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For-Profit Charter Management Organizations Expand Reach, Report Says

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Cross-posted from the Marketplace K-12 blog by Sean Cavanagh.

While the number of for-profit companies operating charter schools and other public schools is ticking up slightly, their overall enrollment has swollen as they expand their presence in the virtual and supplemental education market, a new report concludes.

The report, released by the National Education Policy Center, found that the number of commercial "education management organizations," rose from 95 to 97 in 2011-2012, the most recent year studied.

But while the number of operators did not increase by much, student enrollment in public schools run by for-profits spiked, from 411,000 to 463,000 in just the most recent year. Those numbers reflect a major departure from the mid 1990s, when hardly any students—only about 1,000—were served by public schools run by for-profit providers, the report notes.

The largest for-profit operators, as measured by the number of schools they manage, are Imagine Schools, with 89; Academica, 76; National Heritage Academies, 68; K12 Inc., 57; and Edison Learning, 53, according to the authors' 2011-2012 estimates.

At the same time, there are still many more nonprofit organizations, 201, managing charter and other public schools, and that number has increased from 196 the previous year. Those schools serve more than 445,000 students—up sharply from 238,000 two years ago.

The document is the 14th edition in a series of reports examining school management in the charter school sector and other public schools. It was authored by Gary Miron of Western Michigan University and Charisse Gulosino of the University of Memphis.  The NEPC, based at the University of Colorado, Boulder, has published a number of reports and analyses over the years casting a critical eye on charter schools.

Miron and Gulosino define education management organizations as private entities that manage public schools, including charter schools, typically under a contract that outlines expectations to produce results of one kind or another. EMOs have "executive authority" over a school, and are thus distinct from vendors hired to handle specific services, such as accounting, transportation, or personnel issues, the authors say.

Charter schools have been a "catalyst for the creation of new EMOs and they have been a vehicle for the expansion and growth of already established EMOs," the report says. It estimates that 36 percent of all charters in the United States are run by private EMOs, including either for-profits or nonprofits.

The rise in enrollment in charters and other public schools operated by both for-profits and nonprofits is striking, Miron said in an interview.

"We thought we were seeing a plateau in the for-profits," he said. "But this year reminded us that both sectors are on the march."

The number of virtual public schools managed by for-profits has risen from 60 in 2009-2010 to 91 two years later, the authors say, and the portion of online charter schools run by commercial operators continues to climb.

Miron cites a number of factors at work driving the surge in interest in the online arena among for-profit operators. State policies have encouraged the growth of online programs, in some cases by requiring students to take an online class. But commercial companies have also found a bigger profit margin managing virtual schools than they do running brick-and-mortar charters.

"It's a good policy environment," he said, and, "it's very lucrative."

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