One of country's largest chains of for-profit online charter schools has seen almost a decade of declining academic results, mounting structural problems, and potential self-dealing by its operator, according to a report released today by In The Public Interest. California Virtual Academies, which has 14,000 students at 11 schools strung out across the state, is run by the giant K12 Inc., a publicly traded company that has attracted strong criticism in the past for its management of virtual charters.
Even in the face of controversy, K12 has been in the business of rapidly expanding virtual education across the country; in the past month alone, it won drawn-out legal battles to open new online schools in Maine and North Carolina, and it now enrolls 123,000 students nationwide. But In The Public Interest's report could deal a blow to that growth.
Virtual charter schools like California Virtual Academies, or CAVA, are public schools that exist entirely online: Taxpayer dollars pay for students in kindergarten through 12th grade to take classes from home, communicating with their teachers via computer.
CAVA, the report says, has been plagued by years of slumping academic results: its graduation rate over the past four years has been 36%, meaning it had more dropouts than graduates, and its academic performance has declined steadily since 2005. Though K12 Inc. has consistently blamed poor academic results at virtual schools on the student population it serves, the report shows that even compared to demographically similar schools, CAVA falls short.
Katrina Abston, the head of California Virtual Academies who is an employee of K12 Inc., called In the Public Interest's report "inaccurate and deeply flawed," alleging it was based on misinformation supplied by the teachers' union that is helping CAVA teachers with an effort to unionize, which K12 has opposed.
"Our schools provide families a public school option for children who need alternatives to traditional public school," Abston said. "Efforts by powerful special interests opposed to charter schools and parent choice will not deter us from that commitment."
A representative for K12 Inc. said that the school's graduation rates should be put into context, saying that virtual charters enroll many students who are not on track to graduate when they enroll in the school. The company has previously said that students who stay in K12 schools for all four years graduate at much higher rates.
Though the schools themselves must technically be nonprofits, K12 and the company's main competitor, Pearson's Connections Academy, have transformed them into a booming business by taking over virtual schools' management, administration, curriculum, and even budget. K12, which is publicly traded, takes in just under half of the tens of millions in taxpayer money that flows into CAVA's 14 schools, according to the report; the rest goes to teacher and staff salaries.
The report takes aim at the "troublesome" relationship between K12, its school boards, and the districts that approve the schools. Control of schools is effectively ceded fully to K12 Inc., the report found: The nonprofit boards that technically oversee K12's schools are made up of just two to four people and meet infrequently, with one spending an hour and 37 minutes a year to oversee a school of 3,000 students in Los Angeles.
Financial structures at CAVA open the door to self-dealing, the report said. K12 pays itself out of bank accounts that it manages, the report says, and prohibits schools from seeking out other vendors — unless K12 itself signs off on the deal. And CAVA is perpetually in debt to K12: In 2013, it owed the company $23 million, on top of the $47 million that it paid out.
Abston, the head of CAVA, said that all of K12 California schools have consistently passed financial audits and other oversight measures. "CAVA is governed by separate independent, nonprofit charter school boards, overseen by school districts," she said.
In most states, K12 operates a single, massive school that draws students from all corners of the state. But to comply with California law, K12 instead operates out of a dozen different districts, an arrangement that the report finds problematic: The school districts that K12 chooses to oversee its schools are often tiny, with vastly limited resources. A district of 30 students — a single, quaint country schoolhouse with six teachers and a principal who also serves as the district's superintendent — authorizes CAVA's 3,000-student San Diego school. In the New Jerusalem School District, there are 29 non-charter students to CAVA's 1,600.
Cara Bryant, a 9-year CAVA teaching veteran who has been part of the unionization efforts, said that she has seen conditions at the virtual schools decline under K12's leadership. "Class sizes have gone up, teachers have been saddled with more and more clerical duties, and our resources are increasingly not being used on students," Bryant told BuzzFeed News. "Teachers are not getting the resources to do their jobs."