Angeles teacher Stacie Bailey told the San Gabriel Valley Tribune .

A New Office; A New Investigation

Last February, California Attorney General Kamala Harris opened a new office within the California Department of Justice: the Bureau of Children’s Justice. Two of the new bureau’s five core priority areas include tackling the state’s “elementary school truancy crisis” and “discrimination and inequities in education.”

Within seven months, at least one subpoena had already been filed in relation to an industry-wide investigation into for-profit online charters in the state.

Kristin Ford, a press secretary at the California Department of Justice, declined to comment “in order to protect the integrity of our investigations.”

A 2013-14 report by the National Education Policy Center, ” Virtual Schools in the U.S. 2014 ,” agreed, finding that 30% of online charters hadn’t received state accountability or performance ratings.

“Of the 231 schools with ratings,” the report says, “only 33.76% had academically acceptable ratings. On average, virtual schools’ Adequate Yearly Progress (AYP) results were 22 percentage points lower than those of brick-and-mortar schools.”

And in California, only 5 out of 36 virtual schools met AYP targets.

Virtual school performance: A national problem

Around the country, virtual charters have been scrutinized in Maine , Florida , Oklahoma , Ohio , and Massachusetts.

Overall, graduation rates for virtual schools are around half the national average, the NEPC report says .

And a recent 2015 report of 158 virtual charter schools from Stanford’s Center for Research on Education Outcomes (CREDO) found that the schools have an “overwhelming negative impact” on student learning as compared to traditional schools.

K12 Inc. has also long been the subject of intense media scrutiny. Last year, Bloomberg reported that the company had “lost management contracts or been threatened with school shutdowns in five states this year.”

And in 2011, the New York Times investigated the company, noting that “a portrait emerges of a company that tries to squeeze profits from public school dollars by raising enrollment, increasing teacher workload and lowering standards.” High-profile investors began  shorting K12 stock .

Are companies anticipating virtual classroom closures?

With ongoing controversy around transparency, student performance, and financial clarity, K12 has expressed interest in turning its focus to ed-tech and curriculum development instead.

A recent Buzzfeed article noted that the company’s CEO, Nathaniel Davis, said “… Most growth opportunities exist in the small slice of K12’s business devoted to selling content and curriculum,” reporting that the company planned to focus on “an increasing amount of energy and investment on selling its curriculum, called FuelEd , as well as software and other individual services …”

Education Week also reported the  pending transition , calling it a “rebranding move.”

New legislation proposed by Democratic Assemblyman Roger Hernandez that would prohibit all for-profit corporations from operating charter schools, online or not, in the state was successfully adopted by the California legislature earlier this year, in February. Yet the bill won’t go into effect until 2017.

For now, California Virtual Academies remain in expansion mode, with a self-reported total enrollment of around 16,000 students.

It’s unclear whether the new state investigation into the for-profit virtual school industry by the Attorney General’s office will change that.

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K12 Inc. Beats And Still Goes to the Principal’s Office? Here’s Why

K12 Inc. Beats And Still Goes to the Principal’s Office? Here’s Why

October 31, 2014 |

Investors in K12 Inc (NYSE: LRN ) should have been rejoicing when the company reported earnings yesterday. Instead, the stock fell by as much as 14%.

Consider all the good news:

  • Revenue ($237 million) and earnings (loss of $0.18 per share) figures both came in ahead of expectations.
  • The company met its updated enrollment goals set in early October.
  • The mid-point of revenue guidance offered by management was above analyst expectations.

If you go back to the earnings preview I published on the company earlier this week, you could be forgiven for being completely baffled by these results.

But one very important piece of information was buried at the end of the company's release that should give all Fools reason to pause.

A business shift that doesn't look good for shareholders

As you know, K12 has been forced to acknowledge that there are other options out there for students who want to learn via on-line schools. CEO Nate Davis, in a recent conference call, had this to say:

We're … seeing more traditional school districts offering their own full-time online programs, along with supplemental learning options and online summer courses … these market dynamics have also created a challenge to enrolling students in our traditional managed programs.

But Davis said the company could be nimble on its feet, focusing on growth in non-managed programs to make up for the shortfall. In essence, the difference between managed programs (which has been K12's historical focus) and non-managed programs is that in the latter, local school districts provide instruction and management while relying on K12's technology platform and content.

In managed programs, K12 covered all of these bases.

As I mentioned in my earnings preview: “it's not quite clear how margins will be effected in the long run by a shift toward non-managed programs.”

I may have been wrong to say “margins” instead of “revenue”, but the news from K12's release is clear: non-managed programs bring in a lot less money. Here's what I mean

Revenue per enrollment

Currently, non-managed students only make up 15% of all students under the K12 banner, but they are the supposed “growth driver” moving forward.

The problem is that the total amount of revenue K12 gets per student for non-managed programs is much lower – like a whopping 70% lower!

Adding insult to injury, revenue trends for the non-managed programs are heading south, and were down 17% from last year.

CEO Davis said that the company still believes it can grow managed programs over the long-term. With K12 still trading for about 29 times earnings, it will need to fulfill that promise.

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Gov. Haslam invested in K12 education company at one time

The Tennessean 12:15 p.m. EDT September 9, 2013

Gov. Haslam once owned shares of the troubled online school, but sold them before becoming governor.

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(Photo: The Tennessean)

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By Chas Sisk | The Tennessean

Gov. Bill Haslam owned a block of shares in K12 Inc., the education company behind a troubled online school in Tennessee, but sold the investment before taking office or weighing in on two bills that affected the company directly.

Haslam invested at least $10,000 in K12 Inc. in July 2008, when he was mayor of Knoxville, but had sold off all of his shares by July 2009, when he was running for governor. The investment was reported in a filing with the Tennessee Ethics Commission, as required under state law.

Haslam said he did not know about the investment before The Tennessean inquired about it last week. The governor said the investment, one of about 350 listed in a disclosure that he signed in January 2009, had been made by an investment manager.

“The honest answer is I wasn’t aware that I ever did,” he said at a meeting with The Tennessean’s editorial board. “I, a long time ago, found that there were people who know how to manage my investments a lot better than I do, so I haven’t made investment decisions in a long time.

Haslam declined to provide details about the amount he invested in the company, how many shares he owned or the timing of the transactions. Spokeswoman Alexia Poe cited the governor’s long-standing policy against sharing such information about his investment portfolio.

Poe said the governor’s track record suggests his one-time investment has not swayed him to favor the company.

“We’ve been tougher than not on K-12,” she wrote in an email.

Virginia-based K12 Inc. was founded in 1999 and currently provides online teaching to more than 100,000 students, mostly by partnering with local school districts. The company’s early supporters included former U.S. Secretary of Education William Bennett, Oracle CEO Larry Ellison and so-called “junk bond king” Michael Milken, who pleaded guilty in 1990 to six charges related to securities fraud.

Company criticized

K12 Inc. reported an operating income of $45.7 million in the fiscal year that ended June 30, but the company has been criticized as providing an inadequate education to large numbers of its students.

The Tennessee Virtual Academy, which K12 Inc. operates on behalf of Union County Public Schools, has ranked among the worst in the state in each of its two years of existence.

Haslam’s investment came about eight months after the company’s initial public offering in December 2007. The governor said he sold off the stock at a loss, a claim consistent with the company’s stock history.

The investment appears only once in his disclosure filings. State law does not require him to record stock sales on which he earns less than $1,000.

Haslam moved his stock portfolio into a blind trust when he became governor in January 2011, making it impossible for anyone other than his investment manager to know whether he has reinvested in the company since then.

Haslam signed the bill in 2011 that allowed K12 Inc. to begin operating in Tennessee, but he also has been critical of the school’s performance. Last year, he introduced and signed legislation that allows the Department of Education to close virtual schools that repeatedly post failing test scores.

Reach Chas Sisk at 615-259-8283 or csisk@tennessean.com, or on Twitter @chassisk.

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Suburban group takes aim at state charter school commission

By Elena Ferrarin

A suburban group wants to get rid of the Illinois State Charter School Commission, which they argue shouldn’t be able to overturn decisions made by local school districts.

About 10 members of Northern Illinois Jobs With Justice met Saturday morning at the St. Charles Public Library to kick off a campaign to repeal the legislation that created the commission in late 2011.

NIJJ spokeswoman Mary Shesgreen exhorted people to meet with their state representatives to push for the initiative.

The commission shouldn’t be able to make such decisions because its nine members are appointed, not elected, Shesgreen said. She’s planning to meet with state Sen. Mike Noland on Tuesday, she added.

“We want SB 79 rescinded,” Shesgreen said. “We have democratically elected school boards, and they represent the will of the people.

Before the commission’s creation, charter school applicants could appeal local denials to the Illinois State Board of Education, whose members are also appointed, charter school commission chairman Greg Richmond said.

“There are many, many appointed bodies in this country,” he said.

Shesgreen said the group also plans to fight any future attempts by Virtual Learning Solutions to start an online charter school for students in kindergarten through 12th grade in 18 school districts from Algonquin to Plainfield.

Virtual Learning planned to contract with K12 Inc., a leading online curriculum company that manages virtual charter schools in 33 states.

After the plan was rejected by all 18 school boards, Virtual Learning began the appeal process with the charter school commission last month.

Richmond said the commission will vote Tuesday on a recommendation by its executive director, Jeanne Nowaczewski, to deny the appeal.

That recommendation is based on legal analysis of a one-year moratorium on establishing new virtual charter schools signed by Gov. Pat Quinn in late May, Richmond said.

NIJJ members also charged that commission members are pro-charter schools, and not impartial when hearing appeals.

Richmond disputed that by pointing out that most local school board decisions have not been reversed.

Three charter school appeals were approved by ISBE in 15 years, while the commission has approved two out of 11 or so appeals so far, he said.

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Virginia’s first statewide virtual school likely to close

The Carroll County School Board plans to end its partnership with the contractor that operates Virginia’s largest full-time statewide virtual school , effectively shutting down a program that serves more than 350 students.

The decision to close what was also the state’s first online school deals a blow to Gov. Robert F. McDonnell’s goal of expanding virtual education options . It also leaves hundreds of families, including many in Northern Virginia, in the lurch for the coming school year.

Carroll County has definitely pulled the rug out from [under] everyone,” said Cherie Nielsen, a parent leader of the Virginia chapter of Public School Options, an advocate for nontraditional public schools. “We are scrambling.

The School Board in the southern Virginia county voted in mid-April to discontinue the contract, citing administrative and liability concerns. But families around the state did not find out about the change until late last week, when they received an e-mail from the Virginia Virtual Academy.

Jeff Kwitowski, a spokesman for K12 Inc., the Herndon-based company that operates the school, said the decision also came as a surprise to the company. “We are aggressively looking for a new partnership” to keep the school open, he said.

Taxpayer-supported, privately operated virtual schools have been receiving increased public scrutiny, including criticism of their performance and their funding arrangements.

Last year, a K12 shareholder filed a class-action suit alleging that the company had made false statements about students’ academic performance . The company agreed to a $6.75 million settlement this spring.

About 275,000 students nationwide are enrolled in full-time, publicly funded virtual schools, and enrollment has been growing about 30 percent a year, according to Susan Patrick of the International Association for K-12 Online Learning, a trade association.

Virginia offers online courses through the state’s Department of Education, and many districts, including the Fairfax County school system , are creating virtual schools available to their own students.

But the Virginia Virtual Academy, which opened in 2009, was the first attempt to offer a full-time program to students statewide. A second statewide program opened in 2012 and serves about 130 students through a partnership between K12 and King and Queen County. Another statewide school was briefly available through the school system in Buena Vista City, near Lynchburg, but the contract was not continued.

Developing such programs often proves difficult as online communities of students and teachers try to take root in school systems that have long operated brick-and-mortar schools at local taxpayer expense and with local school board control.

Some states have created statewide school districts to oversee virtual schools, but Virginia’s constitution gives local governments jurisdiction over public education. So K12 must offer its online curriculum through local school districts.

The partnership with rural Carroll County had a distinct financial advantage for the for-profit company. Carroll County receives more in per-pupil state aid than most districts, because of a formula that favors poorer districts, and all of the virtual academy’s students are counted as Carroll students, regardless of where they live.

Virginia’s first statewide virtual school likely to close

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By Michael Alison Chandler, Published: May 1

The Carroll County School Board plans to end its partnership with the contractor that operates Virginia’s largest full-time statewide virtual school, effectively shutting down a program that serves more than 350 students.

The decision to close what was also the state’s first online school deals a blow to Gov. Robert F. McDonnell’s goal of expanding virtual education options. It also leaves hundreds of families, including many in Northern Virginia, in the lurch for the coming school year.

More news about Virginia

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EdX turns 1. Now what?

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Massive open online courses, or MOOCs, are changing higher ed. But how, exactly, remains to be seen.

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.

Carroll County has definitely pulled the rug out from [under] everyone,” said Cherie Nielsen, a parent leader of the Virginia chapter of Public School Options, an advocate for nontraditional public schools. “We are scrambling.”

The School Board in the southern Virginia county voted in mid-April to discontinue the contract, citing administrative and liability concerns. But families around the state did not find out about the change until late last week, when they received an e-mail from the Virginia Virtual Academy.

Jeff Kwitowski, a spokesman for K12 Inc., the Herndon-based company that operates the school, said the decision also came as a surprise to the company. “We are aggressively looking for a new partnership” to keep the school open, he said.

Taxpayer-supported, privately operated virtual schools have been receiving increased public scrutiny, including criticism of their performance and their funding arrangements.

Last year, a K12 shareholder filed a class-action suit alleging that the company had made false statements about students’ academic performance. The company agreed to a $6.75 million settlement this spring.

About 275,000 students nationwide are enrolled in full-time, publicly funded virtual schools, and enrollment has been growing about 30 percent a year, according to Susan Patrick of the International Association for K-12 Online Learning, a trade association.

Virginia offers online courses through the state’s Department of Education, and many districts, including the Fairfax County school system, are creating virtual schools available to their own students.

But the Virginia Virtual Academy, which opened in 2009, was the first attempt to offer a full-time program to students statewide. A second statewide program opened in 2012 and serves about 130 students through a partnership between K12 and King and Queen County. Another statewide school was briefly available through the school system in Buena Vista City, near Lynchburg, but the contract was not continued.

Developing such programs often proves difficult as online communities of students and teachers try to take root in school systems that have long operated brick-and-mortar schools at local taxpayer expense and with local school board control.

Some states have created statewide school districts to oversee virtual schools, but Virginia’s constitution gives local governments jurisdiction over public education. So K12 must offer its online curriculum through local school districts.

The partnership with rural Carroll County had a distinct financial advantage for the for-profit company. Carroll County receives more in per-pupil state aid than most districts, because of a formula that favors poorer districts, and all of the virtual academy’s students are counted as Carroll students, regardless of where they live.

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fairfaxvoter1 wrote:

5/1/2013 2:38 PM PDT

I did not like a company taking advantage of our efforts to equalize opportunity around the state, which involve paying far more per student in rural or poor areas. This company’s response was to look at the list of school districts like a menu, pick the one with the largest per student payments (because of those local conditions), and then act like a vacuum and suck up that money, contributed by all Virginia taxpayers, even though the service they provided had nothing to do with that locality and served kids in more affluent parts of the state. This took gaming the system to a whole new level and I am glad it is over.

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Jaime McCament responds:

5/1/2013 4:05 PM PDT

Fairfax voter you have the right to your opinion and I would never tell you otherwise but do you even know how much money it costs to send my special needs son to a regular public school? Do you even understand that when he was in the regular public school that he was far ahead of the kids in his class but they didn’t offer him a way to succeed just holding him back to work with the slowest kids in the regular general education class? People who think that they know all about how this school works and how it doesn’t help students are clearly wrong. My son is succeeding at home and does far better than he ever did in school. He gets one on one schooling instead of stuffed in a classroom with a bunch of kids who bully and pick on him. That is not my opinion that is a fact, because of this ruling my son will be left without a school. A lot of families will be left without a school. I paid $500 to send my kid to Carroll County and K12 got one cent of that money it went straight to Carroll County.

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Rimfire responds:

6:59 AM PDT

Face it fairfaxvoter1, you have something against businesses charging for things that your liberal mind things should be free.

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