State school board asks Wake judge to block for-profit virtual school

The N.C. Board of Education wants a Wake Superior Court Judge to block a Wall Street-run virtual charter school from opening in the state.

In an appeal filed Wednesday, state officials are arguing that an administrative law judge erred in a May 8 ruling permitting the virtual charter school to open its portals this fall.

A hearing on a temporary motion to stay the  school’s will be held at 10 a.m. on June 4th, in the Wake County Courthouse.

The North Carolina Virtual Academy, which will be run by the Wall Street’s K12, Inc., would exist solely online. It wants to recruit students from across the state to attend the publicly-funded cyber school run by a for-profit company under N.C. Learns, a non-profit organization set up to house the virtual school.  The virtual school permits students to take classes from their home computers, and will loan computers to low-income children that enroll with the school.

In its initial application, the school leaders said they hoped to have 1,750 students and $18 million in education funding  in its first year. The charter school, instead of going straight to the state for permission to open, got preliminary approval in January from the Cabarrus County Board of Education, utilizing an avenue to go to a local school board for charter school approval in the state that hadn’t been used in more than a decade. The company also hired Jeff Barnhart, a former state representative from Cabarrus County, to lobby the school board in its favor, and state Sen. Fletcher Hartsell of Cabarrus County was brought on as a lawyer to represent for the non-profit board of the school.

The state board didn’t act on final approval application submitted to them in February, citing previous statements by State Board Chairman William Harrison that the state was holding off from approving any virtual charter schools until doing more research on the quality and controversy surrounding the schools. The state also doesn’t have a separate funding mechanism set up for cyber charters, meaning the virtual school would receive the same $7,000 to $10,000 per-pupil as a brick-and-mortar charter school.

N.C. Learns, the non-profit that applied to the state on behalf of K12, Inc., filed a grievance against the state board, and were awarded a final approval of its charter school application by the administrative law judge.

In other states, K12, Inc. (NYSE: LRN), which gets more than 80 percent of its revenue from virtual public schools, has faced criticism for its quality of education. An audit in Colorado found that the company overcharged the state $800,000 for students who never attended, while a Stanford University study of Pennsylvania virtual charter schools found a 100 percent of students in the virtual schools performed significantly worse in both math and reading than their traditional school peers. The company has also been named in a class-action investor lawsuit accusing its CEO Ron Packard, who received $5 million in pay and stock compensation last year, and other leaders of overstating the company’s potential and quality of its education delivery system.

Supporters of the company’s brand of virtual education say it educates children at a lower cost than traditional public schools and also allows families flexibility to monitor their children’s progress directly.

Separately, the N.C. Department of Public Instruction sent a letter to Cabarrus County school officials advising the school system that it would be responsible for making sure the virtual school met all the parameters required by law to run a public school. DPI’s Office of Charter Schools serves that role for the 100 exisiting charter schools in the state.

Click here and here to read past articles about K12, Inc.’s push in North Carolina.


  1. Frank Burns

    May 24, 2012 at 4:30 pm

    Maybe I’m missing something. I don’t understand why anyone would oppose this idea. It seems like it has a potential to be an innovative way to teach at much less cost than having a classroom.

  2. Jeff S

    May 24, 2012 at 5:07 pm

    What “less cost” are you speaking of Frank? The cost to the state is the same as with a brick and mortar charter school.

    Theoretically, the idea has merit. K12, however, is currently little more than a state funded home school program; though that is probably being harsh to home schooling, which has reasonable parental involvement expectations. Take some time to look into their curriculum and I think you’ll see what I mean.

    Cost should not be the measure of success and failing less expensively is not something to strive for.

  3. Rob Sutter

    May 24, 2012 at 8:50 pm

    There are more issues with this company and their model than meets the eye to the “normal” consumer. They have aggressive marketing and just want numbers because numbers mean money. They lose 50% of their students yer over year and pay teachers less because they hire unqualified staff. If you wantvto take te equity issue one step further look at how “WHITE” the company is and all of their leadership there are only two black heads of school. The other 85 administrators are white and mostly males. If those are not issues enough as has happened in NC they buy politicians and sue at the drop of a hat. They have hijacked the virtual market and only now with a lawsuit pending, investigations in 5 states and Washington state closing and cancelling their contract with k12 are people finally seeing the truth. NC deserves better and not to be taken advantage of as just happened in Colorado where the company took and yes I say took because the parents do more than the teachers meanwhile they take the full funding and yea it really is just state subsidized homeschool unfortunately without the results that homeschoolers get. It is an insult to everyone’s intelligence that they act like they care about the kids. They care about one thing MONEY.

  4. Frank Burns

    May 25, 2012 at 6:28 am

    If this group is not up to the task, surely NC can look for other firms that do the same thing. I see virtual schools as being an innovation that could be effective for junior high and high school. I don’t see it working for elementary age children. People are concerned about class sizes, well this would be another way to reduce class sizes in brick and mortar schools.

    This could be a way to save cost in colleges and universities as well. You won’t need as many professors and administrators as there are now, and you can greatly reduce textbook costs by making them all electronic. This technology is worth pursuing.

  5. ALEX

    May 25, 2012 at 12:29 pm

    Since when does Jeff qualify as a school expert anyway ? He probably hasn’t been in one since he was in college !

  6. Bobby T

    May 30, 2012 at 3:54 pm

    Jeff, the state no longer has to feed the student or supply a building with running water, electricity, security, janitorial services, pay property taxes, etc. These things help reduce a budget and take the stress off the county/state. The company is fairly new from what I’ve gathered, and will work out the kinks as they move along. Now, before you jump to any conclusions, I work in healthcare, not education.

    Rob, the way I see it, they didn’t hijack the virtual market any more than Microsoft hijacked the software market. They were smart enough to envision that virtual education can be a good, solid business before others and that extended learning might sometimes be a better option for some students. Imagine a student having difficulty in school and nobody knows why. You educate the child at home, find out their strengths and weaknesses and tailor your kid’s cirriculum accordingly. I don’t have any school problems with my kids but if I did, homeschool wouldn’t be off the table.

  7. Rob Sutter

    May 30, 2012 at 9:27 pm

    This is no big surprise that these for-profit companies are “raping” public education and the legislators they “paid off” are allowing them to do it for campaign contributions. They “falsify” their results and win on wall street but the children are the ones who lose out. Around the country especially in In Iowa, LRN made an aggressive push to enter into the Iowa school systems. It has already contracted with a school district and begun signing up students. Unfortunately it came to light that the service that K12 offers (virtual online education at home) is prohibited under Iowa state law, which states that “telecommunications shall not be used by school districts as the exclusive means to provide any course which is required by the minimum educations standards for accreditation.” In short, LRN contracted with the school districts but the school districts do not have the authority to sign such a contract. K12 had expected as many as 300 students to sign up by March 1, but reportedly has “fewer than 50 so far. In Mississippi (another big push state for LRN), the state’s recent education bill expressly prohibited online education. Sen. David Blount gave the amendment to pull the provision out, saying Mississippi does not need to experiment. “There’s just not the evidence there that virtual charter schools have been successful,” said the Democratic senator in the state senate.

    In Arizona, writer David Safier updated his 2008 findings about LRN outsourcing student papers to India for grading. After the practice was uncovered in 2008, K12 quickly discontinued the practice and noted that it was limited to the Arizona schools only.

    Safier recently presented his findings that the practice of outsourcing papers to India extended to 10 of LRN’s schools, which incidentally are the largest of the company’s schools and account for a majority of the students. The outsourcing practice extended beyond Arizona to Colorado, California, Ohio, Pennsylvania, Chicago, Minnesota and Washington. In other words, Safier makes the case that outsourcing student papers to India was not an isolated oversight, but was an institutional decision.

    In Texas, The Texas Observer recently described in detail how one K12 school was effectively shut down due to underperformance only to reopen after partnering with a new school district. The net effect was that the previous school (and its poor track record) was eliminated, and a new school (with a new identification number and no track record) was created. The new school would employ the same teachers and enroll the same students. It is certainly a very novel and creative solution to the problem of having one of its school close, but it seems to indicate that K12 is more concerned about maintaining enrollment than it is in fixing the problem of chronic underperformance.

    The list of scornful local press coverage goes on much longer. But the recent article from TheFinancialInvestigator.com deserves some attention of its own. The main focus of the article is “churn.” Although K12 has been increasing its enrollment numbers at a notable clip, the dropout rate is downright alarming at 25% to 50% per year. This compares to a typical dropout rate of around 5% per year for brick and mortar schools (i.e. an 80% graduation rate over four years). This raises two very troubling prospects. First, until such time as they are coded “withdrawn” these students continue to generate revenue for K12 from state tax dollars. Second, it creates a massive incentive (a necessity in fact) for K12 to aggressively court new students to replace the dropouts. This has given rise to a host of critics who assert that K12 is a fantastic marketer but, as described in the New York Times, a dismal educator.

    You need to look at HOW we educate our children and don’t sell their futures to Wall Street or a slick talking, suit wearing person like Ron Packard who never had a child in PUBLIC SCHOOL but pays his children’s tuition on the backs of our children.

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