Policy Watch Investigates

Virtual charter school pressure falling on state education board

A proposed virtual charter school with ties to a Wall Street-traded education company wants to open this fall, and filed a legal grievance to try and force the N.C. State Board of Education to review the school’s application.

N.C. Learns, a newly-formed non-profit organization that’s partnered with the online education company K12, Inc. , filed a March 21 request for a permanent injunction and contested case hearing against the state education board. (Click here to see the petition.)

The state board had gotten a request in February from the proposed school for approval, but did not take any action on it.

The motion for an injunction and request for a hearing was made at the N.C. Office of Administrative Hearings, an administrative law court that reviews decisions made by state agencies.

The operators of the would-be virtual school argue in their motion that because the Cabarrus County school board gave it preliminary approval in January, state law requires the state board consider the application on a different, and faster, time table than usual.

Representing the non-profit is state Sen. Fletcher Hartsell, a prominent GOP lawmaker and Cabarrus County attorney hired by the non-profit to represent their interests.

By failing to consider, much less grant final approval to the Application, the SBE has substantially deprived NCVA of its rights to form and operate that charter school approved by the [Cabarrus County school board], costing NCVA a substantial sum of money,” Hartsell wrote in the N.C. Learns’ petition.

Hartsell did not return several phone calls seeking comment about the case.

The state education board wants more information about the funding formulas and quality of virtual charter schools before make any decisions about any specific virtual charter schools, said Bill Harrison, the chairman of the N.C. State Board of Education.

We’re big fans of virtual education but we all think this isn’t something we need to jump into without doing some serious work,” Harrison said. “There are some concerns around accountability and quality assurance.”

The N.C. General Assembly lifting of a 100-school cap on charter schools has resulted in a huge spike in interest in the brick-and-mortar schools that operate outside the traditional parameters of public education. Nine schools got the go-ahead to open this fall as part of the state board’s “fast-track” approval process this year. More than 60 more charter schools (the virtual charter school not among them) submitted applications last week to open up for the 2013-14 school year, according to a list of the schools on the N.C. Department of Public Instruction website.

K12, Inc., (NYSE: LRN), the largest online education company in the country, has made an aggressive push to open a statewide virtual charter school, a move that would give its Wall Street investors a share of North Carolina’s education dollars.

The company already runs virtual public schools in more than two dozen states, and estimates 86 percent of its revenue to taxpayer-funded online schools, according to K12, Inc. investor information.

But recent news articles from national newspapers like the New York Times and Washington Post have questioned the fiscal management and quality of education the company offers, pointing out overbilling for ineligible students in Colorado and a Pennsylvania school where virtual students performed significantly worse than their public school peers. A class-action investor lawsuit is also pending against the company, accusing company leaders of making misleading statements about the performance of schools run by the company.

The mounting national attention doesn’t appear to have dampened K12, Inc.’s interest in North Carolina, where the company hopes to recruit 2,750 students in its first year and take in $18 million in federal, state and local education dollars.

The company has hired lobbyists from McGuireWoods, one of the state’s top lobbying firms, including former state Rep. Jeff Barnhart of Cabarrus County. N.C. Learns, the non-profit set up to host the school, hired Hartsell, the Cabarrus County lawmaker, to represent it

In exchange for giving preliminary approval to the virtual charter school, the Cabarrus school district was promised free use of K12, Inc. online products, as well as a 4 percent cut of the public education funding the virtual charter school anticipates receiving.

The administrative grievance filed by the virtual charter school is pending, and no hearing has been set.

Questions? Comments? Reporter Sarah Ovaska can be reached at (919) 861-1463 or sarah@ncpolicywatch.org.