Virtual charter moves forward after judge rules against State Board of Education

A controversial bid to open up a statewide virtual charter school got a go-ahead this afternoon from an administrative law judge, and could open by this fall unless the N.C. State Board of Education appeals the judge’s order.

N.C. Administrative Law Judge Beecher Gray found the state education board acted in an “arbitrary and capricious” manner by not acting on an application submitted in February by N.C. Learns, a non-profit organization that will contract with K12, Inc., an online education company that sends its profits to Wall Street investors.

K12 has had a reputation for aggressively pursuing proposals in other states, and North Carolina was no exception. The company hired a team of lobbyists from one of the state’s top firms, McGuire Woods, including former state Rep. Jeff Barnhart to lobby Cabarrus County school board officials, a group that up until recently he had represented in the state legislature. Then, N.C. Learns (which doesn’t have any apparent funding streams outside of start-up dollars forwarded by K12, Inc.) hired state Sen. Fletcher Hartsell, a prominent GOP state legislator from Cabarrus County Republican, to serve as its lawyer.

By the time the K12/N.C Learns application came in February to state education officials in Raleigh, the state board had already dealt with a batch of “fast-track” applications for charter schools hoping to open in the fall, now that the state has lifted its 100-school cap on charter schools in the state.

The virtual school, which would teach children from kindergarten through 12th grade while students are in front of their home computers, took a different route from other charter schools in the state by asking the Cabarrus County Board of Education to give preliminary approval to the school’s opening, instead of going straight to the N.C. State Board of Education. Final approval would be given by the State Board of Education.

No other school has done that in 12 years, and state board State Board Chairman Bill Harrison had indicated in October that it would not consider any virtual charter school applications because of a number of questions about the quality of education the schools offer, said Laura Crumpler, an assistant attorney general representing the education board at Tuesday’s hearing.

The state education board also wanted to figure out how much funding virtual schools should get. As it stands now, any cyber charter school would get the same portion of public education dollars as brick-and-mortar schools that have to pay for all the expenses that go into providing physical classrooms.

“The local board, a chartering entity, is setting up a school,” Hartsell said at Tuesday’s hearing. “That’s exactly what they’re doing, nothing more and nothing else.”

But the virtual school hopes to enroll students well beyond Cabarrus County’s border, and use state, federal and local education dollars to it. In its applications, it sets a goal of 1,750 students, and $18 million in public funding, in its first year.

The virtual charter schools are a big part of K12, Inc’s business, with more than 85 percent of its revenue coming from running or contracting with public schools, according to filings the publicly-traded company makes with the U.S. Securities Exchange Council. Last year the company made more than a $500 million profit, and gave its CEO a compensation worth $5 million in pay and stock options.

The company has come under fire for its education practices lately, including an extensive article in the New York Times in December that found the company “tries to squeeze profits from public school dollars by raising enrollment, increasing teacher workload and lowering standards.”

The Times mentioned a state audit in Colorado that found taxpayers paid $800,000 to the company for students that were never enrolled in the virtual school, or who lived out-of-state. It also mentioned a Pennsylvania virtual public school run by a K12, Inc. subsidiary that saw 60 percent of its students behind grade level in math, and 50 percent trailing in reading.

Crumpler said K12 and N.C. Learns attempted to circumvent the process of evaluation by utilizing a rarely-used avenue to gain approval. Now, the state’s taxpayers and parents won’t have reassurance that the application was fully vetted, she said.

“They came to the state board and said ‘Give me money along with a permit’” to run a school, Crumpler said. “Now we’re going to say that the legislative intent was that we had to say yes?”

Beecher sided with Hartsell’s argument, and said the state could appeal to Superior courts in Cabarrus or Wake counties.

 Note: The initial post indicated that the state board had said in October that it would not look at any virtual charter school applications. The statement was made by N.C. Board of Education Bill Harrison, not the entire state board, in remarks he made at an October board meeting.

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