Policy Watch Investigates

For-profit online school company tries again to open N.C. school

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A for-profit online school company has kept its eyes on North Carolina’s public education funding stream and recently renewed attempts to open a taxpayer-funded virtual charter school.

If granted permission to open, K12, Inc., a Virginia-based education company traded on Wall Street (NYSE:LRN), would operate a school where students take classes from their home computers under the supervision of their parents.

The company is taking a two-pronged approach in North Carolina to approval. N.C. Learns, a non-profit shell organization set up to house the proposed school, asked the state’s highest court earlier this month to hear an appeal from litigation after a failed 2012 attempt to open a school here while it applied in December to open virtual charter school in the fall of 2015.

The N.C. Virtual Academy, which already has a placeholder webpage on K12’s company website, hopes to attract up to 2,750 kindergarten through high school students in its first year.

As the nation’s largest online education company, K12, Inc. runs publicly-funded charter schools in 33 states, a robust business that accounts for 86 percent of the $848 million in revenue the company reported earnings to investors in its 2013 annual report. But with financial success has come criticism for lackluster student performance at several of its schools, including graduation rates of just 22 percent in Colorado and a Florida investigation that found a handful of teachers taught some classes they weren’t certified in.

Proponents of K12, Inc. say it offers a much-needed flexible choice to students who aren’t being served well in traditional school environments, and many students are able to succeed academically in the online environment.

The company also garnered negative attention in other states for its aggressive pushes for favorable laws in state legislatures and generous campaign contributions, including more than $1.2 million the company contributed form 2004 to 2012 to Democrats and Republicans in races in Virginia, Florida, Georgia and other states.

In North Carolina, the company has already hired four lobbyists for this year’s short session, including former Republican state Rep. Jeff Barnhart of Cabarrus County. Another Cabarrus County lawmaker, Republican state Sen. Fletcher Hartsell, serves as the legal counsel for N.C. Learns, the shell non-profit applying for the charter school.

Cabarrus County’s school board gave its backing to the K12, Inc.-school in 2012 in an agreement where the school district agreed to host the statewide school in exchange for a kickback of revenues brought in by the new virtual school.

Reports of poor performance have continued to plague the company, with the Lawrence, Kan. school district cancelling a contract with the company this month after the virtual high school posted a graduation rate of just 26 percent. The other two high schools in the district graduated more than 90 percent of its students.

New bids to open

A petition for discretionary review was filed Jan. 7 with the N.C. Supreme Court by N.C. Learns following a unanimous decision by a three-judge N.C. Court of Appeals panel to uphold a trial courts’ decision that state board of education acted properly when it declined to take up a 2012 application from the school.

The petition asks the state’s highest court to take up the case because it has “significant public interest and involves legal principles of major significance.”

This case involved the nexus of freedom of educational choice and basic tenets of administrative law,” Hartsell wrote in his petition to the state supreme court.

The court’s justices have not issued a decision about whether they will take the case.

Meanwhile, N.C. Learns also filed an application (click here to read) with the N.C. Department to Public Instruction in December to open up a virtual school in the fall of 2015.

It’s one of two online school companies in the running to operate what could be the first virtual charter schools in the state. Connections Academy, a for-profit school system owned the giant education company Pearson (NYSE:PSO), also filed an application through a non-profit group to open a charter school in 2015.

The state runs the N.C. Virtual Public School, an online-based system where students around the state can take individual classes over an Internet platform but does not offer a fulltime online option.

The K12-run school, N.C. Virtual Academy, hopes to attract as many as 2,750 students from kindergarten through high school in its first year, at a cost the school estimates will be $18 million of taxpayer money, according to the application filed with the state education agency. The application rejects a lower funding model adopted by the State Board of Education for virtual charter schools, which would pay approximately $3,500 a student instead of the $8,000 to $10,000 brick and mortar charter school can receive. That scale of pay is “not viable for a fulltime online school” and the K12-run school requested higher payment.

The state board also limits class size in virtual schools to 50 students for every teacher, but the N.C. Virtual Academy also asks for a pass on that requirement. The school estimates in its application it will assign one teacher for every 60 elementary school students and one teacher for every 180 middle-school or high-school students.

The State Board of Education will make their decision in June, after applications for the virtual schools and nearly 60 other charter schools are vetted by a charter school advisory board.

Chris Withrow, the chief technology officer of Warren County schools who applied on behalf of N.C. Learns, said the virtual charter school would offer a needed option to parents in North Carolina.

We look forward to participating in the process of charter selection and hope that we will be successful,” Withrow wrote in an emailed statement.

But Rodney Ellis, the president of the N.C. Association of Educators, said that he continues to be wary of K12’s venture into North Carolina, and warns that the charter school run by a for-profit entity could cause more harm than good to students. NCAE intervened in previous ligation involving K12, Inc. *

Education is not about teaching children with these groups, its more about making profit out of them,” Ellis said. “I haven’t seen anything expect for their self-promotion that there are benefits to K12.”

*:Note: The N.C. Justice Center, an anti-poverty state advocacy group that N.C Policy Watch is housed under also joined litigation in an amicus capacity in opposition to the virtual charter school.

Correction: This post changed from the original to reflect that a Florida education department investigation found a few K12, Inc. teachers taught virtual classes in subjects they were not specifically certified in, though the teachers did have certification to teach in Florida.

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