Charter Schools & "Choice": A Closer Look

From the National Education Policy Center

"It is no secret. The news media is full of reports about problems with cyber schools. Some recent examples include:

• In January 2018, the nation’s largest virtual school, Electronic Classroom of Tomorrow (ECOT), closed. There was a subsequent failure to determine what happened to 2,300 of 11,400 students. The school shut down after the state of Ohio found that ECOT had overstated its enrollment by more than 9,000 students, resulting in a $60 million overpayment.

• The Akron Digital Academy quietly closed last month because it could not repay the state the $2.8 million it owed for failing to correctly track enrollment. Akron Public Schools dropped its sponsorship of the school in 2013 due to problems such as poor student performance.

• The state of New Mexico is in the process of shutting down the state’s largest virtual school, also for poor academic performance.

An Education Week resource, updated through 2017, includes hundreds of news stories, state audits, and reports about online schools, many highly negative, dating back to the early 2000s.

Some of the best and most updated information about these schools is provided in the NEPC’s Sixth Annual Report on Virtual Education, titled Full-Time Virtual and Blended Schools: Enrollment, Student Characteristics, and Performance.  The report provides a census of the nation’s full-time virtual schools as well as institutions that blend online learning with face-to-face instruction. The report also includes student demographics, state performance ratings and, where available, analyses of school performance measures.

Michigan public radio station WKAR mentioned the NEPC report in a piece about another study that found that a quarter of the 101,000 Michigan students enrolled in online classes did not pass a single one. In an interview with the outlet, Gary Miron, author of the Virtual Education report, said: “We need a moratorium right now; we have to stop. No more growth for the schools; no more schools. The schools that are performing extremely poorly, we have to take sound steps to dismantle them.”

Ed tech-focused EdScoop devoted an article to the NEPC report’s findings, noting that: “While the average ratio in the nation’s public schools is 16 students per teacher, virtual schools reported having close to three times as many, and blended schools clocked in with twice as many.” In a piece about a rural school district that partnered with for-profit virtual education company K12 Inc., NBC News quoted the report’s finding that district-operated online schools tend to perform better than charter school versions. Yet the latter continue to dominate the sector. And despite the highly publicized problems with virtual schools, the sector continues to thrive. “It’s rather remarkable that virtual schools continue to grow even while study after study confirms that these schools are failing,” Miron told NEPC.

“Students are clearly being negatively impacted when they attend these schools, and revenues devoted to public school systems are being siphoned off to the private companies that dominate this sector.”...

For full post, see: 
https://nepc.colorado.edu/publication/newsletter-virtual-schools-073118 

By Tony Wan

"Nothing should unite both critics and fans of education technology more than reports of companies making big money from shoddy products. But what about when the critic may also make a profit by betting that a company will tank because of its lackluster service and results?

At the Value Investing Congress in New York City on September 17, hedge fund manager Whitney Tilson of Kase Capital delivered a whammy of a case against online school provider, K12 Inc., with a 110-slide talk on "An Analysis of K12 (LRN) and Why It Is My Largest Short Position," shared on Business Insider. He said that K12 is his portfolio’s biggest short position.

Tilson is a staunch and outspoken fan of education reform. He blogs regularly on education reform and circulates weekly newsletters championing charter schools, reform and edtech in general. He joined Teach for America in its early days and serves on the board of KIPP. And he invests.

At last week’s meeting, Tilson argued that K12 Inc., the largest online K-12 education provider in the U.S., and manager of online charter schools in 33 states and D.C., is due for a fall. Although the company’s stock (ticker: LRN) has risen 70% since January 2012, Tilson says it’s “absurdly overvalued and sure to collapse.”

Tilson’s analysis of why K12 is a poor investment briefly describes its financial numbers, then dives deeply into why it’s failing to deliver education value.

On the numbers (slides 11-19): K12 says its revenue has grown 32% annually over the past decade and that projected earnings per share is expected to climb 32% over the next 12 months. Smoke and mirrors, contends Tilson. He notes that although net income and EBITDA (earnings before interest, taxes, depreciation and amortization) have climbed over the past two years, revenue growth is slowing. Profit margins (over the past two years) have been erratic. And other indicators--how long it takes K12 to get paid, its aggressive accounting practices, and so on--make Tilson jittery.

Even more ominous are Tilson’s concerns about K12’s practices. Among them: (slide 8):

• "K12's aggressive student recruitment has led to dismal academic results by students and sky-high dropout rates, in some cases more than 50% annually."
• "I have been looking for years and have not found a single K12 school that is free of scandal and posting even decent (much less good) academic results."
  
  

Through personal interviews, analysis of a class action suit and media coverage, Tilson has compiled a lengthy indictment of the quality of K12's service. He recounts stories from former employees (slides 21-25) who say the company follows a "growth-at-any-cost mentality" and "increasingly target[s] at-risk students that it knows are likely to fail." He has strong reservations against K12's publicized academic "successes" after poor results and "sky-high" dropout rates at its schools in Colorado, Pennsylvania and Tennessee (slides 33-59). These issues, along with other regulatory infractions, place K12 under intense scrutiny from state officials. Tilson notes that the company will not be opening schools in any new states next year (slide 81).

Following his presentation, Tilson wrote in an email that "K12 reminds me of the subprime mortgage lenders and for-profit colleges when they were flying high--and the ending will be similar I believe."...

Full post is at the following page: 

https://www.edsurge.com/news/2013-09-21-why-investor-whitney-tilson-is-betting-against-k12 

By Alan Singer 

For full post, see: http://www.huffingtonpost.com/alan-singer/how-hedge-funds-will-prof_b_13855900.html 

For full post, click on title above or here: 

http://www.truth-out.org/news/item/35144-cashing-in-on-kids-172-alec-education-bills-push-privatization-in-2015 

By Brendan Fischer and Zachary Peters, PR Watch

"ALEC's agenda would transform public education from an accountable institution that serves the public into one that serves private, for-profit interests. (Photo: School Money via Shutterstock; Edited: LW / TO)

Despite widespread public opposition to the corporate-driven education privatization agenda, at least 172 measures reflecting American Legislative Exchange Council (ALEC) model bills were introduced in 42 states in 2015, according to an analysis by the Center for Media and Democracy, publishers of ALECexposed.org and PRWatch.org. (A PDF version of this report may be downloaded here.)

One of ALEC's biggest funders is Koch Industries and the Koch brothers' fortune. The Kochs have had a seat at the table - where the private sector votes as equals with legislators - on ALEC's education task force via their "grassroots" group Americans for Prosperity and their Freedom Partners group, which was described as the Kochs' "secret bank."

The Kochs also have a voice on ALEC's Education Task Force through multiple state-based think tanks of the State Policy Network, ALEC's sister organization, which is funded by many of the same corporations and foundations and donor entities.

ALEC's Education Task Force is also funded by the billionaire DeVos family, which bankrolls a privatization operation called "American Federation of Children," and by for-profit corporations like K12 Inc., which was founded by junk-bond king Michael Milliken.

ALEC's education task force has pushed legislation for decades to privatize public schools, weaken teacher's unions, and lower teaching standards.

ALEC's agenda would transform public education from a public and accountable institution that serves the public into one that serves private, for-profit interests. ALEC model bills divert taxpayer money from public to private schools through a variety of "voucher" and "tuition tax credit" programs. They promote unaccountable charter schools and shift power away from democratically elected local school boards."...

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..."Other Koch-ALEC Educational Priorities in 2015

Other ALEC-influenced bills introduced in 2015 include legislation to:

• Promote the creation of taxpayer-subsidized charter schools through the Next Generation Charter Schools Act, introduced in three states - Maryland, Utah, and West Virginia - which exempts charter schools from complying with the legal requirements that govern traditional public schools, such as teacher qualification standards. This legislation also creates an appointed, state-level charter school authorizing board, safeguarding charter schools from local accountability.
• Shield charter schools from democratic accountability through bills such as The Innovation Schools and School District Act, introduced in three states - Connecticut, Mississippi, and Texas. This legislation removes local accountability by giving state-level officials - rather than elected local school boards - chartering authority for schools that do not follow the legal obligations of public schools, including possibly waiving provisions of teacher collective bargaining agreements.
• Send taxpayer dollars to unaccountable, for-profit online school providers through the Virtual Schools Act, introduced in five states (Alabama, Illinois, Minnesota, Missouri, and Virginia), the Statewide Online Education Act, introduced in three states (Mississippi, South Carolina, and Virginia), and the Course Choice Program Act, introduced in five states (Alabama, Missouri, Oklahoma, Texas, and Wisconsin). These bills promote an education model where a single teacher remotely teaches a "class" of hundreds of isolated students working from home. The low overhead for virtual schools certainly raises company profits, but it is a model few educators think is appropriate for young children. Even the Walton Family Foundation, no friend to public schools, has documented the failure of online schools in 2015.
• Allow schools to revoke tenure for teachers through the Great Teachers and Leaders Act, introduced in three states - New Mexico, New York, and Oklahoma. This bill allows these schools to let go of teachers, despite seniority or contracted tenure, and purports to base these decisions on "performance," mostly measured through "student growth."
• Limit teacher tenure through the Career Ladder Opportunities Act, a version of which was enacted in Idaho, which modifies teaching contracts and pay scales to base them upon teaching "performance," potentially demonstrated in part by student test scores.
• Create mandated curriculum supporting ALEC's rhetoric about "federalism" in the Founding Principles Act, introduced or expanded in six states - Arkansas, Georgia, Michigan, New York, South Carolina, and Texas. This bill requires the teaching of a semester-long course on the "philosophical understandings" of America's founders that appears geared toward indoctrinating children with conservative views.
• Require the government to facilitate and fund sending students to any school in the state through The Open Enrollment Act, introduced or expanded in three states - Arkansas, Florida, and Rhode Island. These "open enrollment" programs are an alternative to voucher programs and have a similar fiscal impact on state education budgets.

Drivers of the School Privatization Agenda in ALEC

Some of the interests funding ALEC and driving the effort to undermine universal public education include:

The Kochs' Americans for Prosperity (AFP) group. AFP has long been a member and funder of ALEC's education committee and has been active in promoting ALEC policies in the states, lobbying in favor of measures like vouchers in Wisconsin and holding rallies in Oklahoma to support the Special Needs Scholarship Act. AFP has also launched "issue ads" to support ALEC modeled school reforms.

Members of the State Policy Network (SPN) are also key drivers of the ALEC agenda in the states. SPN is a network of state-based "mini-Heritage Foundations" that provide academic cover and the appearance of local grassroots support for ALEC policies - even though the groups are working in a coordinated fashion. For example, SPN affiliates like Colorado's Independence Institute, Arizona's Goldwater Institute, Florida's James Madison Institute, and others are part of the ALEC Education Task Force. SPN was created to help ALEC's national agenda look local, as CMD has documented.

K12 Inc., the nation's largest provider of online charter schools, in which low-paid teachers manage as many as 250 students at a time and communicate with their pupils electronically. The corporation, co-founded by famed Wall Street junk bond king Michael Milliken, is on the ALEC Education Task Force and its lobbyist Lisa Gillis has Chaired ALEC's Special Needs Subcommittee. On top of other studies showing that full-time virtual schools are not appropriate for most children, the conservative Walton Family Foundation commissioned a study from Stanford University in 2015 which found that, over the course of a school year, students in virtual charters learned the equivalent of 180 fewer days in math and 72 fewer days in reading than their peers in traditional charter schools, on average.

The 501(c)(4) American Federation for Children and its 501(c)(3) wing the Alliance for School Choice are key drivers of the school privatization agenda in ALEC. The groups were organized and are funded by the billionaire DeVos family (heirs to the Amway fortune); Richard DeVos has received the ALEC "Adam Smith Free Enterprise Award" and Betsy DeVos chairs AFC. AFC's top lobbyist at ALEC is disgraced former Wisconsin Assembly Speaker Scott Jensen, who was convicted of three felonies for misuse of his office for political purposes and banned from the state Capitol for five years (though the charges were later reversed and dropped as part of a plea deal).

The Milwaukee-based Bradley Foundation, one of the top school privatization funders in the country, has spent more than $31 million promoting "school choice" nationwide between 2001 and 2012. For decades, Bradley has also been a major ALEC funder bankrolling ALEC operations and key reports. The foundation has over $800 million in assets and has been headed for many years by Michael Grebe, Governor Scott Walker's longtime campaign co-chair (he is retiring in mid-2016)."...

For full post, click on title above or here: 

http://www.truth-out.org/news/item/35144-cashing-in-on-kids-172-alec-education-bills-push-privatization-in-2015 

By Donald Cohen

"Did you know that one of the fastest growing sectors of the charter school industry are ‘virtual’ charter schools, where K-12 students learn from home in front of their computers? No school buildings, no recess with friends, no shared learning. It’s true. The largest virtual charter company, a publicly traded corporation called K12, Inc., provides education to over 120,000 public school students across the country. Last year, they made more than $900 million in revenue, most of it taxpayer money earmarked for public education.

But virtual charters are starting to pile up bad news and serious questions about their priorities.

A study released last week by the Center for Research on Education Outcomes (CREDO) found that students attending virtual charters learn significantly less in math and reading than similar students attending brick-and-mortar schools. So significantly less that the Washington Post’s Lyndsey Layton wrote, “In other words, when it comes to math, it’s as if the [online] students did not attend school at all.”
 

This week, news broke that California’s Attorney General is investigating the entire virtual charter industry. And for good reason. Earlier this year, we looked under the hood of California Virtual Academies (CAVA), the state’s largest provider of online public education, and what we found was clear: CAVA’s manager and primary vendor, a subsidiary of K12 Inc., has put their responsibility to maximize profits for shareholders above investing in educating children.
 

Virtual charters are starting to pile up bad news and serious questions about their priorities.

While the overall percentage of U.S. students who attend online schools is small, in some states—like California, where CAVA teachers are organizing to serve students and families, not corporations—online education has become yet another path towards the privatization of public education. Online charters are a significant issue in Pennsylvania’s ongoing budget standoff between legislative leaders and the governor, as the state has the second-highest online enrollment in the country.
 

An increasing number of charter schools are using ‘blended learning’ models, where students go to school but spend lots of time in front of keyboards and screens. A former executive of the charter school chain Rocketship—which is one of the largest users of online learning—called blended learning “stripped-down efficiency model.”

Along with a growing crowd, we have concerns about an overreliance on technology in the classroom, but fully online schools go too far. While high quality virtual charters can be useful for certain students, like actors, artists, or Olympic hopefuls, the majority of kids need teachers to interact with and classmates to socialize and study with. And a pro-charter think-tank (CREDO), California’s attorney general, and many others, including teachers, seem to agree.
 

To follow up our CAVA report, we’re going to be looking even harder at virtual charters. Let us know if companies like K12, Inc., are recruiting students in your community.

We’d love to hear from you. Send us an email: info@inthepublicinterest.org"...

For full post, click on title here: http://www.inthepublicinterest.org/yes-virtual-charter-schools-exist-and-theyre-growing/

By PAUL BUCHHEIT 

"Free-market capitalists view education in terms of products and profits. The products, to them, are our children. The profits go to savvy businesspeople who use a "freedom to choose" rallying cry to convince parents that they're somehow being cheated by an equal-opportunity public school system.

Education reformers focus on privatization, public program cutbacks, and plenty of revenue-producing testing. There are at least five truths about education reform that suggest ignorance or delusion among its adherents.

1. Privatized Education Steals from the Poor, Gives to the Rich

Eva Moskowitz makes $72 per student as CEO of the private Success Academy in New York City.

Carmen Farina makes 19 cents per student as Chancellor of New York City Public Schools.

More salary shock: The salaries of eight executives of the K12 chain, which gets over 86 percent of its profits from the taxpayers, went from $10 million to over $21 million in one year.

A McKinsey report estimates that education can be a $1.1 trillion business in the United States. Forbes notes: "The charter school movement [is] quickly becoming a backdoor for corporate profit." The big-money people are ready to pounce, like Rupert Murdoch, who called K-12 "a $500 billion sector in the U.S. alone that is waiting desperately to be transformed."

Meanwhile, Head Start was recently hit with the worst cutbacks in its history. Arts funding overall is lower than ever, with a National Endowment for the Arts budget barely accounting for 2 percent of the National Science Foundation budget. Spending on K-12 public school students fell in 2011 for the first time since the Census Bureau began keeping records over three decades ago."....

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By Valerie Strauss
"Virginia-based K12 Inc. is the largest operator of for-profit charter schools in the country and is a national leader in running online full-time public schools in numerous states. The company, based in Herndon, has long been a target of critics who have questioned the quality of its schools as well as its spending and lobbying practices — and now, the company will face new questions, this time from stockholders.

At a meeting scheduled for Thursday, shareholders are going to ask for a vote on whether the company should be required to publicly disclose details about its lobbying efforts in various states. The Arjuna Capital shareholder resolution asks that K12 prepare an annual report showing:

 
1. Company policy and procedures governing lobbying, both direct and indirect, and grass-roots lobbying communications.

2. Payments by K12 used for (a) direct or indirect lobbying or (b) grass-roots lobbying communications, in each case including the amount of the payment and the recipient.

3. K12’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

4. Description of the decision-making process and oversight by management and the board for making lobbying payments.

At its annual meeting in December last year, investors voted down the company’s plan for executive pay based on a recommendation from Glass Lewis & Co., a governance advisory firm.  Glass Lewis has  endorsed the stockholder initiative being submitted on Dec. 15 at this year’s annual K12 meeting, as has proxy adviser firm Institutional Shareholder Services"....

The new shareholder effort is being led by Bertis Downs,  a public school advocate in Athens, Ga., who spent his career providing legal counsel and managing the rock group R.E.M., and who bought K12 stock a few years ago. Asked why he is taking this action, Downs said in an email:

"My motivation in filing for this disclosure of K-12’s lobbying activities stems from my overall curiosity and interest as a parent and a shareholder in knowing more about what lobbying is done, whether through ALEC or directly, that leads to the so-called “education reform” laws being passed all over the country. How much does the company spend and how do they spend it and what results do they get for it? And is any of that good for meaningful teaching and learning in our schools? And is it good for the company and its shareholders?"

K12 is one of a number of education companies that have been attempting to exert influence on education policy in states. Their efforts come at a time when corporate school reformers have supported the expansion of online education for students from kindergarten through college. In Florida, for example, legislators passed a law requiring all students to take at least one online course to earn a high school diploma.

Virtual schools as a whole are often cited for poor academic performance. A 2015 national study found that students in these schools who receive no instruction from an “in-person teacher” showed academic results in math equivalent of what would be expected if a student skipped 180 days of school. The deficiency in reading was reported to be the equivalent of 72 days of school.

Virtual schools and their operators say that they often cater to students who struggle in traditional settings and that results should not be expected to be the same as traditional schools.

Education Week said in a recent report:

Despite more than a decade of state investigations, news media reports, and research that have documented startling failures and gross mismanagement in full-time online schools, the sector — dominated by two for-profit companies — continues to expand, spreading into new states and enrolling more students.

Virtual charter schools, which collectively receive more than $1 billion in taxpayer money each year, are rarely shut down.

One big supporter of virtual education is Betsy DeVos, the Michigan billionaire tapped by President-elect Donald Trump as his nominee for education secretary.
Her husband, Dick DeVos, listed on a financial disclosure form in 2006 that he and his wife owned K12 stock. The nonprofit organization she runs, the American Federation for Children, lists K12 on its website among organizations that support school choice.

Enrollment at the schools K12 manages almost quadrupled from 2008 through 2015, according to Bloomberg, reaching more than 120,000, about one-third of students enrolled in full-time online schools.

K12 — which receives most of its funding from public funds used to pay for the virtual schools to operate — “runs effective lobbying efforts in more than 20 states,” according to Education Week. That includes Indiana, where it spent, since 2007, nearly $1 million lobbying Indiana lawmakers and donating to their campaigns and political parties since 2007.

A Mercury News investigation published in April revealed how California’s online charter schools — run by K12 —  have “a dismal record of academic achievement” but have won more than $310 million in state funding over the past dozen years. In July, California’s attorney general announced that his office had reached a $168.5 million settlement with K12, and the 14 affiliated nonprofit schools known as the California Virtual Academies that it manages, over alleged violations of California’s false claims, false advertising and unfair competition laws.

K12 is a member of the American Exchange Legislative Council, known as ALEC, a controversial group that advances model legislation about numerous issues, including at least 139 bills to promote private for-profit education models since 2013.

K12’s stock price has gone up and down in recent years. According to Bloomberg News, “K12 shares have tumbled by two-thirds since reaching a near-record high in September 2013,” but it has rebounded some from its low.

Natasha Lamb, managing partner at Arjuna Capital, said in a statement:

“K12 would probably get failing marks on its results, but it absolutely flunks when it comes to transparency.  K12 is dependent on taxpayer dollars, yet there is neither transparency nor accountability to taxpayers, students, or investors.  The academic outcomes are troubling, and investor returns have suffered.  Shareholders need to understand how K12 is using investor dollars to lobby for what appears to be a failing business model.”

The full text of the Arjuna Capital shareholder resolution is available online at http://arjuna-capital.com/wp-content/uploads/2016/12/K12-Lobbying-Proposal-2016.pdf."...

For original post, see: https://www.washingtonpost.com/news/answer-sheet/wp/2016/12/14/virtual-school-operator-k12-faces-challenge-from-stockholders-demanding-transparency/ 

By Jessica Calefati 

"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.

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."...

For full post, click here: 

http://www.mercurynews.com/education/ci_29957298/k12-inc-bay-area-lawmakers-call-audit-california 

BOULDER, CO (July 18, 2012) -- "A new report released today by the National Education Policy Center (NEPC) at the University of Colorado shows that students at K12 Inc., the nation’s largest virtual school company, are falling further behind in reading and math scores than students in brick-and-mortar schools.

These virtual schools students are also less likely to remain at their schools for the full year, and the schools have low graduation rates. “Our in-depth look into K12 Inc. raises enormous red flags,” said NEPC Director Kevin Welner.

The report’s findings will be presented in Washington today to a national meeting of the American Association of School Administrators (AASA), where the report’s lead author, Dr. Gary Miron, is scheduled to debate Dr. Susan Patrick, president and CEO of the International Association for K–12 Online Learning. The report is titled, Understanding and Improving Full-Time Virtual Schools.

“Our findings are clear,” said Miron, an NEPC fellow, “Children who enroll in a K12 Inc. cyberschool, who receive full-time instruction in front of a computer instead of in a classroom with a live teacher and other students, are more likely to fall behind in reading and math. These children are also more likely to move between schools or leave school altogether – and the cyberschool is less likely to meet federal education standards.”

K12 Inc. schools generally operate on less public revenue, but they have considerable cost savings, says Miron. They devote minimal or no resources to facilities, operations, and transportation. These schools also have more students per teacher and pay less for teacher salaries and benefits than brick-and-mortar schools.

“Computer-assisted learning has tremendous potential,” said Miron. “But at present, our research shows that virtual schools such as those operated by K12 Inc. are not working effectively. States should not grow full-time virtual schools until they have evidence of success. Most immediately, we need to better understand why the performance of these schools suffers and how it can be improved.”...

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