Profit Before Kids
An Analysis of the Performance and Financial Practices of For-Profit, Virtual Charter Schools
Introduction and summary
California Virtual Academies (CAVA) oversees nine virtual charter schools across the state of California. Virtual charter schools are public schools that provide online instruction. Students complete assignments individually rather than attending a brick-and-mortar school. State tax records and the schools’ charters specify that CAVA schools are independent nonprofit charitable organizations, but these schools are moneymakers for K12 Inc., a publicly traded company and the largest for-profit virtual school provider in the United States. CAVA is a subsidiary of K12 Inc. and its schools run in lockstep with their parent company’s deceptive and harmful business practices.1
K12 Inc. receives substantial scrutiny from the media and advocates given its market share and listing on the New York Stock Exchange. But a growing body of research and national media reports show that, on average, fully virtual schools perform much worse than brick-and-mortar schools serving similar populations.2 For instance, students at CAVA schools significantly underperform the state average. In the 2015-16 school year, the CAVA schools @ Los Angeles’ graduation rate was 66 percent, far below the Los Angeles School District’s average of 92 percent and the state’s average of 84 percent.3
In 2016, then-California Attorney General Kamala Harris announced a court-approved settlement in which K12 Inc. would repay California $8.5 million—$2.5 million for inflated attendance figures and $6 million for costs ensured by the attorney general’s office—regarding aggressive marketing campaigns and inadequate instructional supports. This settlement included no admission of fault, but Harris’s office alleged that K12 Inc. and CAVA used misleading advertising to recruit students even if they were unlikely to be successful in a virtual program.4 Once enrolled, many students did not receive adequate instruction. CAVA instructed teachers to mark a child in attendance if they logged in for at least one minute a day in order to maximize the public dollars allocated to each school.5
These types of concerning outcomes among for-profit virtual charter schools are not unique to California. Schools managed by K12 Inc. nationwide struggle to match student outcomes at other public schools, even as the company’s executives receive multimillion-dollar compensation packages.6 Alex Molnar and others, “Virtual Schools in the U.S. 2017” (Boulder, CO: National Education Policy Center, 2017), available at http://nepc.colorado.edu/files/publications/RB%20Virtual%20Schools%202017_0.pdf.] Rather than address these challenges and rework instructional strategies to improve outcomes, K12 Inc. has misrepresented student performance—leading to shareholders filing multiple lawsuits.7 They have also defended their outcomes, stating that policymakers use “broken” accountability measures to evaluate school performance and their schools serve struggling students.8
Virtual instruction takes many forms: virtual courses supplementing what is available at traditional brick-and-mortar schools, blended schools where students receive substantial instruction online while also having access to face-to-face teacher support, and fully virtual schools with no in-person instruction. The prevalence of all of these types has grown steadily.9
Limited online coursework can fill an important need in public education, especially within secondary schools. For example, 24 states develop their own virtual education content or partner with an outside entity that provides virtual material, in order to offer students greater flexibility to take additional credits.10 These courses can help students make up credits or expand course options in districts or schools where there are not enough students or available staff to teach full classes on specific subjects, such as some languages. In fact, the enrollments in language courses have grown more significantly than any other subject offered among state virtual schools and now account for about 12 percent of all state virtual enrollments.11
Coursework in fully virtual schools usually entails students completing their work alone, at their own pace. Students in fully virtual charter schools interact in real time with a teacher for fewer hours in one week than students in brick-and-mortar schools do in one day.12 Overwhelmingly, research shows that fully virtual schools underperform blended or brick-and-mortar schools.13 Molnar and others, “Virtual Schools in the U.S. 2017”; Miron, Shank, and Davidson, “Full-Time Virtual and Blended Schools.”] Yet the number of students enrolled in fully virtual schools continues to grow. In the 2016-17 school year, virtual schools enrolled an estimated 295,518 students nationwide.14 Of those students, 76 percent—or 223,634—enrolled in fully virtual charter schools.15 Fully virtual public schools and fully virtual charter schools are both public, but virtual charter schools are operated by companies or nonprofits rather than public school districts or the state.
While K12 Inc. is well known as a for-profit company and their schools do not hide their affiliation, many independent virtual charter schools bury their connections to for-profit companies. Many states bar for-profit companies from receiving public education funding, so many of these schools establish nonprofit boards to accept the funds but contract operations Continue reading: Profit Before Kids - Center for American Progress
