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.


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Tough times for K12, Inc.