I’ve been following the fortunes of K12 Inc., the for-profit, publicly traded, online school corporation, since 2008 when I broke the story that it had been outsourcing student essays to an essay-grading company in India without informing the parents. (K12 Inc. said it stopped the practice soon after the story broke). The corporation is the poster child for everything wrong with the for-profit education model where profits, rather than education, drive the enterprise. For awhile, K12 Inc. was flying high despite its reputation for low student achievement and high student turnover. That all changed in the middle of 2013 after the stock peaked at 36. As you can see from the chart at the top of the post, it’s taken a bumpy downhill ride since them. Current stock price is in the nine dollar range.
Local angle: K12 Inc. operates Arizona Virtual Academy (AZVA) which has about 4,600 students statewide.
You never know, the stock prices could reverse themselves and head upwards again—which, after all, is the primary purpose of any publicly traded corporation—but I doubt it. K12 Inc. is facing a whole lot of obstacles, all of which help tamp down investor confidence.
A recent study concludes that online charter schools in general, K12 Inc. included, are doing a lousy job of educating their students. Three research institutions participated in the study, including CREDO out of Stanford University, which tends to be pro-privatization and whose last comparison of charter and district schools had charters coming out a little ahead. (In its previous study, district schools came out a little ahead.) The academic growth of online school students is so low that, according to CREDO, it’s as if students missed half a year’s learning in reading and a whole year’s learning in math compared to district schools. This shouldn’t come as much of a surprise. Online schools like those run by K12 Inc. amount to home schooling with benefits. If you have motivated students whose parents keep them on task, they’ll learn from the parent-assisted curriculum. But because of the need to keep student numbers growing in the face of one-third of the students leaving every year, K12 Inc. actively recruits students who are unsuited for education that comes to them through a computer in their homes. Yet those students are encouraged to stay enrolled because, like other charter schools (and district schools as well), online charters get money from the state on a per student basis. Lose students, lose money.
Currently, K12 Inc. is being investigated over possible securities laws violations. It’s been alleged that there is a “substantial disconnect between compensation and performance results.” This isn’t the first time stockholders have complained about the company. Previously, stockholders sued because they said K12 Inc. inflated its schools’ academic results. During the most recent shareholder meeting, investors voted down the corporation’s plan for executive pay. The previous year, the CEO received $5.33 million and the CFO received $3.6 million.
Some teachers are none too happy with their online schools, most vocally at California Virtual Academies (CAVA), where teachers have been complaining for years about the school. In The Public Interest wrote an in depth study of CAVA detailing problems with student performance levels and poor teaching environment as well as the use of revenue for advertising, executive pay and profit.
Finally, some schools have left or are considering leaving the K12 Inc. fold as their contracts with the corporation expire. The latest is Massachusetts Virtual Academy (MAVA) whose contract is up in June, 2016. It’s considering two other online curriculum providers.
Put this all together, and you have a corporation in serious trouble.
This article appears in Dec 17-23, 2015.
I wish those who root for the demise of public education would spend their energies hounding legislatures about these schools that are for profit, bilk the public of tax dollars and don’t educate our children. The evidence is there. Thank you David.
Just look at all the poor quality students they keep out of public schools. And yet public school students fail at math and reading. How much worse could it get if these students filled public schools? Carefull what you wish for.
Is anyone starting to realize that maybe, just maybe, the students are to blame?
How long is the square peg going to be forced into the round hole before all sides run out of excuses and entities to blame?
“It’s been alleged that there is a “substantial disconnect between compensation and performance results.”
While the level of compensation is nowhere near commensurate, this does bring to mind what has happened recently in TUSD, where as the district continues to produce poor test results and to shed students at the rate of approximately 1,000 a year, the board significantly inflates the CEO’s compensation package. Here there seems to be, not a “disconnect” between outcomes and executive salary, but an inverse relationship between performance and compensation: as the district becomes more and more difficult to manage, the board inflates the CEO’s salary in a desperate attempt to keep yet another CEO from deserting a sinking ship.
“Previously, stockholders sued because they said K12 Inc. inflated its schools’ academic results.”
What can we say about a district trying to promote increased AP test taking rates as a district-wide achievement and a broad-based benefit to TUSD students, when public records requests then reveal that the so-called “benefit” occurred pretty much solely as the only student population in the district that already takes a lot of AP courses and tests was forced to take many, many more, rather than as the result of increasing offerings and opportunities in schools where they did not already exist in sufficient numbers?
https://arizonadailyindependent.com/2015/12/17/tusd-ap-scores-show-disparities/
Moral of the story? If this article on K-12 Inc. gave you the impression it seems to have given “Guardians,” above, that when we become concerned about schools that “don’t educate our children,” it’s only for-profit schools (not also public districts) that need to be held accountable, you can think again.
Yes, K-12 needs reform, but so do some of our public districts. We wouldn’t be seeing desperate parents resorting to patently bad “products” like K-12, if the neighborhood schools these citizens should be able to rely on to provide a quality education to their children were not so low functioning and so unresponsive to valid parent concerns.
Does K-12 Inc. publish their mission statement? Does K-12 Inc. require learning a second language?