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K12, Inc.It may be 10 days before Christmas, but there are still a lot of worrisome/controversial policy decisions taking shape in the halls of state government this week. As noted in this morning’s Weekly Briefing, a state legislative committee will meet this Friday to recommend rolling back some important consumer protections in the mortgage lending industry.

Now, comes word that a special committee appointed by the State Board of Education will be meeting tomorrow to interview two private, for-profit companies seeking to run virtual charter schools in North Carolina — at least one of which (K12, Inc.) has been shown on numerous occasions to be a predatory failure. As Bloomberg Business Week reported last month:

“K12 Inc. (LRN) was heralded as the next revolution in schooling. Billionaire Michael Milken backed it, and former Florida governor Jeb Bush praised it. Now the online education pioneer is failing to live up to its promise.

Plagued by subpar test scores, the largest operator of online public schools in the U.S. has lost management contracts or been threatened with school shutdowns in five states this year. The National Collegiate Athletic Association ruled in April that students can no longer count credits from 24 K12 high schools toward athletic scholarships.”

Of course, K12, Inc. isn’t an unknown to the State Board of Ed. To its credit, the Board has been holding the troubled company and its whole scam at bay for years. Unfortunately, K12, Inc. lobbyists prevailed upon the privatizers at the General Assembly to slip a provision into the state budget bill this past summer which directs the Board to approve two virtual charters as part of a “pilot” program. Now, low and behold, there are only two applicants for those slots.

Whether this means that the State Board will roll over and approve K-12, Inc. or show some backbone and tell the company and its buddies in the legislature to stuff it remains to be seen. Let’s hope for the latter eventuality.

Lest you have any doubts about the appropriateness of such a response, Read More

Commentary

Loan sharksIt’s one thing for progressive pundits and advocates to talk in generalities about what the election of Thom Tillis and his conservative colleagues to the U.S. Senate will mean in the policy world next year, but here’s a much more concrete and troubling example of what we have to look forward to. According to a pair of global banking giants, scalawag, for-profit colleges are now a hot investment opportunity.

As reported this morning by Alan Pyke at Think Progress:

Investment advisers from both Credit Suisse and BMO Capital Markets issued research notes this week connecting the Republican victories on Tuesday to an improved outlook for education companies. The analyses were based primarily on future legislative predictions. The Higher Education Act needs to be renewed, and BMO’s Jeffrey Silber argued that a Republican Senate will produce a bill that is much friendlier to the companies that run for-profit schools, according to Buzzfeed. Credit Suisse wrote in Barron’s that the “diminished regulatory risk characteristics of a Republican-controlled electorate” makes student lending company stocks likely to rise in value because “Republicans have historically fought detrimental legislation originating from Congressional Democrats.”

Here’s what that means when translated to everyday English: With conservatives exercising complete control over Congress, lobbyists for all sort of sharks and con artists will be like pigs in slop more than ever before. And one of the top scamming industries these days in modern America is the for-profit college business. As the article notes:

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Commentary

slowdownThis morning’s editorial in Raleigh’s News & Observer gets it right on the state Board of Education’s plan to approve two new “virtual” charter schools. The central message: “Not so fast!”

Charters were seen initially as a chance to be “laboratories” for public education, as places to cultivate innovations that could be used in conventional schools. But too many charter advocates have viewed them as “alternative” schools, almost private schools funded by the public. Now that there’s no limit on the number of charter schools North Carolina can have, Republicans seem inclined to invite an almost unlimited number to open without knowing whether they’re succeeding.

The state needs to more closely oversee and evaluate the charters that exist before going in to the Brave New World of online-only charters.

The N&O’s conclusion is pretty self-evident — especially if you’ve read any of NC Policy Watch’s reporting on the scoundrels at the for-profit virtual charter company, K12, Inc. But if you have any doubts, check out this in-depth report from earlier this year by a team of experts at the National Education Policy Center. According to the authors:

“Despite considerable enthusiasm for virtual education in some quarters, there is little credible research to support virtual schools’ practices or to justify ongoing calls for ever-greater expansion.”

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Uncategorized

Tennessee’s education commissioner has ordered the closure of a struggling K12, Inc.-operated online school, as lawmakers here at home debate a budget proposal that could pave the way for K12 to finally set up shop in North Carolina.K12 logo

Tennessee Virtual Academy began operating in 2011 and struggled to produce positive academic results from the get go, according to The Tennessean. Three years of low student growth at the K12-managed school prompted Kevin Huffman, Tennessee’s education commissioner, to order the school’s closure at the end of the 2014-15 school year.

K12, Inc. has a history of producing low performance and graduation rates across the country, most recently prompting the NCAA to announce that it will no longer accept coursework from 24 virtual schools that are affiliated with the company.

The company has also been compared to subprime mortgage lenders, pulling in and churning out a disproportionate amount of students who are not well prepared for the online learning model–all in the name of big profits from taxpayer budgets.

A spokeswoman for K12, Mary Gifford, told members of a study committee considering virtual charter school options here in North Carolina that the poor results simply reflect the fact that their company tends to attract low performing students, and the home-based system of education can do little to help that demographic.

“High school is a nightmare,” Gifford told the virtual charter study group in February. “Forty percent of the students in high school will be very successful.”

K12, Inc. has been trying, unsuccessfully so far, to land in North Carolina, and is currently waiting on the state Supreme Court to hand down a decision on their appeal to open a virtual charter school in the state.

Meanwhile, lawmakers have acted on the recommendations of a virtual charter school study committee and have inserted language into the proposed 2014 budget to direct the State Board of Education to establish a Virtual Charter School Pilot Program, which would authorize the operation of two virtual charter schools serving students in kindergarten through 12th grade beginning in the 2015-16 school year.

The provision would allow the virtual charters that show positive academic outcomes to become permanent institutions at the discretion of the State Board, without having to go through a formal application process.

There does not appear to be criteria set forth in the proposed legislation for how the State Board of Education should vet and select the two virtual charter schools that would take part in the pilot program.

Notably, at least 90 percent of all teachers employed by the virtual charter schools must reside in North Carolina.

To read the virtual charter school study committee’s report to the legislature, click here.

To read the language for a virtual charter school pilot program in the state budget proposal, click here and read section 8.35.

Uncategorized

BMO Capital downgraded K12, Inc.’s stock (NYSE: LRN) yesterday, on account of slowing enrollments. Shares of the stock tumbled on the news, down 25 percent at the start of trading this morning and down 35 percent as this story was posted 40 minutes after the market opened.

K12, Inc. is a Virginia-based for-profit company that runs online schools in 32 states and attributes nearly 85 percent of its income to public dollars.

The company has been trying to break into the North Carolina market by opening a virtual charter school, but their bid thus far has been unsuccessful.

K12 has run into numerous problems recently, with school districts dropping their partnerships with the company, news of teachers lacking certification, and instances of very low graduation rates.

Just last week, news surfaced of a K12 school outsourcing the grading of student essays to workers in Bangalore, India.

In a press release, K12 explained the slowed enrollment growth:

We believe the increase in Managed Public School enrollments fell short of internal expectations due to several factors, which include, among others:

–The Companys inability to convert the increased volume of student applications into enrollments at a level achieved during previous years due to performance in its enrollment centers and, to a lesser extent;

–The delayed start of the open enrollment period for certain schools.

Managed Public School first quarter enrollments were 5.7 percent over enrollment numbers this time last year, short of expectations.

Revenue is projected to come in between $905 million and $925 million, below the anticipated target of $988.5 million.