The N.C. Court of Appeals stepped into a legal fight this week, and will be the most recent judicial authority to decide if the Wall Street-traded online education company K12, Inc. can tap into North Carolina’s public education market.
The appeals court heard arguments Wednesday in litigation filed over the N.C. State Board of Education’s 2012 decision to disregard an application for a virtual charter school run by the company because it was submitted outside the time period allotted by the board.
“This is a whole new thing,” said N.C. Appeals Court Judge Wanda Bryant during arguments Wednesday, referring to the Internet-based charter school model which has no equivalent in the state’s education system.
The three-judge panel won’t release their decision for several months, as is customary in appeals cases, and any decision could be appealed to the N.C. Supreme Court, the highest level of North Carolina’s judiciary. Bryant was joined by Judges Chris Dillon and Linda Stephens on the N.C. Court of Appeals panel Wednesday.
North Carolina, unlike most states, doesn’t have any virtual charter schools that allow students to remotely take school classes through home computers. The state does run the North Carolina Virtual Public School, which offers individual online classes to school districts.
K12, Inc., the company behind the recent litigation, is the nation’s largest provider of online education and runs charter schools in more than 30 states. Traded on Wall Street, the company (NYSE:LRN) reported $708 million in revenue in 2012, with 84 percent earned from running public schools, according to the company’s 2012 annual report.
The company has faced growing criticism in recent years for its profit-centric model of operation that critics say results in students being poorly served by the online schools. Tennessee education officials recently blocked the company from opening a second charter school, after the other school run by the company had student test scores among the worst in the state.
North Carolina appears to be a ripe market, after the state legislature lifted the 100-school cap on charter schools in 2011 in the state and Republican Gov. Pat McCrory speaking favorably about virtual charter schools during the 2012 campaign.
Through N.C. Learns, a non-profit group K12, Inc. helped set up, the virtual charter school gained preliminary approval to open from the Cabarrus County school board in early 2012. In the proposal, the school district would receive a 4 percent cut of the online school’s total public education funding, estimated to be as high as $18 million in its first year if the company managed to hit its own projections of attracting 2,750 students statewide.
But the N.C. State Board of Education did not respond to the group’s February 2012 application for final approval, and in court arguments have argued that the online charter school should have instead submitted a request in the announced time period.
The state board has the constitutional authority to oversee the state’s education system and should have been consulted before the Cabarrus school board, said Laura Crumpler, an attorney with the N.C. Attorney General’s Office representing the state board.
“We’re talking about children, we’re talking about parents, we’re talking about the ability to run a school,” Crumpler said.
An administrative law judge disagreed with the state board’s decision, and ruled in May 2012 that N.C. Learns could open. A Wake Superior Court judge subsequently disagreed with that decision, and ruled that the state board was within its rights to not act on the application.
Christy Wilhelm, an attorney for N.C. Learns, the non-profit group set up to house the online-only charter school, argued Wednesday that the school’s application was mishandled by the N.C. State board of Education in 2012 when the board passed on making a decision.
“No one had the courtesy to follow the law,” Wilhelm said. Wilhelm works in state Sen. Fletcher Hartsell’s law firm. Hartsell attended Wednesday’s court proceedings but did not argue the case.
The appeals court could decide to let the Wake judge’s decision stand, or send the case back for a new hearing.
Lawmakers appear interested in the matter as well, and instructed the N.C. State Board of Education, through a provision in the state budget, to come up with a list of recommendations and rules by February about online charters schools.
(Note: The N.C. Justice Center, a non-profit advocating for low-income North Carolinians, joined the lawsuit in opposition to N.C. Learns and K12 in an amicus capacity. N.C. Policy Watch is project under the N.C. Justice Center, but no attorneys involved with the lawsuit participated in the writing and reporting of this article.)