Although the darling of Wall Street, there are issues in given K12 control of our schools.

The breakneck speed at which these privitized schools have taken off, often with little oversight, has led to scandals. Since 2013, the FBI has investigated more than five charter schools in Illinois, Indiana, Ohio and beyond on suspicion that management has misplaced or stolen funds. In Florida, a state with famously lenient rules for operating charters and among the highest concentration for-profit K through 12 schools, the Miami Herald has reported on a continuing laundry list of poorly run charters: students going weeks without textbooks, class attendance sheets faked, and children charged illegal fees for standard courses. In a growing phenomenon, another Florida for-profit company, Academica, earned over $19 million a year by charging leasing fees to public school land already owned by its charter schools.

Does free market competition ensure accountability in education by turning bad operators into economic losers? That’s what privatizers claim, but the record so far suggests otherwise.

K12 Inc., the for-profit charter behemoth that enrolls 123,259 students, went public in 2007 with the help of Moe’s previous investment firm, and has since been a darling of Wall Street. In January of this year, students from Newark Prep Charter School, which is K12 Inc.-operated, joined executives from the company to ring in the bell of the New York Stock Stock Exchange. In Moe’s revolutionary manifesto, K12 Inc. is listed as among the businesses he considers the “special forces” that will remake the education landscape.

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.

Part of K12’s problem seems to be that it skimps on special education spending and employs few instructors, despite having lower overhead than brick-and-mortar schools,

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 … Over the next three years, we believe that the company is capable of 7%+ organic revenue growth with modest margin expansion.” How will it achieve this growth? According to Baird, K12 Inc.’s “competency in lobbying in new states” is “another key point of differentiation.” The analyst note describes “K12’s success in working closely with state policymakers and school districts to enable the expansion of virtual schools into new states or districts” as a key asset. “The company has years of experience in successfully lobbying to get legislation passed to allow virtual schools to operate,” Baird concludes.

So basically Wall Street gloats,  privatized education will achieve it’s profits the old fashioned American way; lying, stealing, and public graft.

K12 Inc.’s spectactular growth over the years stems largely from the extraordinary amount the company spends on lobbying ($447,850 in 2012) , 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.

That is $21.5 million NOT BEING SPENT ON KIDS!

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. Though state by state lobbying figures are difficult to come by, given the patchwork of varying laws, K12 Inc. has hired dozens of local officials to ensure that these voucher laws are quickly passed with few amendments. “We have incurred significant lobbying costs ($1,265,143) in several states,” K12 Inc. noted in a filing with the SEC. “The stockholders benefit from those students’ enrollments, but the students get stuck with a lousy education that will follow them the rest of their lives,” says Jeff Bryant, the director of the Education Opportunity Network.

Upcoming will be talk of organizing a bipartisan campaign to persuade 2016 presidential candidates to sign onto a statement of principles endorsing charters and other education innovations. The pledge also calls for the federal government to create new tax incentives for spending on education companies akin to a health savings accounts.

The scheme works like this:  you will pay much more for charters than you currently pay for public education, but the Federal Government will eat that extra cost and give you a rebate back for the difference.  Your overall costs stay the same; private companies grow, and the Federal Government borrows more debt money that one day we must tighten our belts tighter when forced to pay it back.  And for their largess, you get below substandard results for your higher investment.

The results are not there.  Charter Schools are only better than their public school counterparts 17% of the time… They are worse than their public school counterparts, 37% of the time.  The balance, 44%, are exactly the same as what we now have with public schools…  Privatization means paying a lot more… for nothing. (except making someone rich off your public money.)

So as we get told of the rosy picture which privatization will give our students at Warner, Shortlidge, Highlands, Stubbs, Bancroft, and Bayard, let us remember that is exactly what a used car salesman says when he is selling you a Hurricane Sandy underwater car…….

Self promoters are the absolutely very last people you can ever, ever trust…. 

Every objective eye put to privatization of public entities, has showed that privatization only benefits the investor.  It does nothing for the customer; it does nothing for “We, the people”, it does nothing for society at large, and it always, always, always, comes back to hurt our wallet….

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