Tough times for K12, Inc.

The virtual charter school company that launched an unsuccessful bid to open up an online-based school in North Carolina has been having a rough time in other states.

Cyber (also called online or virtual) schools allow students to take their entire school caseload through their home computer, and the for-profit K12, Inc. has a large chunk of the national market.

K12 officials made reference to their recent troubles this in an earnings call it had today with investors. (K12, Inc. is publicly traded on Wall Street, NYSE: LRN.)

“As the industry leader, K12 often takes the brunt of assaults for online education as our integrity and our effectiveness is sometimes questioned,” said Nathanial Alonzo Roberts, a chairman of the board’s audit committee. “This is to be expected.”

The company also settled an investors lawsuit for $6.75 million that accused company officials of making misleading statements about the academic successes of the schools.

( A transcript of today’s earning call is available here from SeekingAlpha, an investors’ website.)

In Virginia, home to K12’s headquarters, the small school district that hosted the statewide online school plans to drop its affiliation with K12, Inc., according to the Washington Post.

The split would effectively shut down the statewide cyber school, the oldest virtual school in the state that enrolls an estimated 350 students. The school board in Carroll County, a rural area on North Carolina’s border near Mt. Airy, voted to end its affiliation with K12 in mid-April, in part because the oversight was burdensome for a small school district that only had five students in Carroll County enrolled in the program.

Why did K12 go in business with the small county to begin with?

The Post offers this explanation:

The partnership with rural Carroll County had a distinct financial advantage for the for-profit company. Carroll County receives more in per-pupil state aid than most districts, because of a formula that favors poorer districts, and all of the virtual academy’s students are counted as Carroll students, regardless of where they live.

In Florida, the much-awaited results of an investigation by the state education department found that K12 used three teachers that were not certified to teach certain subjects, though they did have general certifications to teach. The probe, which looked at the K12 program in a single school district, was launched after the Florida Center for Investigative Reporting (FCIR) published a report where teachers said they were told to cover-up the non-certification. K12 then refunded the school district $12,800 for courses taught by the teachers, according to  FCIR.

That investigation appears to have rattled education leaders in Maine, who are debating whether to allow K12 to open up a virtual charter school in that state, according to this report from a Maine public radio station. Lawmakers there are debating legislation of whether to put a moratorium on virtual public schools, just two years after the legislature gave the schools a green light to enter the state.

Here in North Carolina, K12 had tried to open up a statewide charter school by approaching the Cabarrus County Schools to back their application. The N.C. State Board of Education ultimately declined to grant the online school a charter, and the matter is still pending in appeals court.

The company did not submit any applications to open in the current back of charter school hopefuls being examined by the N.C. Department of Public Instruction.



  1. david esmay

    May 3, 2013 at 5:16 pm

    They wasted all that money buying Fletcher Hartsell for naught, at least Fletcher gets to keep his reputation as a corporate shill.

  2. Jeff Kwitowski

    May 4, 2013 at 11:43 am

    Sarah, this seems like a lot wishful thinking on your part, not real accurate reporting. Let me unpack this:

    1) Lawsuit: K12 did not settle academic claims made in the lawsuit. In fact, the plaintiffs dropped the claims they made about K12’s academic performance and education quality after discovery showed the allegations had no merit. In other words, K12 was vindicated.

    2) Florida: The IG report conclusively found that the allegation made by one school that K12 intentionally avoided teacher certification laws was unsubstantiated (see: http://prn.to/17WI5Oz). It confirmed what K12 said all along. K12’s status as a state-approved provider was renewed and contracts with over 40 district and charter schools partners were approved. FL Department of Education reports over 8,500 teachers in Florida’s schools are teaching courses outside their subject certification (see: http://www.fldoe.org/arm/pdf/ctsa1314.pdf); Seminole County – the district that leveled the allegation – admitted having 100 teachers without proper certification; K12 was unable to verify it for 3 teachers. It was disclosed and quickly corrected. Hardly the stuff of an investigation.

    3) Virginia: K12 partners with over 2,000 school districts in the U.S. — large, small, urban and rural – including in Virginia (e.g. Alexandria City Public Schools in highly populated northern Virginia uses K12 for its online/blended programs.) Studies show costs for full time online schools average about $6500 per student. Large districts in VA spend much more than $6500 per student, but they only want to use state funds to support students in multi-district online schools. If districts don’t feel the state provides an adequate amount to support students in online schools they won’t offer it. It’s not about K12; the program is popular with families in the state (as it is in NC) and many districts are interested. The problem is the state needs to correct the funding and structural issues that limit districts’ ability to offer online schools.

  3. edward nelms

    May 4, 2013 at 9:00 pm

    Yes i say no to rate hikes.

  4. david esmay

    May 5, 2013 at 11:49 am

    Who would have guessed an enterprise founded by Michael Milken and William Bennett, one stole millions and went to prison for insider trading and the other lost millions gambling while writing “The Book of Virtues”, would enrich them and tank?

  5. Doug

    May 6, 2013 at 10:14 am

    Trouble or not for one company, this is the future of education. Having gone to a more rural NC high school, it would have been nice if this technology had existed at the time. There were many classes the larger school districts offered that were not available in our area. This type of technology makes education much more accessible to populations that would not have the opportunity in the past. As far a taking the whole curruculum online…that is debatable and I would not want to have gone to school without the contact with teachers and other students. There are benefits to school that are beyond just taking classes.

  6. Sarah Ovaska

    May 6, 2013 at 11:37 am

    Note to readers and such: I want to point out that Jeff Kwitowski is the spokesperson for K12, Inc., to help put his comments and information provided by him up above in context. Take his comments with as big or small a grain of salt as you feel necessary.

  7. Doug

    May 6, 2013 at 1:02 pm

    Still, much needed context and potential facts which are typically lacking in posts here. I understand you guys are not really journalists, but It is good to have more than one side to the story so we can go out and make up our own minds. Not every story screeching about some company’s problems is true by the face put on it here at the crotch.

  8. Sarah Ovaska

    May 6, 2013 at 1:21 pm

    Thanks for your comment Doug. For your information, I am a journalist who has been trained as such and worked in the field for several years. There are several reporters now on staff at N.C. Policy Watch, to supplement some of the commentary you see on the blog post and in editorials.

    I’ve written extensively about K12’s involvement in NC in larger stories on this site, and encourage you to take a look at them if you have interest in the topic. This post was just a quick update on how other states are dealing with K12, and not an exhaustive story by any means. North Carolina does fund and run a smaller virtual school it runs, the N.C. Virtual School, that specializes in offering individual classes (allowing students in rural areas, for example, to take advanced classes not offered at their schools, or remedial classes allowing other students to catch up where they’ve fallen behind.) The state does not have a full-time virtual school like the one K12 proposed offering in the application for a new charter school in the state.

    Here’s a sampling of some of the larger articles I’ve written about K12.




  9. Doug

    May 6, 2013 at 4:28 pm

    I will check them out. It is interesting that you have been “trained” in journalism. FWIW I do not find that very comforting considering the state of the trade in this nation at this time.

  10. Jeff Kwitowski

    May 7, 2013 at 1:48 pm

    Sarah, thanks. Yes, I work with K12. I thought my comment and use of my full name made that clear, but appreciate you clarifying for readers.

    Doug, here’s more background for you and others: http://www.k12choice.com/index.php?option=com_rsblog&layout=view&cid=36:watchdogging-nc-policy-watch&Itemid=77

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