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A Stinkweed is a Stinkweed--Even When You Rebrand It as a Rose

by Susan Ohanian

The Feds are finally looking into K12 Inc.--but not because kids are being robbed. The Feds are worried about the investors. Money talks. People who worry about children are ignored.

I levitated on reading K12 Inc's pretension at "personalized learning." I think I'm still the only researcher in the country who actually worked through their curriculum offerings. I signed up three fictional children for their history courses (I paid for these courses and worked my way through every ugly lesson and took every stupid test). I actually paid for the literacy courses too but phonics drill is not nearly as much fun to write about as ancient stories of incest, rape, and murder.

When I'd complain that I didn't understand a lesson or when a child failed a test on a lesson, the answer from K12 Inc was always the same: Repeat the lesson. Personalized learning: Repeat. Repeat. Repeat.

Gerald Bracey wrote a companion report: Knowledge Universe
and Virtual Schools: Educational Breakthrough or
Digital Raid on the Public Treasury?

Both our reports were pretty much ignored. The media remains uninterested in education content--be it for-profit online or Common Core. Just label it all reform, 21st Century education, skills for the global economy--and they'll repeat this. Repeat. Repeat. Repeat.

Meanwhile, what's in a name? K-12 is betting the bank that a name change will keep the big bucks rolling in.

K12 Inc. rebrands as Fuel Education

Allie Gross

April 7, 2014

K12 Inc., one of the largest for-profit virtual schools in the nation, announced plans to rebrand a number of its products under a new banner: Fuel Education.

The virtual education provider says the decision to rebrand is not to distance itself from a recent wave of critical news reports but rather to regroup a number of related offerings under one, marketable banner.

Fuel Education, a separate legal entity owned by K12 Inc., will provide various "personalized learning" platforms, as well as professional development content, consulting, and virtual classes.

K12 Inc., has received a high volume of critical attention recently. The American Federation of Teachers called the company out on its new site, Cashing in on Kids, as one of the most egregious education profiteers.

Dive Insight:

K12 Inc. saying its decision to rebrand has nothing to do with negative press is difficult to believe. How often do successful companies rebrand? And K12 Inc. is definitely successful -- at least monetarily. While a 2012 study by the National Education Policy Center found K12 Inc. students were "falling further behind in reading and math scores than students in brick-and-mortar schools," the company's annual report that year estimated $708.4 million in revenue. And according to the Washington Post, the company's CEO, Ron Packard, took home $5 million in 2011.

The virtual company, which facilitates online learning programs in over 30 states, has come under fire for a myriad of issues recently: poor academic performance and allegations of placing pressure on districts to enroll students in its online courses -- even if the students are not a good fit for virtual learning.

All of the preceding negative press makes K12 Inc.'s re-branding as Fuel Education feel somewhat duplicitous. In ways, it is reminiscent of what some for-profit education management companies have done when states shut down one of their schools: simply open a new school to replace the one the state closed for poor academic performance. The new school -- run by the same company -- opens at the same address and with much of the same staff, but is technically different because of the name.

Fuel Education may be a different name, but at the end of the day, it is still owned by K12 Inc. and the products within were designed by K12 Inc., as well.

Recommended Reading:

Ed Week: K12 Inc. Building a New Identity for Part of the Company

There's more. After all this time, the Feds are getting involved--but not because kids are being robbed. The Feds are worried that people who invested in K12 Inc. may have been shortchanged.

Lawsuit accuses K12 Inc., former CEO of misleading investors
By Allie Gross

April 15, 2014

A new federal lawsuit alleges that K12 Inc.-- a for-profit virtual education program -- mislead investors by making wildly positive statements about the company and its future, only to reveal it was actually financially off-target.

The suit claims former CEO Ron Packard "reaped the rewards": These statements reported led to "artificially inflated" stock prices, and Packard proceeded to sell 43% of his personal share of stock -- raking in $6.4M-- before announcing the company's financial reality in October.

A company spokesperson denied the claims, saying Packard has been forthright about his trading, and used a 10b5-1 plan -- which is an SEC-instituted plan allowing company execs to pre-rearrange trades, not based on insider information.

Dive Insight

K12 Inc. has been quite controversial and this is not the first time investors have sued. In July, the company settled a lawsuit with a bunch of investors who claimed the company misled them about academic achievements and business practices, though K12 Inc. maintained its denial of the allegations.

What happened here is unclear. Since Packard announced he was leaving the company in January, some financial analysts say the stock trading probably had more to do with his departure than artificially inflated stock prices. The 10b5-1 plan, which Packard is using as his defense against insider trading, has skeptics who say it lacks transparency.

And more.

April 21, NCAA announced it will no longer accept coursework from 24 schools which use a company called K12 Inc. to provide their curriculum.

Today the NCAA announced that 24 schools which use a company called K12 Inc. to provide their curriculum were no longer approved. All of the schools are nontraditional high schools, and their courses were found to not comply with the NCAA's nontraditional course requirements. The schools are:

California Virtual Academy -- San Joaquin
California Virtual Academy -- San Diego
California Virtual Academy -- Los Angeles
California Virtual Academy -- Sutter
California Virtual Academy -- Jamestown
California Virtual Academy -- Kern
California Virtual Academy -- San Mateo
California Virtual Academy -- Kings
California Virtual Academy -- Sonoma
San Francisco Flex Academy (CA)
Silicon Valley Flex Academy (Morgan Hill, CA)
California Virtual Academy -- LA High
California Virtual Academy -- Santa Ysabel
Colorado Virtual Academy Cova (North Glenn, CO)
Georgia Cyber Academy (Atlanta, GA)
Nevada Virtual Academy (Las Vegas, NV)
Ohio Virtual Academy (Maumee, OH)
Oklahoma Virtual Charter Academy (Nicoma Park, OK)
Agora Cyber Charter School (Wayne, PA)
South Carolina Virtual Charter (Columbia, SC)
Washington Virtual Academy -- Monroe (Tacoma, WA)
Insight School of Colorado (Westminster, CO)
Insight School of Washington (Tacoma, WA)
IQ Academy Washington (Vancouver, WA)

As a result, the NCAA will stop accepting coursework from these schools starting with the 2014--15 school year. Coursework completed from Spring 2013 through Spring 2014 will undergo additional evaluation on a case-by-case basis when a prospect tries to use it for initial eligibility purposes. Coursework completed in Fall 2012 or earlier may be used without additional evaluation.

In addition to the 24 schools above, other schools affiliated with K12 Inc. remain under Extended Evaluation. This means the NCAA will continue to review coursework coming from those schools to see whether it meets the NCAA's core course and nontraditional course requirements. Prospects with coursework from those schools must submit additional documentation no matter when the coursework was completed.

A story about this was on the AFT/In the Public Interest new site Cashing on Kids, but it's been removed. Somebody check the AFT's investment portfolio.

The Name IQ Academy is so deliciously awful that I looked it up. There are more than the one in Vancouver.

I find it fascinating but not surprising that the NCAA is a better watchdog over what outfits like K12 Inc are up to than is the US Department of Education, which has long served as handmaiden to corporate interests. I documented this in two books, One Size Fits Few: The Folly of Educational Standards, 1999, and more thoroughly in Why Is Corporate America Bashing Our Public Schools?, 2004.

Neither the public nor teachers have a clue how closely the US Department of Education follows the Business Roundtable template laid out in the late 1980ies.

— Susan Ohanian




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