Big Money in Education Part II

by Anita

Big money often means corruption or the appearance of corruption whether in elections, environmental policies, prisons, education or other areas of public life. The first post in our series on big money in education examined corruption that is derived from direct or nearly-direct relationships among corporations, nonprofits, and state and local education officials. This post will investigate charter schools, which privatize education, and the consequences of these plans.

Privatization of any governmental function is usually championed by business leaders who claim that performing that function – through privatization – “like a business” with free-market rules will provide better and cheaper results. Wealthy donors such as John Walton (Walmart), Dick DeVos (Amway), Richard Sharp (ex-CEO of Circuit City) and Don Fisher (founder of The Gap) have used their big bank accounts and other resources to determine the future of schools. They have bankrolled school voucher programs, scholarships to private schools, and charter schools.

A charter school is essentially a private school which has been authorized by the state; therefore, it can receive state education money. Charter schools are run by private entities – individuals or corporations – and are intended to be an innovative alternative to traditional public schools and curriculum. As such, they are exempt from many regulations of the state education board.

Texas passed its first charter school legislation in 1995, and 20 charters were granted to schools for the 1996-1997 school year. In 1997 the maximum number of charters was increased to 120, and in 2000, the state’s laws permitted 215 open-enrollment charters (each of which may have more than one campus). Since 2000, every session of the Texas legislature has considered bills to increase the number of charters. In the 2013 session the State Senate has passed a bill to increase charters, but the House has not yet voted on it. However, increasing the number has not been necessary so far because it is not unusual for charter schools to close down after only one school year (or less); also, some schools have had their charters revoked by the state, often due to administrative issues.

Charter schools may be “brick-and-mortar” or online. Virtual schooling, provided by the Texas Virtual Academy as well as other institutions, is rapidly growing due to the significant savings per pupil it achieves. Virtual schools do not need to hire as many teachers as physical schools, and they don’t have the overhead required to keep a campus maintained. Instead of purchasing enough textbooks for every student, online schools develop one version of a particular course then use it for all their students.

ALEC (American Legislative Exchange Council) and its Texas partner, TPPF (Texas Public Policy Foundation), have helped private education companies by promoting virtual charter schools which take state funding away from public schools. According to Progress Texas, ALEC’s Education Task Force, co-chaired by private online education company executives and Texas State Senator Florence Shapiro, was able to get a law passed in Texas which funded virtual school students at the same level as traditional public school students, in spite of the obvious savings for virtual schools. The combination of Shapiro’s position as chair of the Texas Senate Committee on Education and her ALEC position was a potential conflict of interest that could lead to an appearance of corruption even when corruption was not proven (at present, she is no longer a member of the Texas Senate but has indicated that her next job will be with an education company).

Similarly, one of the biggest beneficiaries of the virtual charter school policies touted by Jeb Bush’s group FEE (detailed in the prior post) is the publicly-traded online charter school management company K12 Inc. It is the most lucrative player in the online-school business, with expected revenues of $850 million in fiscal 2013. In 2011, Connections Education, the second-largest player in this market, was purchased by the education and publishing giant Pearson for $400 million. Online schooling is definitely big business.

Are charter schools really any better than traditional education? How do they perform with regard to outcome measures such as standardized tests? According to Raise Your Hand Texas (RYHT), a nonprofit group advocating for public education, Texas charter schools have a higher percentage of campuses rated “Academically Unacceptable” than traditional public schools (11.2% of charters vs. 5.9% of traditional schools). For the 2010-2011 school year, almost 70% of charters were rated Academically Acceptable or lower (the four possible ratings are exemplary, recognized, acceptable, and unacceptable).

K12’s virtual schools have been cited in several studies for their abysmal performance. A 2012 report found that K12 Inc.’s students across the nation scored between 14 and 36 percent lower than their non-cyber school peers. Only 29.7 percent of all virtual schools reported meeting Adequate Yearly Progress standards in the 2011-2012 school year, which, the National Education Policy Center notes, compares poorly to the 51.1 percent average scored by brick-and-mortar charter schools and 52% of traditional schools.

The New York Times reported in 2012 that by almost every educational measure, K12’s Agora Cyber Charter School was failing. By Wall Street standards, however, Agora was a remarkable success that helped enrich the company’s investors. “And the entire enterprise is paid for by taxpayers,” wrote Stephanie Saul.

However, in January 2013, K12 Inc. investors sued the company after reports by former employees indicated that Agora was using fraudulent record-keeping practices and other techniques to keep students on their books and continue billing school districts. Benjamin Herold of Newsworks wrote, “In one example, a former Agora teacher said in court documents that the school continued to bill the home school district of one special education student who was absent for 140 consecutive days. Pennsylvania requires that cyber charter students who miss 10 straight days be reported as withdrawn.”

The company’s records also failed to report the “churn rate” or turnover of students, which was up to 50% in some districts, according to investors. The suit charges that the company used “aggressive sales practices” and recruited “at-risk and inner city students for whom the K12 curriculum was not appropriate.”

The Agora Cyber School is only one example of the failure that can result when big money takes over public education. The curriculum used at Agora is the same one used by the Texas Virtual Academy, which is being expanded as indicated above. It is also likely that TVA uses some of the same fraudulent practices as Agora, since K12, Inc. manages both schools. Time will tell.

The third post on money in education will examine school voucher programs.

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2 responses to “Big Money in Education Part II

  1. Pingback: Big Money in Education Part III | citizens for truth

  2. Pingback: Big Money in Education Part IV | citizens for truth

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