Things aren’t looking good for the publicly traded K12 Inc., which runs online charter schools in states around the country (Its Arizona Virtual Academy has more than 4,000 students). The schools are funded by taxpayer dollars, like all charter schools, so the corporation’s profits and its CEO’s $5 million salary come from taxpayer money it doesn’t spend on its students’ educations. K12 Inc.’s stock value has plummeted from $38 in September, 2013, to its current $12.60. The downward slide over the past few months has taken it into dangerous territory. Most stock analysts have revised their recommendations downward from Buy to Hold or Sell.
The notoriously poor education K12 Inc.’s schools provide isn’t the issue, at least not directly. The problem is, the customer base hasn’t grown sufficiently, stores are closing and new stores haven’t opened as expected — I mean, the schools haven’t picked up enough new students, some of K12 Inc.’s charters have severed ties with the corporation, and some states are balking at allowing schools to open. When you’re running a for-profit school, students are customers and schools are stores, so it’s really the same thing, which is the problem with for-profit education. (The best analysis of the problems with K12 Inc.’s education and its profit model comes from a wealthy hedge fund guy, Whitney Tilson.)
Can the corporation reverse its downhill slide? It’s going to be tough. The brand is tarnished, and the stock market trend these days is up, not down. Unless investors think the stock has hit bottom and they can make a killing as it rises, things aren’t looking good for K12 Inc.
This article appears in Nov 13-19, 2014.
The schools are funded by taxpayer dollars, like all charter schools, so the corporation’s profits and its CEO’s $5 million salary come from taxpayer money it doesn’t spend on its students’ educations.
You trying to make that sound like a bad thing? I would bet they don’t have an administration position for every three students.
Let’s sell stock in public schools. I bet they fold.
Rat T: There are two main differences between these “virtual schools” and district run public schools. The first difference is that the virtual charter schools are run for profit and the district run schools are not. That is why the CEO can legally pull out five million bucks and put them into his personal bank account.
The second difference is that the virtual charter schools are not accountable to anyone for anything. District run schools are accountable to all voters in the school district. Don’t judge every district by what happens in TUSD. In most school districts across the country voters would toss out any governing board that allowed schools to produce the underwhelming student results shown by the virtual charter schools. In most districts across the country someone with a track record as full of failure as Adelita Grijalva’s would have come in dead last in the recent election. That she came in first is an example of “TUSD exceptionalism.”
I would add that the 5 million dollars paid to the CEO for truly lousy results is undoubtedly a much higher percentage of the virtual charter’s revenues than the percentage of revenues paid to administrators by school districts. Please note that TUSD is, in this area as in several others, an outlier. In TUSD 10.2% of its revenues goes to administration, but that far exceeds the percentage of spending any other large Arizona district wastes on bureaucracy. You can find exact numbers for TUSD and all other Arizona districts in the Arizona Auditor General’s annual report on school district spending.
David Safier: By trying to portray TUSD as a district that is similar in most significant aspects to other school districts in Arizona and the rest of the country, you are feeding into the mythology that all public schools are poorly run and fail to educate the students who go to them. In practice, the behavior of the CEO of the Virtual Academy charter schools is remarkably similar to the behavior of the majority cabal on the TUSD Governing Board. He takes money that should go for student learning and puts it in his pocket. They take money that might promote student learning if it was spent in TUSD classrooms and give it to useless educrats to drink coffee, push paper, and generate misleading reports. They act with impunity because they are supported by a political machine that pulls out all stops to defend its own…witness the victories of Adelita Grijalva and Eva Dong.
Not every article about education everywhere is about TUSD. This one is about a truly vicious and dangerous rush towards a corporate version of schooling. Its about gros misuse of public funds without oversight while in the public SCHOOLS the oversight is suffocating. Before I get a crowd of dissenters, let me invite you on over to see how much bureaucracy and oversight is involved in trying to buy desert plants at a local nursery for an after school class with tax credit funds. Let me invite you over to see what is involved in providing coffee and donuts for parent meetings about student achievement, or getting school supplies for classrooms. I am specifically picking examples at the school site, where issues of 15 million dollars in the hole this week and 20 million dollars ahead next week (with little to no Board oversight) definitely do NOT occur.
But even more important than that, does anyone think seriously that kids benefit from being the widgets on a corporate assembly line? I think their parents are the clients, but they are the widgets–the raw material turned into “value added” goods. Or at least that is how it is supposed to go. My work in a public school reminds me how much these “widgets” need a public school to go to for learning after their experimentation with being on the assembly line fails them.
What happened to let the buyer beware? You folks need the government to come by your house and wipe your nose for you.
It has become pitiful.
Just like TUSD but at least at the charter school it has a better education and is not racist.
Safier is correct that K-12 Inc. and other charters like it are irresponsible and are misusing public funds.
Marty is correct that TUSD can also be accused of spending too much on administration and too little in the classroom, though the scale of the abuse is different. He is also correct that in TUSD the normal mechanisms that are in place in the public school system (as opposed to the charter and private systems) for the purpose of protecting the constituency from bad leadership do not seem to be functioning properly.
Putnam-Hidalgo is correct that public schools in general have a crippling level of oversight while charters and privates that benefit from public funds have too little. I think she needs to be cautious, though, in lumping all “public schools” together. Those who have direct experience with other public districts locally know that, though education policy at the state level in Arizona is uniformly bad for public schools, there ARE decisions that can be made by the board and by the administration within each public district that make the situations of their sites and students significantly better or worse. TUSD falls very distinctly in the “worse” camp rather than in the “better.” If we are not honest about that fact and do not keep it in the foreground in our discussions, we risk people drawing the wrong conclusions about public schools in general from looking at TUSD. With close to 50,000 students still enrolled in the district, the opinions of tens of thousands of people — students enrolled, their parents, their extended family networks, their friends and neighbors — about the functionality of “the public school system” are influenced by what happens in TUSD schools.
Some people in the progressive education community in Southern Arizona are of the opinion that, in light of the results of the recent election, all attention needs now to be transferred to education policy at the state level and pushing back against the privatizers. Others are of the opinion that some attention should still be focused on exerting pressure for reform at the local level. The reality is that if the progressive camp is to have any credibility, both processes (local reform efforts and state-level policy advocacy) need to happen at the same time, and the progressive network needs to be seen to be actively and energetically supporting BOTH.
To Betts Putnam-Hidalgo: Not every article on education is about TUSD. Maybe, maybe not. So long as the missteps of TUSD’s leadership…especially its elected leadership… are being used to justify the abuses of for-profit charters and totally unaccountable private schools then the failures of TUSD leadership are in play. The two comments above that support the actions of the Arizona Virtual Academy’s CEO in paying himself $5 million both cite…either directly or implicitly…the outrageous amounts of money TUSD spends on bureaucracy.
The bible says to “let he who is without sin cast the first stone.” If those of us who believe all students deserve a quality public education must support…as you frequently do…changes in TUSD that will return a focus on student learning to that district. If we don’t then we are hypocrites for criticizing the Arizona Virtual Academy’s CEO.
Well, David. It’s been a while since you have steered a moderate course with a contribution like this one. Great story about the worst of the worst and why charter schools are so widely reviled. Unfortunately, I feel part of this morass is the legislature responding to the perception of too many constituents who believe our public education is on it’s ear….for good. I personally will never accept such a notion but sometimes the public sector can be it’s own worst enema. You have my complete support to get rid of these parasites and return that money back where it belongs.
And I feel the same about vouchers.