Policy Watch Investigates

Virtual charter school plans disrupted by court

A Wall-Street run virtual charter school had its plans to open in North Carolina derailed Friday afternoon after a Superior Court judge ruled in favor of state education officials.

Wake Superior Court Judge Abraham Jones issued a ruling Friday that found the State Board of Education, the state entity that sets policy for the North Carolina’s public schools, had been legally entitled to ignore an application from a virtual charter school seeking North Carolina taxpayer funds to teach students from their home computers.

The extent of Jones ruling came as a bit of a surprise, with both the State Board of Education and the N.C. School Board Association asking Jones in arguments earlier in the week give the state board another chance to review the application of the school again.

Though it would have been a better practice to give a written response to [North Carolina Virtual Academy]’s and N.C. Learn, Inc.’s charter school application on or by March 15, 2012, the SBE [State Board of Education] was not legally bound to do so because it had already explicated stated that virtual charter school applications were not being accepted for school year 2012-2013,” Jones wrote in his order.

SBE Chairman Bill Harrison had said in comments of an October board meeting that the state wasn’t considering virtual charter schools, an announcement that attorneys for N.C. Learns argued did not carry the weight needed to create an effective moratorium on the charter schools.

Jones’ order reversed an administrative judge’s May decision to give the North Carolina Virtual Academy final approval after the State Board of Education didn’t act on the school’s application.

N.C. Learns, a non-profit organization that will serve as the school’s governing body, sought approval through a little-used avenue to establish a public charter school, which receives public funding but is operated by private non-profit organizations. Instead of going straight to the N.C. Department of Public Instruction and state education board, K12, Inc. and N.C. Learns instead convinced the Cabarrus County School Board to sign off on a preliminary approval and then forward it to the state board of education. The school system was promised four percent of whatever public funding K12 took in for the school.

The state, which hadn’t seen anyone use that tactic in a dozen years, chose to do nothing with the application instead of reviewing the proposal before a March 15 deadline.

State Sen. Fletcher Hartsell, a Concord Republican hired as an attorney by the non-profit set to house the virtual charter school, had asked Jones in a hearing Monday to let the administrative law judge’s approval stand.

Hartsell argued that the State Board of Education missed their chance when they failed to take up K12’s application.

It’s no wonder we can’t get literacy in this state if we can’t get the state board to read the law,” Hartsell said in court.

But the virtual charter school stands to affect school districts, and schoolchildren around the state, said Laura Crumpler, an assistant North Carolina attorney general representing the state board.

Only the state board can look at how this impacts the whole system,” Crumpler said. “It’s their role.”

The school board association intervened in the State Board of Education’s appeal, and has had 89 of the state’s 115 school boards pass resolutions in opposition to the virtual charter school. Lawyers for the N.C. Justice Center, a statewide anti-poverty advocacy group that the N.C. Policy Watch is a project under, filed an amicus brief to encourage the judge to send the virtual charter school’s application back to the state board.

Profits in public education

K12, Inc., has good reason to want to do business 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.

Taxpayer-sourced dollars are a big profit for the company.

More than 80 percent of its $522 million worth of the company’s revenue in 2011 came from running online-based public schools, according to the company’s 2011 annual report. It runs publicly-funded virtual schools in 29 states, as well as the District of Columbia, and may pursue offering virtual pre-K as well, according to its CEO Ron Packard made in a recent investor’s call.

The school’s model, which takes children out of classrooms and puts them in front of their home computers, has found supporters in the school choice and home-schooling community. It’s found critics in traditional public schools that see the company focused on profits while offering a substandard education to children that would be better served in classrooms.

The virtual charter school backers argued that they have a right to open the school because of procedural mishap by the state education board, and that parents should be able to choose to send them to the school. In Monday’s hearing, Hartsell said the school has already heard from 900 families interested in enrolling in the public charter school.

Meanwhile, state education officials feel that the controversial form of education hasn’t been vetted enough to warrant taxpayer money flowing through to a company with mixed reviews.

But while the company has successfully cornered a large piece of the virtual education market, the company’s school hasn’t necessarily performed well in all states.

In Ohio, where the Ohio Virtual Academy has been run by K12 since 2002, only 30 percent of the school’s ninth graders graduate within four years, according to the school’s 2010-11 cohort graduation rate, which is adjusted to account for students that leave to attend other schools. It plummets to 12.2 percent for black students. The Colorado Virtual Academy had an even lower four-year graduation rate – 12 percent overall, and 9.1 percent for black students, according to the state’s education department.

To compare, North Carolina’s statewide cohort graduation rate is 77.9 percent, dropping to 71.5 percent for black students and 68.8 for Hispanic children — all levels that has been decried as unacceptable by state leaders of all political stripes.

K12 officials explain away those graduation rates and testing scores by saying that they take in students that are worse off academically than most, and were far behind in their schoolwork by the time they come to the online school.

In Pennsylvania, a Stanford University study found that virtual charter schools in the state, including ones contracting with K12, all provided a lackluster education and left students significantly worse off in reading and math than their traditional public school peers.

Over the last year, critical news articles from national newspapers like the New York Times and Washington Post have questioned the 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.

While public debate about the quality of a computer-based education for the state’s youngest citizens swirl around K12, the company has forged ahead in other states by aligning itself with the school choice and education reform movements.

In other states, the company’s employees and shareholders generously gave to the campaigns of political allies, assembled strong lobbying teams to secure favorable legislation and launched recruitment efforts that pitch the company as the answer to parents frustrated with traditional public schools.

In Idaho, the company poured $44,000 into the 2010 campaign chest of the state’s superintendent of public schools, who has since backed policies that favor the for-profit education industry. In Tennessee, lobbyists pushed through the first virtual school there in 2011 and then successfully fought off an attempt by critics of the school to require a financial audit of the public school’s finances.

Tennessee state Sen. Andy Berke, a Chattanooga Democrat, was one of the most vocal critics of the K12, Inc. virtual charter school that was sanctioned in the legislature there in 2011. He sees the school’s opening as a dangerous entry into the privatization of public education.

The decision to open up education to for-profit ventures that put shareholder interests over educational quality is, in the long term, of the worst things that we can do in our state,” Berke said.

Here in North Carolina, the company has paved its path to approval with influential figures in the state.

It hired former state Rep. Jeff Barnhart, a Cabarrus County Republican, to lobby the Cabarrus School Board and also hired other lobbyists from McGuire Woods, one of the state’s top lobbying firms. N.C. Learns, the non-profit set up to house the virtual school, retained Hartsell, another Cabarrus County Republican, to serve as the group’s attorney.

Campaign finance reports also show that Hartsell’s senate campaign took in a total of $500 in contributions on Feb. 29 from two K12 employees, according to campaign records.

The virtual charter school will be able to appeal Jones’ ruling, but did not say in court Friday whether or not they would.

Want to read Judge Jones’ order yourself? Click here to read.

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

 

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