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Virtual charter schools will face restrictions if they want to open up in North Carolina.

The N.C. State Board of Education voted today to adopt a policy that would require the online-based schools to adhere to a significantly lower funding formula ($3504 per student) than brick-and-mortar charter schools, maintain high graduation rates and low withdrawal rates of students. Schools will also need to keep a ratio of one teacher for every 50 students and keep graduation rates within 10 percent of the state average (80 percent), and can’t have withdrawal rates higher than 15 percent in two out of three years.

Committee leaders for the legislature’s education committee took issue late last year with the state board making policies about virtual charter schools, saying that the board didn’t have the authority to tinker with funding formulas or single out online-based schools. Bill Harrison, the chairman of the N.C. Board of Education who will faces a likely replacement from new Gov. Pat McCrory, disagreed. (Read our story about that tiff here.)

The legislature, of course, could undo the state board’s decision if they choose.

The state currently has no virtual charter schools, though the state does operate the N.C. Virtual Public School, wich allows high-school students (and some middle-school students) to take individual classes as part of their regular studies.

Virtual charter schools have shown a keen interest in North Carolina. Two national online learning companies have sent letters of intent to the N.C. Department of Public Instruction that they want to open up their doors in 2014: Connections Academy, owned by the for-profit education company Pearson and N.C. Virtual Academy, to be run by the for-profit K12, Inc.

K12, Inc., through a non-profit organization called N.C. Learns set up by K12, tried to open up in the state last year, and had their application ignored by the N.C. State Board of Education, which authorizes charter schools in the state. The matter is now tied up in the appellate courts, with N.C. Learns appealing a lower judge’s ruling affirming the state board’s denial. State Sen. Fletcher Hartsell, a prominent Republican legislator, was hired on as N.C. Learn’s attorney for the case and K12 has hired another former lawmaker, Jeff Barnhart, as a lobbyist, according to the N.C. Secretary of State’s office.

Pearson has lobbyists of its own – four were hired from Capstrat, the Raleigh-based lobbying firm.

Here’s the new policy adopted by the N.C. State Board of Education:

 

Policy for N.C. virtual charter schools by ncpolicywatch

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In its final report to the General Assembly, the interim committee on digital learning called on lawmakers to initiate the shift from hardbound to digital textbooks and to implement other measures that will ensure North Carolina public schools are, in fact, providing students with a 21st century education.

In addition to the transition from bound books to e-books, the committee recommended the use of lottery funds for digital learning needs and the creation of a new “digital competency” standard that teachers and administrators would have to meet to get their credentials.

“We truly have set North Carolina on a new path forward into, as we say, the 21st century,” said Rep. Craig Horn, a Republican from Union and co-chair of the committee. “This is important work. It does not end here. All we’ve done is . . . (identify) the direction in which the ship should go at some point, so lots of work ahead.”

Like other interim education committees this week, the digital learning panel sidestepped the one or two issues destined to create controversy. In this case, the issue was virtual charter schools.

Rep. Marvin Lucas, D-Cumberland, pointedly noted the omission but there was no other discussion about the possibility of allowing virtual charters to become a part of North Carolina’s school choice landscape.

Criticized in other states for providing a lackluster form of education, virtual charters have met with resistance in North Carolina. A superior court judge effectively blocked an educational company called N.C. Learns from opening a virtual charter school earlier this year, a move supported by school boards across the state and the N.C. Justice Center.

“We hope,” said Katherine Joyce, assistant director of the North Carolina Association of School Administrators, that “the committee’s decision not to recommend authorizing a virtual charter school indicates an awareness of the concerns surrounding that proposal and all the unanswered questions that need investigation before the state moves in that direction.”

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Here’s another tidbit about K12, Inc., the publicly-traded company trying to open up a virtual charter school in North Carolina.

K12, (NYSE:LRN), the largest virtual education company in the nation, spent $21.5 million in the first eight months of 2012 advertising the online public charter schools it operates in 29 states, according to an article that ran yesterday in USA Today. (My colleague Chris Fitzsimon also made mention of that in his Friday Follies column today).

That’s a decent amount to spend on advertising, especially considering that 85 percent of the company’s revenue comes from public sources. Click here to read more about the ad buys, and how USA Today calculated the estimates.

Lots of ads ran on kid-friendly media outlets, including Nickelodeon, The Cartoon Network and MeetMe.com, a social media site used by teens (and tweens).

The company also may be trying to tap into the disaffected youth market – it spent $3,000 to advertise on VampireFreaks.com, which bills itself as “the Web’s largest community for dark alternative culture,” according to the USA Today article.

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K12, Inc., a for-profit virtual education company looking to open a statewide virtual school in North Carolina, took a fairly major hit yesterday on Wall Street when a stocks analyst downgraded the company’s performance outlook.

A Wells Fargo analyst took the stock from a favorable “outperform” stock rating Monday to a more neutral rating of “market performance” based on ongoing questions being brought up about the quality of education it offers at Colorado Virtual Academy, according to KUNC, a public radio station in Colorado.

The company (NYSE: LRN) has the largest reach of for-profit online providers in the country, and runs virtual public schools in 29 states. Students from kindergarten to 12th grade can take their entire school curriculum from their home computer, at the expense of public taxpayers.

The Colorado online school had a graduation rate of just 12 percent in 2010. To compare, North Carolina’s statewide graduation rate topped 80 percent for the first time last year, a number that political leaders of all stripes say is still too low.

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A Florida school district refused an application for a virtual charter school contracted with K12, Inc., the for-profit online education company that’s come under fire for management and education quality issues.

From the Ocala Star-Banner:

The board voted unanimously Tuesday to deny the application.

“I’m concerned to go with a contract in the light of the investigation,” said School Board Chairwoman Judi Zanetti.

School Board members Ron Crawford and Angela Boynton agreed they could not support the virtual school because of the state investigation.

Superintendent of Schools Jim Yancey’s urged the board to deny the charter school because board members are not local and he believes K12 is only interested in turning a profit.

If the new school had been approved in Marion County, it would have started as a K-8 school in 2013-14 and would have expanded to all grade levels by 2018-19. At the school’s peak, the enrollment was projected to reach 296 students.

The company is currently under investigation in Florida, a leading state in the push for online education via for-profit companies,  for covering up its use of non-certified teachers for programs that required teachers certified to teach in Florida.

The company is seeking a spot in the North Carolina education market, and is appealing a Wake superior court judge’s decision in an attempt to open up a statewide online school, that would allow students from kindergarten through 12th grade to take classes over their home computers.