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Virtual Schools, Real Profits, Troubling Results

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Private enterprise is often portrayed as a mighty engine of innovation. If we break the "government monopoly" on education, entrepreneurial opportunities will inspire new solutions to problems that have not been licked by the public schools.

But corporations are funny people. They do not actually care so much about how they make money - just so long as they do. Innovation is not their purpose, nor is solving society's intractable problems.

We have a fresh report from the National Educational Policy Center, where authors Gary Miron and Jessica Urschel take us into the world of K12 Inc, the nation's largest "virtual school provider." They look at the characteristics of the students, at the quality of the instruction they receive, and the outcomes that result. This should be a huge wakeup call to anyone who cares about education.

Virtual schools such as K12 have some natural cost advantages over traditional schools. They save on all sorts of expenses associated with housing learning in real buildings, and also pay less for teachers. Administrative costs are a bit higher, and their CEO, Ronald Packard, last year was paid $5 million, a bit higher than the typical superintendent.

K12 Inc. enrolled 94,000 students last year, and took in revenues of $522 million.

Here are some performance indicators from K12. I have to say that this data is problematic in several regards. I do not believe we should use test score data as a valid reflection of learning, in virtual schools or real ones. But in today's accountability regime, public schools are being closed for poor performance on tests. It is hard to understand why these virtual schools seem to be getting so much fresh support in light of the following data:

Only 27.7% of K12 schools reported meeting Adequate Yearly Progress (AYP) in 2010-11. This is nearly identical to the overall performance of all private Education Management Organizations that operate full-time virtual schools (27.4%). In the nation as a whole, an estimated 52% of public schools met AYP in 2010-11.

The mean performance on state math and reading assessments of K12-operated virtual schools consistently lags behind performance levels of the states from which the schools draw their students.

Across grades 3-11, the K12 schools' scores were between two and 11 percentage points below the state average in reading.

In math, K12 students score, on average, between 14 and 36 percentage points lower than students in their host states, with the gap increasing dramatically for students in higher grades.
The on-time graduation rate for the K12 schools is 49.1%, compared with a rate of 79.4% for the states in which K12 operates schools.

A letter to the editor last year from a former teacher of the year in Ohio sheds some light on another trouble with using profit as a driver in education. Maureen Reedy points out that several executives of two charter school networks

have donated a combined $5 million to high-ranking GOP legislators, including Gov. John Kasich, Lt. Gov. Mary Taylor, House Speaker William G. Batchelder and Sen. Kevin Bacon, chairman of the Senate Committee on Insurance, Commerce and Labor.

This money has gotten results:

House GOP caucus policy director Chad Hawley welcomed provisions written for the state budget by Brennan's charter-school's lobbyist with the comment that these proposals "look like great ideas and exactly the kind of things we are hoping to do."

Here are some of the facts reported by Ms. Reedy:

Charter schools are a poor investment of Ohio's education dollars and have a worse track record than public schools in our state; there are twice as many failing charter schools as successful ones, and one in two charter schools is either in academic emergency or academic watch, compared with only one in 11 traditional public-school buildings. Five of seven of Ohio's largest electronic-charter-school districts' graduation rates are lower than the state's worst public-school system's graduation rate, and six of seven of the electronic charter schools districts are rated less than effective.
And finally, the Electronic Classroom of Tomorrow has failed in every identified state category for eight years, a worse track record than the Cleveland City School system, which is under threat of being shut down by the state. The Electronic Classroom of Tomorrow is run by unlicensed administrators. Lager, in addition to his $3 million salary, earned an additional $12 million funneled through his software company, which sells products to his charter-school corporation. Just how much does the average teacher in the Electronic Classroom of Tomorrow earn you may ask? Approximately $34,000 per year.

This Washington Post story from last December reports another interesting twist. The K12 virtual schools in the state of Virginia can be launched in one county with a high reimbursement rate, and draw online students from another county with lower rates. The Post reports:


By selecting a "host" school district in a poor, rural area receiving more state aid per pupil to provide on-line classes, K12 Inc draws students from wealthier areas with lower per-pupil subsidies. Here's how it works:

  1. K12 Inc. opens Virginia Virtual Academy (VAVA) in poorer Carroll County, which receives one of the state's highest per-pupil subsidies ($5,421 per student).
  2. Sixty-six students in affluent Fairfax County, which receives less state aid per pupil, ($2,716 per student) enroll in VAVA.
  3. K12 receives $357,786 in tax dollars for the 66 online students instead of $179,256 because the virtual school is hosted by Carroll County.
Education funding in today's climate of budget cuts is a zero sum game. The $357,786 that is spent on these students has been subtracted from the revenues that would have flowed to brick and mortar schools had these students been enrolled there.


Private enterprise may have some lessons to teach educators about efficiency, but so far we seem to see profits building up with few apparent benefits to our students. It is unclear why this is so attractive to our legislators - unless they are somehow being influenced by these large campaign contributions. I would hate to think that!

Update: This video shows the role ALEC has played in advancing legislation around the country that expands business opportunities for virtual schools such as K12 Inc.


What do you think? Do you think virtual schools are delivering a high quality education to their students? Are campaign contributions swaying policymakers to make unwise decisions?

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