California teachers allege online school operator K12 Inc. misused federal funds

Last December, a group of teachers from California Virtual Academies sent a letter to the North Carolina Board of Education, warning officials not to replicate the network of charter schools run by for-profit company K12 Inc.

“As teachers at CAVA, we have grown increasingly concerned about the direction of our school,” they wrote, using the schools’ acronym. “We believe that decisions being made by CAVA and K12 management are oftentimes not in the best interests of either students or teachers, and have negatively impacted the quality of education offered at our school.”

The warning went unheeded. Several days later, North Carolina officials approved a school run by the Virginia-based K12 Inc., making it the latest in a string of about 33 states to open the virtual academies despite consistently low performance and graduation rates across the board.

Now the CAVA teachers are escalating their concerns. On June 19, the group filed 69 complaints with state education authorities, alleging that K12 Inc. is failing special needs students, inflating enrollment numbers, violating student privacy laws and using federal funds for retreats in places like Yosemite National Park.

“Their focus is not educationally driven,” special education teacher Danielle Hodge said of K12 Inc. “Their goal is profit, not outcome.”

K12 Inc. operates 11 online schools that serve about 14,000 students across California. None of the schools met state Academic Performance Index standards, according to most recent available data from 2013.

In one of the complaints, a former CAVA administrator and current CAVA teacher testified that K12 Inc. spends federal Title I funds on retreats for administrators, including on travel, hotel costs and meals. Those funds are meant to improve the academic achievement of disadvantaged students.

The California teachers, meanwhile, say the conditions at their own schools have become untenable, and they have banded together in a fight to unionize for job protections. They have been documenting their whistleblower efforts on a blog called California Virtual Educators.

A K12 Inc. spokeswoman did not return a request for comment. The company’s website asserts parents are satisfied with K12’s results, with 92 percent of parents in a 2014 survey saying “their student has benefitted academically from the K12 curriculum.”

A spokeswoman for the U.S. Department of Education wouldn’t comment on whether the agency opened an investigation into schools run by K12 Inc., but she added, “we have conducted a number of investigations and audits involving charter schools and currently have several audits involving charter schools underway.”

From January 2005 through March 2015, the Education Department’s Office of Inspector General has opened 68 charter school investigations, but few have been conducted on virtual charter schools.

Cutting off services

Hodge, who teaches at CAVA @ San Joaquin, told FedScoop that administrators have cut off essential services to children with special needs — including one with a degenerative muscle disorder who requires a speech pathologist, according to her Individualized Education Plan, or IEP.

“We will not take it out of her IEP because she needs the service,” said Hodge. “But they have not been funding it.”

She added the pathologist has agreed to keep working with the student even though she has not been paid for the services since September.

Another teacher, Jen Shilen, said clerical work has piled up for teachers because management refuses to hire more support staff.

“When you look at how CAVA chooses to staff the school, they choose not to hire more guidance counselors or more clerical staff — anything that can be passed along to the teachers is what is done,” said Shilen, who teaches history to about 160 students a year at CAVA @ Sutter. “We would love to invest the effort to make the virtual model work, but we’re being held back by the model CAVA is using under K12 Inc.”

Follow the money

Meanwhile, K12 Inc. has generated a fortune, with revenues increasing from more than $226 million in 2008 to more than $848 million in 2013, according to the Center for Media and Democracy. It has an aggressive lobbying arm, and has fueled dozens of bills aimed at expanding virtual schooling — 157 of which have passed in 39 states, including the District of Columbia.

When it comes to accountability, “that’s the million-dollar question,” said Michael Barbour, director of doctoral studies for the Isabelle Farrington College of Education at Sacred Heart University.

“In most states, much of the legislation passed that governs the regulation of cyber charters is often directly from the proponents of cyber charters,” Barbour said in an interview. “Money, in all honesty, is the bottom line.”

According to a report released in February about CAVA schools, K12 Inc. received nearly $50 million for management, technology and administrative resources during the 2012-13 school year — but it’s unclear how much of that money went to direct services for students.

The analysis, conducted by In the Public Interest, a Washington research and policy organization, also found that K12 Inc.’s top executive raked in nearly $4 million in salary and bonuses in 2012 while the average teacher’s wages stayed stagnant at about $36,000 a year.

“What we found is absolutely reasons for concern,” said Donald Cohen, executive director of In the Public Interest. “They kept individual schools in debt. There was never any surplus for the schools, all the surplus was for K12 Inc.”

K12 Inc. officials called the report “inaccurate and deeply flawed” in a statement.

“All CAVA schools undergo annual financial audits by independent external auditors and have a long record of clean findings with no material weaknesses,” the statement read.

State allies

Hodge said an official from the California Department of Education has met with the teachers “several times” and is trying to guide them through the process of filing complaints with the charter school authorizers. In this case, the authorizers are nearby school districts that have little or no experience in dealing with virtual schools.

A spokeswoman for the department said the teachers’ grievances would be taken seriously.

“The CDE takes complaints very seriously and believes teachers should be given the respect and support they need to provide every student the best education possible,” spokeswoman Tina Jung said.

K12 Inc. has retained top labor law firm Jackson Lewis to fight the teachers’ efforts to form a union. A decision from the California Public Employment Relations Board is expected to come down this summer.

Shilen said she and several other teachers have not yet received a contract to teach again next year.

“I think some people are really worried,” she said.