K-12 Continues its March to Monetize Pubic Schools

The Nation reports that the K12 juggernaut to cash in on public schools has caught the attention of Wall Street, and is due in large part to its huge lobbying expenditures:

Indeed, K12 Inc.’s spectacular growth over the years stems largely from the extraordinary amount the company spends on lobbying, as well as on marketing and advertising, with promises in some areas that enrollment comes with a free computer. USA Today found that the company spent $21.5 million on advertising in the first eight months of 2012. The company sponsors billboards, radio advertisements, and spots on children’s cable television.

Nation 2014

It has accomplished this on a national scale due to its sponsorship of ALEC:

K12 Inc.’s lobbyists helped author model legislation to develop sweeping voucher laws through the American Legislative Exchange Council, a conservative group that provides state lawmakers with template legislation.

Wall Street is interested even in the face of overwhelming evidence that on-line schools fail at unsustainable rates:

The rising revenues of K12 Inc. have been matched by poor performance. In the 2010-2011 school year, only 27.7 percent of K12 Inc.-operated schools met the Adequate Yearly Progress (AYP) standard, far below the 52 percent average of brick and mortar public schools. An investigation in Colorado, where K12 Inc. has been ejected from several school districts, found that nearly half of online students left within a year, and when those students returned to brick and mortar schools, they were further behind academically than when they started. Similar investigations in Florida and Ohio found K12 Inc. teachers instructing classes without certification and instructing online classes of over 250 students.

In several states, K12 Inc.-operated virtual charter schools have faced a backlash because of poor performance and high drop-out rates. In July, Tennessee’s education commissioner announced the closure of the Tennessee Virtual Academy, K12 Inc.’s affiliate school, at the end of the 2014-2015 school year because of the charter’s failure to score above the state’s lowest level of academic achievement. Last month, Pennsylvania’s Agora Cyber Charter School, the largest school managed by K12 Inc., voted to consider ending its relationship with the company after revelations that the school allegedly manipulated attendance sheets and performance data in an attempt to conceal incredibly high rates of student turnover.

Still, despite wave after wave of negative press, K12 Inc. figures as a solid investment opportunity to many. Baird Equity Research, in a giddy note to investors this year about the potential growth of K12 Inc., noted, “capturing just two million (3.5%) of the addressable market yields a market opportunity of approximately $12 billion …

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