By Nevit Dilmen (Own work) [GFDL or CC-BY-SA-3.0], via Wikimedia Commons

July 10, 2016; Los Angeles Times

A chain of 13 “nonprofit” online charter schools in California must pay the state attorney general an $8.5 million settlement for false advertising, misleading parents and inadequate instruction. An investigation by the San Jose Mercury News is credited with bringing many concerns about underperformance, misrepresentation of enrollment, and other issues to public view in a comprehensive way.

But, starting from the beginning, is the network really nonprofit as state law requires? California Virtual Academies (CAVA) is, according to an investigation, controlled by the for-profit, Virginia-based K12 Inc., which operates in 37 states and reported $651.4 million in revenue for the nine months ending in March of this year.

“All children deserve, and are entitled under the law, to an equal education,” state Atty. Gen. Kamala D. Harris said in a statement. “K12 and its schools misled parents and the state of California by claiming taxpayer dollars for questionable student attendance, misstating student success and parent satisfaction, and loading nonprofit charities with debt.”

K12 and California Virtual Academy have admitted to no wrongdoing, but have agreed to abide by state law in the future. Both now also may face a Department of Education audit that will cost $300,000. The Senate Education Committee is also due to consider Assembly Bill 1084, which would ban nonprofit online charters from contracting with for-profit companies for instructional services. CAVA CEO Stuart Udell says the company is not under the control of K12, and that it has always abided by the law.

According to this article, the $8.5 million will “settle outstanding claims, refund state education dollars and cover the cost of the investigation. In addition, the company also will provide ‘debt relief’ to the charters it manages, a provision designed to remove these operations from under the control of K12.”

A for-profit like K12 is not allowed to run a charter school per state law, but the schools it established as nonprofits have contracted with K12 for “substantially all of the management, technology and academic support services in addition to curriculum, learning systems and instructional services,” according to the state complaint. (Thus, the debt apparently.) At 14,000, it has enrolled far more students than any other online operation in California.

Udell says, “Opponents of K12 and skeptics of public online education have spent years making wild, attention-grabbing charges about us and our business. The state of California used the full authority and investigative resources of the office of the attorney general to investigate these charges for over eight months. In the end, we demonstrated industry-leading levels of service and compliance with regulations and benefits to families.”

But even the California Charter Schools Association, which defends charters, is unwilling to support the group’s practices, saying in a statement:

CCSA condemns the predatory and dishonest practices employed by K12 Inc. to dupe parents [by] using misleading marketing schemes, siphon taxpayer dollars with inflated student attendance data, and coerce CAVA School nonprofit employees into dubious contracting arrangements.

Meanwhile, in Ohio, a lawsuit to try to prevent the Department of Education from auditing the Electronic Classroom of Tomorrow, or ECOT, has been rejected in court. Every five years, a DOE audit is scheduled to determine whether student enrollment matches the number of students the state is paying the charter $115 million/year to educate—money that comes from traditional public schools. The latest audit had been delayed twice and was due to begin yesterday.

Longtime lobbyist Neil Clark, a consultant for ECOT, claims that the group is trying to block the audit due to revised standards: “They want to ignore the Revised Code and they want to ignore the existence of our contract, so we had no choice but to go to court and seek a temporary restraining order from having them apply these ridiculous standards.”

A recent article in the New York Times noted ECOT’s graduation rate was below 39 percent, far lower than the worst-performing traditional public schools. ECOT claims an enrollment of nearly 15,000 students, which would make it larger than all but eight public school districts.

But inflated enrollment and shell organizations feeding revenue to a company store are not the only problems these kinds of organizations create. A study released by CREDO last October found that the achievements of online charter school students compared very unfavorably to their peers in public schools, and last month, the National Alliance for Public Charter Schools said people should be “outraged” at how little learning occurs at some online schools. ECOT itself has repeatedly received F grades on state report cards for student progress.—Ruth McCambridge