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Jason Stanford: K12 Inc—Great for investors, horrible for students

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Jason Stanford
May 19, 2014

Texas Attorney General Greg Abbott opposes universal pre-K, arguing that we should not spend tax dollars on unproven education methods. But earlier this month, in rolling out the third plank of his education platform, he proposed doing even worse—spending more money on something we know doesn’t work: K12 Inc., the country’s largest online education company. We hold schools, students and soon teachers accountable. It’s time to hold purveyors of failure accountable, as well.

Founded in 2000 with funding from convicted Wall Street felon Michael Milken, K12 Inc. has a great business model. Virtual schools cut out the expensive brick-and-mortar facilities and move the entire school online, where students can point and click their way to high school diplomas. No schoolhouse means no light bill, no cafeteria, no janitors and no gym teacher. Their overhead is a fraction of a neighborhood public school, but thanks to a loophole snuck into the same 2011 bill that cut funding for Texas public schools by $5.4 billion, virtual schools get funded at the same level.

K12 Inc. might be great for its investors, but it’s horrible for its students. Everywhere virtual schools have been tried, they have failed to meet minimum standards or do better than public schools, according to a report by Progress Texas. K12 Inc. is so ineffective that the NCAA announced last month that it was K12 Inc. credits would no longer count toward eligibility.

The problem with running schools like a business is that Wall Street is usually the model. Last year, the company paid $6.75 million to settle a class-action securities lawsuit that alleged K12 Inc. lied to investors about academic performance, enrollment figures and student retention. The Florida Department of Education investigated allegations that K12 Inc. asked employees to cover up its use of uncertified teachers, and then the Securities and Exchange Commission investigated K12 Inc. when the company failed to disclose the Florida probe to investors.

Because of these problems, former TEA Commissioner Robert Scott kept K12 Inc.’s enrollment caps low, but after he announced his resignation May 1, 2012, TEA staff interpreted a new state law as lifting enrollment caps for virtual schools. Perhaps anticipating Scott’s refusal to adopt the rule, TEA staff did not present this finding to the commissioner until Gov. Rick Perry appointed Williams that August.

Soon after, Williams issued a rule that essentially deregulated online virtual schools. According to an agency spokeswoman, the new rule “eliminate[d] the requirement for application to the agency to operate full-time online schools and eliminate enrollment caps.” Hindsight might be 20/20, but Williams’ decision to open the state treasury to a company with such a lousy track record both in the classroom and in the boardroom still doesn’t make sense.

Perhaps coincidentally, about two week before Perry announced Williams as his new education chief, Williams attended Andrea McWilliams’ 40th birthday party at a Sonoma winery, an event so lavish it made the society pages. McWilliams is also a lobbyist for K12 Inc. In political circles, her birthday party weekend in wine country is best remembered for not being disclosed on her ethics filing as required by state law because a handful of state lawmakers attended, including Sen. Dan Patrick and Rep. Jim Pitts, then the chairman of appropriations.

Williams, who did not disclose receiving any gifts from lobbyists on his financial disclosure form, seemed to enjoy the party where guests received gift bags, according to a published report. The party also featured a surprise appearance by rapper Ton Loc, prompting Williams to tweet, “Ton Loc makes surprise visit to Andrea McWilliams’ birthday party. Crowd goes wild over wild thing.”

Even after restoring some of the 2011 cuts to public schools, education funding continues to lag behind population growth in Texas, so it is a cruel exception of generosity that Abbott, the gubernatorial frontrunner, likes virtual schools. If we truly wanted to run schools like a business, it is doubtful we would invest in a proven failure, no matter who their friends were.

Jason Stanford is a Democratic consultant who writes columns for the Austin American-Statesman and The Quorum Report. He can be reached at stanford@oppresearch.com and on Twitter @JasStanford. His columns are distributed exclusively by Cagle Cartoons newspaper syndicate.



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