Archives for category: K12 Inc.

John Hechinger, one of the narion’s top investigative reporters, here presents a balanced but nonetheless devastating overview of K12 Inc., the for-profit virtual charter chain listed on the Néw York Stock Exchange.

K12 is the biggest purveyor of online homeschooling, paid for with public funds drawn away from traditional public schools.

This approach may be effective for some students –students training to be athletes or performers, students with illnesses–but K12 reaches out to recruit as many as it can.

“Plagued by subpar test scores, the largest operator of online public schools in the U.S. has lost management contracts or been threatened with school shutdowns in five states this year. The National Collegiate Athletic Association ruled in April that students can no longer count credits from 24 K12 high schools toward athletic scholarships.
While the company says its investments in academic quality are starting to pay off, once-soaring enrollment at the more than 60 public schools it manages has dropped almost 5 percent. Targeted by short sellers, who benefit from a company’s decline, K12 shares have tumbled by two-thirds since reaching a near-record high in Septeber 2013…..”

“Of the full-time online schools assigned ratings by their states, only one-third were considered academically acceptable in 2012-2013, the National Education Policy Center at the University of Colorado reported this year. The percentage of K12 students achieving proficiency on state math and reading tests is generally below state averages, according to the company’s 2014 academic report.

“Ohio Virtual Academy, which accounts for 10 percent of K12’s annual revenue, received failing grades on a state report card last year for student test-score progress and graduation rates. Only 37 percent of its ninth graders receive diplomas within four years.”

Several online charters have cancelled their contracts with K12. Tennessee may soon cancel its Tennessee Virtual Academy.

“In Tennessee, education commissioner Kevin Huffman is moving to close a K12-managed school unless it can improve results by the end of this school year. Tennessee Virtual Academy has test results “in the bottom of the bottom tier” and is an “abject failure” in improving student outcomes, Huffman said in a telephone interview.”

Having created a string of low-performing but profitable virtual charter schools, K12 Inc. has announced that it is entering the lucrative preschool market.

This is a new venture for the corporation founded by the Milken brothers. Equity investor Whitney Tilson warned other investors last year against K12, which he compared to the subprime mortgage industry, but the company keeps coming up with new ideas to put children in front of computers and absorb public dollars.

Here is the latest bad news for American children:

K12 Inc. Launches EmbarK12 Comprehensive, a Kindergarten-Readiness Product; New, Award-Winning Program Gets Children Ages 3 to 5 Ready for Kindergarten

New product aims to fulfill the need for high-quality early learning programs to prepare children for kindergarten and is being made available to consumers and school districts for the first time.

An early learning advantage we can’t afford to miss…

Herndon, VA (PRWEB) July 24, 2013

Industry leader K12 Inc. [NYSE: LRN], is fulfilling the need for high-quality early learning programs through the release of a product aimed at preparing children for kindergarten: EmbarK12 TM Comprehensive. The innovative, research-based, award-winning kindergarten-readiness product has already been introduced in some of the leading national pre-K learning centers. The curriculum is now being made available to consumers and school districts for the first time.

EmbarK12 is an extension of K12 Inc.’s [NYSE: LRN] commitment to offer the most engaging and innovative products and programs to inspire young minds and provide high-caliber, individualized learning options. Development was spearheaded by K12’s Dr. Melissa King, who has more than 35 years of professional experience as an educator, in conjunction with a highly skilled team of developers and designers.

EmbarK12 Comprehensive PROGRAM DESCRIPTION

A truly comprehensive, easy-to-use, all-in-one pre-K program offering both online and offline activities with rich multimedia and hands-on, minds-on engagement for children who are 3 to 5 years of age.

The customizable lesson plans can be tailored to child-specific skills and interests and include more than 450 online activities and more than 750 hands-on activities. There are 18 thematic units, each with intuitive, related content and instructional experiences for language arts, math, science, social studies, art, and music. Examples of themes include: “Family and Friends,” “My Five Senses” and “Looking at Animals.”

The program has already won multiple awards, including the Parents’ Choice Award, Association of Educational Publishers Golden Lamp Award Finalist and Association of Educational Publishers Distinguished Achievement Award.

Parents are encouraged to review “KINDERGARTEN: Is Your Child Ready?” and to play an active role in a highly individualized, early learning process.

Curriculum is aligned with state and national standards and with core principles of early childhood education established by the National Association for the Education of Young Children (NAEYC) and Core Knowledge Foundation.


“Whether your child is thriving in a neighborhood preschool or you’re juggling multiple things and have a youngster who is curious and open to learning in new and different ways at home, EmbarK12 is designed to meet you and your child where you are,” explains Dr. King. “Age 3 to 5 is such a precious time and opportunity. I think we all instinctively know this as parents. Having a program that makes the most of this important window of time is an early learning advantage we can’t afford to miss if we want our children to reach their true academic potential.”

“I’m excited about EmbarK12 because it offers the best content, the best instruction, the best materials and the best design. I’m sure parents will share my enthusiasm when they see how well EmbarK12 can prepare their children for kindergarten,” she added.

“There’s no question young children today are increasingly cyber savvy and engaging products developed with sound learning fundamentals can help prepare the next generation of young students to not just get off on the right foot, but to head into elementary school with a strong foundation and real learning momentum,” explained Dr. Margaret Jorgensen, K12’s Chief Academic Officer. “It could be game-changing for young students who deserve the brightest of futures.”

Many others in the education arena echo the importance of quality pre-K education. Educators across the U.S. have identified kindergarten-readiness as an educational priority, and even the President of the United States has made kindergarten-readiness a national issue. According to the U.S. Department of Education, there is a robust body of evidence and research demonstrating that high-quality, early learning programs help children arrive at kindergarten ready to succeed in school and in life.”

Larry Feinberg, who runs the Keystone State Education Coalition of public school advocates, offered the following summary of K12 Inc.’s Agora charter school in Pennsylvania:

Pennsylvania’s Agora Cyber Charter, managed by K12, Inc. never made adequate yearly progress under No Child Left Behind

· In 2006 its AYP status was Warning

· In 2007 its AYP status was School Improvement 1

· In 2008 its AYP status was School Improvement 2

· In 2008 its AYP status was Corrective Action 1

· In 2010 its AYP status was Corrective Action 2 (1st Year)

· In 2011 its AYP status was Corrective Action 2 (2nd Year)

· In 2012 its AYP status was Corrective Action 2 (3rd Year)

In 2013 (no more AYP) Agora’s Pennsylvania School Performance Profile score was 48.3 on a 100 point scale; Acting Sec’y of Education Carolyn Dumaresq has indicated that a score of 70 is considered passing.

In addition to never making AYP, Agora’s 2012 graduation rate was 45% while the Philly SD graduation rate was 57%.

School Choices: K12 Inc execs taking $2K per student in salary. 8 execs, 75K students, $21M in salaries. 20% of revenue in 8 pockets.

Morningstar Executive Compensation

K12 Inc. is a for-profit virtual charter school chain that trades on the New York Stock Exchange. It was founded by Michael Milken and Lloyd Milken. It is funded with taxpayer dollars. It advertises and recruits heavily to keep enrollment up. It has a high attrition rate.

Its cash-cow operation is the Ohio Virtual Academy. Look for significant lobbying in New Jersey, Illinois, Connecticut, Kentucky and New York, according to the investor conference call.

I don’t know about you, but I had a hard time reading this transcript. They might just as well have been discussing a corporation that sells tires, toothpaste, bundled mortgages, or manure. These guys are profiting from taxpayer dollars that are supposed. To pay for public schools, for bands, for nurses, for guidance counselors, for reduced class sizes, for libraries. They are taking money away from real instruction, real children, real schools. Have they no sense of shame? Would any of the investors on this call put their own children in a K12 virtual charter school? Bet not. Bet their kids are in really nice suburban schools or elite private schools.Not sitting in front of a computer and calling it a “school.” It’s not. It’s a business, and the kids it recruits don’t get an education.

NOTE: I just learned that I am allowed to quote only 400 words from the transcript, so accordingly, I will count 400 words and delete what remains.

RISK FACTORS (Page 33-48)

Page 42

“We generate significant revenues from two virtual public schools, and the termination, revocation, expiration or modification of our contracts with these virtual public schools could adversely affect our business, financial condition and results of operation.

“In fiscal year 2013, we derived approximately 11% and 14% of our revenues, respectively, from the Ohio Virtual Academy and the Agora Cyber Charter School in Pennsylvania. In aggregate, these schools accounted for approximately 25% of our total revenues. If our contracts with either of these virtual public schools are terminated, the charters to operate either of these schools are not renewed or are revoked, enrollments decline substantially, funding is reduced, or more restrictive legislation is enacted, our business, financial condition and results of operations could be adversely affected.

“Note at a k12, inc investor conference call on 10/9 the company addressed the loss of the management agreement for Agora Cyber Charter School in PA.

“The school will continue to use the k12, inc curriculum, but will self-manage.”

Here is the transcript of the investor conference call. Grab your vomit bag.

K12, Inc., 2015 Guidance/Update Call, Oct 09, 2014

Oct. 9, 2014 3:30 PM ET | About: K12 Inc. (LRN)

K12 Inc. (NYSE:LRN)

October 09, 2014 8:30 am ET


Mike Kraft – Vice President of Investor Relations

Nathaniel Alonzo Davis – Executive Chairman and Chief Executive Officer

James J. Rhyu – Chief Financial Officer and Executive Vice President

Timothy L. Murray – President and Chief Operating Officer

Jeffrey P. Meuler – Robert W. Baird & Co. Incorporated, Research Division
Corey Greendale – First Analysis Securities Corporation, Research Division
Jason P. Anderson – Stifel, Nicolaus & Company, Incorporated, Research Division
Trace A. Urdan – Wells Fargo Securities, LLC, Research Division
Sou Chien – BMO Capital Markets Canada


Greetings, and welcome to the K12 Inc. Guidance Conference Call for Fiscal Year 2015. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mike Kraft, Vice President of Finance. Please go ahead, sir.

Mike Kraft – Vice President of Investor Relations

Thank you, and good morning. Welcome to K12’s Fiscal Year 2015 Guidance Conference Call. Before we begin, I would like to remind you that in addition to historical information, certain comments made during this conference call may be considered forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and should be considered in conjunction with cautionary statements contained in our guidance release in the company’s periodic filings with the SEC.

Forward-looking statements involve risks and uncertainties that may cause actual performance or results to differ materially from those expressed or implied by such statements.

In addition, this conference call contains time-sensitive information that reflects management’s best analysis only as of the day of this live call. K12 does not undertake any obligation to publicly update or revise any forward-looking statements.

For further information concerning risks and uncertainties that could materially affect financial and operating performance and results, please refer to our reports filed with the SEC, including, without limitation, cautionary statements made in K12’s 2014 Annual Report on Form 10-K. These filings can be found on the Investor Relations section of our website at

This call is open to the public and is being webcast. The call will be available for replay on our website for 60 days.

With me on today’s call is Nate Davis, Chief Executive Officer and Chairman; Tim Murray, President and Chief Operating Officer; and James Rhyu, Chief Financial Officer. Following our prepared remarks, we will answer any questions you may have.
I would now like to turn the call over to Nate. Nate?

Nathaniel Alonzo Davis – Executive Chairman and Chief Executive Officer

Thank you, Mike. Good morning, everyone. Thanks for joining us on the call today. We wanted to provide you with an update on our fiscal year 2015 count date enrollment as well as a guidance for the first quarter and for the full year.

Today’s guidance is a reflection of the trends in the markets that I outlined during our fourth quarter earnings call. Specifically, we saw a couple of our charter schools deciding to self manage their online learning programs. We’re also seeing more traditional school districts offering their own full-time online programs, along with supplemental learning options and online summer courses.
Education is evolving for the better, and families today have more choices in choosing full-time or part time virtual programs for their child. We believe that overall demand for virtual options in education is increasing, and this is translated into stronger demand for our institutional group, Fuel Education or FuelEd, which provides content and curriculum to school districts as well as private and charter school operators. At the same time, these market dynamics have also created a challenge to enrolling students in our traditional managed programs. And to help you understand this transition, we’re providing new guidance on student enrollment and revenue to clearly outline how K12 is participating in the growth of online learning use in public school classrooms.

Student enrollment and revenue data will now be provided for Managed and Non-managed Programs. Managed Programs are where K12 provides substantially all of the administration and education program management for an online program. Non-managed Programs include schools where K12 is the primary provider of content and technology and we may even provide instruction, management or other educational services, but K12 is not providing primary administrative oversight for the virtual school program.
And as you can see from the data we provided in this morning’s release, the 4.7% reduction in student enrollment from managed schools reflects this new market dynamic. It also reflects the events in Tennessee, where the state imposed an arbitrary enrollment cap midway through the enrollment season; and in Colorado, where our school partner took longer than expected to finalize their charter and subsequently, the curriculum contract with K12. We believe that enrollment in these 2 states were impacted by over 4,000 students this season. Also, this year, K12, in collaboration with the school boards we serve, made a concerted effort to keep students enrolled only if they were truly engaged and ready to learn, which also affected Managed Program enrollments.

Our partners are serious about running high-quality charter schools, with students who realize this is hard work. And they want to succeed by putting in the work. And while this is slow to growth in the near term, it better matches students to our core curriculum strengths and improves our reputation as a firm who is serious about providing high-quality education.

Even with the market evolution that’s beginning to unfold, we continue to see strong demand in Managed Public Schools. This year, we saw solid growth in select markets, including Texas, Michigan, Florida and Georgia. And at some point, we believe states like New Jersey, Illinois, Connecticut, Kentucky and New York will become states that allow online charter schools, although these states could take quite some time before opening up.

We will also attempt to be one of the educational management organizations chosen in North Carolina as that market commences an online charter trial next year.

[NOTE: I deleted the remainder of the conference call to abide by the guidelines of the company that supplied the transcript. It was hard to know which words count towards the 400 permissible, like instructions, the operator’s comments, the names of participants, etc. I cut copiously.]

K12, Inc., the virtual charter chain founded by the Milken brothers, is in big trouble, according to Its stock is tanking, and its legal troubles growing. Its virtual charters seldom get good academic results, but a heavy investment in marketing and recruiting have kept the profits flowing. Until now. I have never liked virtual charters. I think they are a rip-off of kids and taxpayers.


TOUGH TIMES FOR K12, INC: The nation’s largest for-profit operator of public schools, K12, Inc., has had a bumpy ride of late. Its stock closed Friday at a 52-week low of 13.82 per share, down from a recent peak of 36.78 in September 2013. What’s behind the slump? For one thing, the company’s astronomical growth has slowed significantly. Just last fall, K12 executives were projecting revenue of $987 million for fiscal year 2014. But actual revenue for the year came in under $920 million. In a conference call last week, executives projected revenues would rise only slightly in the next fiscal year.

– Meanwhile, K12’s academic empire has been in turmoil. The board of Agora Cyber Charter in Pennsylvania, which is one of K12’s largest and most profitable online schools, has signaled its intent to seek new management (though it will continue to buy digital curriculum from K12). Colorado Virtual Academy broke ties with K12 before the start of the school year. And late last week, Delaware’s state board of education voted to close another struggling school operated by K12, the Maurice J. Moyer Academic Institute. Trouble also looms in Tennessee, where Education Commissioner Kevin Huffman has ordered the K12-operated Tennessee Virtual Academy to shut down after this school year unless it shows big gains in academic performance. And last spring, the NCAA said it wouldn’t accept coursework completed at any of two dozen K12-operated schools as proof of a student’s eligibility to compete for Division I or II colleges and universities.

– To top it all off, K12 faces a trademark infringement lawsuit in Florida. The state Supreme Court last month ruled that Florida Virtual School – which was founded in 1997 – could sue K12 Inc. for opening a slew of competing online schools under the name Florida Virtual Academies. Pro Education looked at K12’s business model and examined the shaky performance of online schools in general in a series last fall: and

If data and research matter, the worst reform in U.S. education is the virtual charter school.

The League of Women Voters–one of the few national organizations with integrity about education issues (I.e. has not been bought by the Gates Foundation) issued a report about these floundering “schools,” that typically have low test scores, high dropout rates, and low graduation rates. Only a devotee of the Jeb Bush reform school would want to invite these ineffectual schools into their state. Poor New Mexico. Its acting state commissioner Hannah Skandera used to work for the Jebster himself, so whatever Florida has done to bring in for-profit hucksters must be brought to New Mexico, of course.

So New Mexico has a K12 virtual charter (listed on the New York Stock Exchange, founded by the Milken brothers), and a Connections Academy, owned by the much unloved Pearson.

Here is the study conducted by the New Mexico League of Women Voters.

Here is an article by Bonnie Burn in the Las Cruces Sun-News explaining why the League of Women Voters opposes for-profit schools. Actually, she is wrong on one point. There is a growing body of research that shows the ineffectiveness of virtual charters. However, they are highly profitable.

Will the Secretary of Education Arne Duncan speak out against for-profit virtual charters? Will elephants fly?

This prize-winning story by investigative reporter Colin Woodard follows the money trail in Maine, as Governor Paul LePage seeks to make a name for himself in the world of digital learning. It was originally published two years ago, but remains relevant. Woodard dug through more than 1,000 documents that he obtained through the Freedom of Information Act, and his story won the George Polk award.

Donna Garner is a retired teacher in Texas. She is conservative, politically and pedagogically. She is furious that the State Education Department is expanding the virtual charter school K12. Her commentary below shows what a hoax K12 is. Imagine getting credit for two years of Spanish in only eight weeks, and credit for one year of Environmental Science in only two days! Meanwhile, K12 gets full state tuition for enrolling these students. The corporation will use some of its profits to pay handsome executive salaries (its most recent CEO was paid $5 million a year), and it will use taxpayer dollars to advertise heavily for new students and to pay lobbyists to win entry into new markets or assure funding equal to that of real schools. This is about as close as one can get to a Ponzi scheme in education.

Donna Garner’ s post reminds us that the operative principle here is profit, not ideology.


[After I wrote and published the following article about the Texas Virtual Schools Network (5.18.14 – “Texas Virtual Academy: Another Failed Education Experiment” — ), a frustrated parent posted her comments on Facebook telling about her son’s experiences in TXVSN in their local school district.

Please read these comments from the bottom of the page upwards. I have removed the identifiers to protect this parent and her son. – Donna Garner]

8:00pm May 18
From S. Oh, and the grades were 90’s or better

Comment History

From S.
7:59pm May 18
Donna, I questioned the curriculum dept, the virtual academy facilitators, teachers, school board and superintendent. I was made out to be the bad guy for questioning the program. How can a kid get a YEAR of Environmental Science in 2 days and 2 YEARS of Spanish in 8 weeks? My son will tell you he knows nothing about Spanish yet he got 2 credits for it.

Donna Garner

7:43pm May 18
I can’t tell you how furious S.’s message makes me. I taught Spanish I and Spanish II for many years. When I think how hard my students had to work day in and day out for a full year to get that course credit, and then S.’s son finished those courses in a matter of weeks, I want to say bad words. How any school district could approve of such a plan by the Texas Virtual Academy [TXVSN] shows how truly lacking in concern for academic excellence many of our school administrators really are.

From R.
6:17pm May 18
So who decided to have the virtual business academy at XXXX High School?

From S.
5:56pm May 18
My son took several classes through the virtual academy [TXVSN]. He finished Spanish 1 and Spanish 2 in just weeks and Environmental Science in 2 days. I brought up this issue and NO ONE in the district seemed concerned but me.

Donna Garner

K12, the online charter corporation founded by the Milken brothers, has received a series of terrible evaluations. The NCAA recently denied a score of K12 “schools” credit because of the poor quality of instruction. A CREDO study in Pennsylvania concluded that virtual charters performed wose than public schools or brick-and-mortar charter schools.

Major stories in the Néw York Times and the Washington Post have reported that K12 virtual charters have high attrition rates, low test scores, and low graduation rates.

But K12 is good at two things: recruitment and lobbying.

In this article, Jason Stanford reports that Texas Commissioner of Education Michael Williams just lifted the enrollment cap on K12. Williams was previously head of the Railroad Commission, which theoretically “regulates” the energy industry.

According to Stanford, Williams is a friend of K12’s lobbyist. He, along with other key state officials, attended her lavish birthday party in Wine Country. The GOP candidate for governor has pledged to increase funding for K12.

In Texas, it seems the #1 criterion for education funding is not need, but lobbying. Kids come last.

Morgan Smith of the Texas Tribune (published in thr New York Times) wrote about the secrecy that surrounds the finances of private corporations that manage schools and claim to be “public.”

They are “public” when it is time to get the money but their finances are private when asked to account for taxpayer money.

Basis, an Arizona charter chain, submitted an application to open a charter in San Antonio and this is what happened:

“On a recently approved Texas charter school application, blacked-out paragraphs appear on almost 100 of its 393 pages.

“Redactions on the publicly available online version of the application often extend for pages at a time. They include sections on the school’s plan to support students’ academic success, its extracurricular activities and the “extent to which any private entity, including any management company” will be involved in the school’s operation. The “shaded material,” according to footnotes, is confidential proprietary or financial information.”

Smith writes:

“In Texas, commercial entities cannot run public schools. But when a school’s management — including accounting, marketing and hiring decisions — is contracted out to a private company, the distinction can become artificial. Such an arrangement raises questions about how to ensure financial accountability when the boundary between public and private is blurred, and the rules of public disclosure governing expenditures of taxpayer money do not apply.”

Some of the most secretive companies run virtual schools, paid for with public money:

“When The Texas Tribune made an open-records request for employee salary records and marketing expenses at the state’s full-time virtual schools, it received responses from all but one of those connected with for-profit entities indicating either that the records were not available or were not subject to public information laws.

“The Huntsville Independent School District, which went into partnership with K12 Inc. to open a virtual academy this year, said the district did not have documents responding to the request at the virtual campus as “it contracts with a private company to handle all employment of personnel and staffing-related data.”

“In other instances, The Tribune was directed to make a request to the private company. A lawyer for Responsive Ed Solutions, a charter school that also contracts with K12 Inc., wrote that most employees of its virtual school were hired by the company and provided the email address of a K12 lawyer. A K12 Inc. spokesman then told The Tribune that “confidential information about K12’s employees” could not be disclosed.”