Call it “the power of money.” The nation's largest online education provider & target of shareholder lawsuits alleging fraud – K12.Inc – has “taken an interest” in the “Education Options Act” (HB541) say the company's lobbyists. The EOA allows the limited establishment of charter schools in Alabama. Early in the process, a provision that would have specifically prohibited “virtual charter schools” was removed. That's an important point because a number of online education companies want a piece of the charter school pie.
Decatur Daily reporter Eric Fleischauer has already noted many problems with the bill. Today, reporter George Altman reported on another one: “bill could pave the way for virtual charter schools in Alabama.” Like so many issues being debated by the Alabama Legislature – all the high-minded rhetoric aside – this is all about money:
Supporters say that virtual learning helps children under-served by traditional classrooms such as students who are very advanced, remedial or have unique educational needs.
Others — particularly charter school opponents — say online learning is a bad idea in grade school because young students need structure and social interaction.
Additionally, the specter of K12, a Virginia-based company that made $522 million in revenue last year, and other large businesses dipping into the state’s Education Trust Fund has stirred fears.
Yes, that's one fear.
But the bigger issue is that these online education academies don't seem to be working for students all that well – and formerly bullish investors are becoming skittish. The company is desperate for new customers and Alabama could be the next target of their marketing blitz.
Will the K12's aggressive lobbyists succeed in obscuring these issues that have troubled the company in other states? Possibly so, if the company's lobbying activities across the country are any indication:
K12 has hired lobbyists from Boise to Boston and backed political candidates who support school choice in general and virtual education in particular. From 2004 to 2010, K12 gave about $500,000 in direct contributions to state politicians across the country, with three-quarters going to Republicans, according to the National Institute on Money in State Politics.
“We understand the politics of education pretty well,” Packard told investors recently.
Given that corporate mindset, it's no surprise that the company is facing criticisms of its methods and results:
- Churn rates: student turnover at K12 virtual academies in Ohio, Colorado, and California is as high as 51% per year.
- Teacher to marketing ratios: K12 CEO, Ronald J. Packard,calls “lobbying state officials a “core competency” of the company. Perhaps that's why the marketing-to-teacher ratio in staffing is 3 to 1.
- Poor results in other states: A Standford University study (PDF) of Pennsylvania cyber schools found that “in every subgroup, with significant effects, cyber charter performance is lower.”
- Education on the cheap: States can save money by contracting for higher class sizes with less experienced teachers. Meanwhile, CEO Packard was paid $2.6 million in compensation in 2010 (read: money that came from taxpayer coffers).
More info on all three on the flip, but first, let's look at K12.inc's operations in more detail….
The company has experienced falling stock prices this year, following a December 2011 expose in the New York Times that described
“a company that tries to squeeze profits from public school dollars by raising enrollment, increasing teacher workload and lowering standards.”
Barely a month later, K12 was hit with this blow:
A shareholder in Virginia-based K12 Inc. has filed a lawsuit against the virtual-schools operator in federal court, alleging that the firm violated securities law by making false statements to investors about students’ poor performance on standardized tests.
The class-action complaint, filed Monday in U.S. District Court in Alexandria, also accuses K12 of boosting its enrollment and revenues through “deceptive recruiting” practices.
Turnstiles As A Company Logo
In a devastating article about K12 published in February of this year, KeepingAlpha.com (an investment analysis & reporting site), cited numerous problems with K12's student retention and business model.
Citing statistics from four of the “virtual academies” run by K12, reporter Roddy Boyd found extremely high levels of annual student “churn,” or turnover:
- Agora (Pennsylvania): 35.5% churn
- Ohio Virtual Academy: 51.5% churn
- Colorado Virtual Academy: 36.1%
Chief executive Ron Packard has remarked that K12 has only begun to tap into the vast potential of its marketplace, using the phrase “manifest destiny” in a conference call with analysts to describe his hope that a K12 education would be available to every American child. These withdrawal numbers suggest a different destiny. There is a very good chance the company has drained the pool of the students most able to succeed in a virtual school–the ones coming from families who are willing to conduct themselves as home-schoolers and spend four-to six-hours daily directly involved with their child’s education–and will have to settle for an increasingly marginal applicant.
There is a lot more churn to come, in other words.
Who's in the school and who's not? Let's just say that recordkeeping isn't a priority for K12. They enroll the student, pocket the money, and often look the other way about attendance & performance:
One of the 81 incomplete IEPs that had annoyed Agora’s Corcoran was of a special education student categorized as “absent” for 141 straight days, but who had not formally withdrawn, so even though he hadn’t attended the school since the early autumn, his home district still (apparently) reimbursed Agora.
Corporate Philosophy: Sell, Sell, Sell! Instead of Learn! Learn! Learn!
K12 spent $26 million on advertising in 2010. And a lot of that money goes into aggressive recruitment where it's more important to sign up a student than to evaluate whether the student is a good fit for virtual learning.
“Some of the cyber charter schools have fairly aggressive recruitment campaigns,” said Jim Buckheit, executive director of the Pennsylvania Association of School Administrators. “They have vans, billboards, TV and radio ads. They set up recruitment meetings in area hotels and invite parents to come.”
All this marketing and lobbying money is coming from money that state and the federal government pay this company to educate students.
The “education” process works like this, say teachers employed by the company in Ohio:
At Agora, enrollment has reached 8,836, up from 6,323 in May, according to figures released by the school. As of late November, the total number of staff members — 408 — was lower than last year. Some high school teachers said they were managing as many as 270 students, even though they had been told they would have 150.
And the lobbying/conflict of interest works like this, according to the New York Times:
In Pennsylvania, where K12 Inc. collects about 10 percent of its revenues, the company has spent $681,000 on lobbying since 2007. The company also has friends in high places. Charles Zogby, the state’s budget secretary, had been senior vice president of education and policy for K12. In a statement, Mr. Zogby said he still owned a small number of K12 shares, but did not make decisions specifically affecting online schools.
It seems like a simple question: Why does it cost the same to educate students online from home as in traditional brick and mortar schools unless profit is the driving factor?
At virtual schools, student to teacher ratios are high, there's no infrastructure, no bus, no library, cafeteria, no sports teams, and no support staff. No wonder they have plenty of taxpayer-provided campaign cash to toss around.
Plenty of people are asking these same questions:
But even some supporters of virtual schools question whether online operators are charging taxpayers fairly.
“They have no business trying to charge as much as the brick-and-mortar schools, at least over time,” said Finn, of the Fordham Institute, which has commissioned a study of the cost of online schools. “Once you’ve got the stuff that you’re going to use for fourth-grade math, for instance, you don’t really need to do much with it. And it should be cheaper.”
But Do These Schools Work?
Cyber-schooling doesn't appear to work well for the bulk of students. Aside from the astronomical “churn rates,” the students who stay in the programs seem to lag in performance according to Standford researchers:
Devora Davis, the center’s research manager, said the group’s analysis of Pennsylvania online schools showed that students were slipping. “If they were paired with a traditional public schools student, the public school student kept their place in line, and the cyberstudent moved back five spots,” she said.
An analysis by the Carroll County Public School District in Virginia shows that the 400 students in the virtual program there performed worse than the regular students in 19 of 26 categories on the state assessment test.
And a Rand Corporation (PDF) study of charter schools (both brick & virtual) found mixed results, but did single out virtual charter schools in Ohio:
In the 2008–09 school year, 34 of Ohio’s 328 charter schools were virtual charter schools, serving approximately 22 percent of charter students statewide. Table 3.4 displays the results of student fixed-effect achievement analyses for virtual charter schools versus classroom-based charter schools in Ohio. The estimates for the virtual charter schools are negative, substantial, and (in three of four estimates) statistically significant. In contrast, all estimates for nonvirtual schools are close to 0 and not statistically significant. When we limit the analysis to nonprimary charter schools (which, in Ohio’s data, means middle schools), the impact estimates are almost unchanged: Virtual charter middle schools lag substantially behind classroom-based charter middle schools (which show effects comparable to those of conventional middle schools). (pp. 40-41)
In another report, the Rand Corporation analyzed charter school performance in California. In every category in the graph below, virtual charter schools lagged in student performance:
What might be the problem? The Idaho Statesman described the “virtual” school process:
Virtual class sizes tend to be larger than at traditional schools — the Virginia Virtual Academy, public institution run by K12, averages 60 students per teacher. So in the primary grades, the model relies on the intensive work of a parent “learning coach,” who provides most lessons away from the computer, using books and 90 pounds of other educational materials shipped to families by K12.
In the higher grades, the bulk of learning is online, with software that sometimes aims to mimic real-life experiences for students, such as a high school biology lab featuring an animated frog dissection.
Teachers monitor student progress, grade work and answer questions by email or phone. They work from home, aren’t likely to be unionized and earn as much as 35 percent less than their counterparts in regular schools, according to interviews with former K12 teachers.
Education On The Cheap
How do you get teachers to work with such large classes and do it for so little money? You hire less experienced teachers. K12's chief competition in the virtual school business offers this tasty little package of options and per student price points for schools to choose from:
Option A: $7,500, a student-teacher ratio of 35-40 to 1, and an average teacher salary of $45,000.
Option B: $6,500, a student-teacher ratio of 50 to 1, with less experienced teachers paid $40,000.
Option C: $4,800 and a student-teacher ratio of 60 to 1, as well as a narrower curriculum.
It's not just an issue with inexperienced, overwhelmed teachers. Because the teachers are overwhelmed and also because smaller children, of course, need more guidance than older, more advanced, students, parents are increasingly thrust into the role as teacher. Only the K12 marketing literature calls them “learning coaches.” As Boyd sardonically noted in his KeepingAlpha report:
“Learning Coach” is a marketing term designed to be more palatable to prospective enrollees than “Parents-who-make-Johnny-turn-off-World of Warcraft-and-do-geometry-every-single-thankless-day.”
In an economy such as this, where both parents are likely working harder than ever to make ends meet–if there are even two parents or guardians in the picture to teach children–students from households that lack the “home-school” orientation are the preponderance of students who are withdrawing from the virtual academies.
Teachers agree, as one told the New York Times:
“When you have the television and the Xbox and no parental figure at home, sometimes it’s hard to do your schoolwork,” said one Agora teacher, who asked not to be identified because of concerns over job safety.
For the parents who do succeed as “Learning Coaches,” it's almost a full-time job (naturally: that's why we – ahem – pay teachers to do it!). As the NYT reported:
In a neighborhood teetering on the edge of middle class, Ms. Alhammadi has converted her living room into a classroom. Two desks are for her children, Romeo, 13, and Yasmine, 8.
Within weeks of attending a K12 information session, Ms. Alhammadi had become parent and teacher, wrapped into one. She spends as much as six hours a day as the official “learning coach” for her children.
I've been researching charter schools for a month or so and have been trying to turn my 19 pages of notes into a coherent narrative of blog posts – much like we did in our 2010 series on state education lotteries.
I've found charter school success stories and tales of failure and corruption. It's a mixed bag and – like most things – if you do the schools right, things will probably work out. Maybe.
But I've found very little data that supports the widescale use of virtual charter schools. So when that news article caught my eye about K12 lobbyists being “interested” in Alabama, I thought I should at least present that part of the research ASAP.
Please share this with your friends, family, and legislators. There may actually be a place for brick and mortar charter schools in Alabama – but this “virtual school” option seems to work for a small minority of students. With as much as we've written about the problems with rural broadband and broadband access in Alabama, do legislators really think this is a good idea? How will poor students in isolated areas possibly sit around and watch educational videos on computers they don't have using broadband that's not available?
Let's let K12 & similar companies line their pockets in other states. We don't need them in Alabama.