Writing in their 2015 Annual Report, K12 Inc. Chairman and Chief Executive Officer Nathaniel Davis said;
Our strategy is simple: optimize student success, support market expansion in collaboration with current and future partners, and pursue targeted revenue growth.
Hyping their status as the leader in the for-profit corporate education reform industry, the company reported added;
The U.S. Market for K-12 education is large and online learning is gaining greater acceptance.
The notion that the country’s public school children are little more than lucrative profit centers for Wall Street investors has been growing since Rupert Murdoch famously called America’s public schools, a $500 billion untapped economic opportunity.
And by way of explaining the pro-charter environment and their ongoing success collecting public money, K12 Inc. explained;
Many parents and educators are seeking alternatives to traditional classroom-based education for a variety of reasons. Demand for these alternatives is evident in the expanding number of choices available to parents and students. For example, public charter schools emerged in 1988 to provide an alternative to traditional public schools and, have seen enrollments grow by 225% over the past 10 years….and there are approximately 6,400 public charter schools operating in 42 state and the District of Columbia with an estimated enrollment of over 2.5 million students.
While much of the attention related to education reform has focused on charter schools, the Common Core and the Common Core testing frenzy, Internet based, online virtual charter schools have become a significant part of the corporate education reform industry.
According to the International Association for K-12 Online Learning (iNACOL), as of 2013, all 50 states “had established a significant form of online learning initiative, adding that, “1.82 million students participated in a formal online learning program.”
It was with this burgeoning sense of opportunity that a former Goldman Sacks executive and President Ronald Reagan’s former US Secretary of Education formed K12, Inc. in 2000.
With $40 million dollars from Wall Street investors, including $10 million from the infamous junk-bond dealer Michael Milken, Ronald Packard, a former Goldman Sacks executive and William Bennett, a former Secretary of Education, formed K12, Inc. so that they and their investors could profit off the children of the United States.
Other initial Wall Street investors included Andrew Tisch (Loews) and Larry Ellison (Oracle and Knowledge Universe), as well as Milken and his brother.
William Bennett, who by the 2000s had become a right-wing talk show host, served as the chairman of K12 Inc.’s board of directors until he resigned in 2005 following a series of racist comments that he made about African-Americans.
However, despite the controversy surrounding K12 and Bennett’s role in the company, the corporation’s profits have grown exponentially over the years, earning hundreds of millions of dollars for K12’s executives and shareholders.
K12 Inc. began by creating an online “education program” for children in Kindergarten through 2nd grade in Pennsylvania and Colorado.
Today, a decade and a half later, K12 Inc. owns, operates or manages virtual schools in Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, Wyoming and the District of Columbia. In addition, the company sells online products to schools in all 50 states and around the world.
The company has been so successful that in 2007 it owners decided to take the company public, raising millions in capital as it joined the New York Stock Exchange (NYSE: LRN).
By 2015, the company’s revenue exceeded $948 million, a 5.1 percent increase over the preceding year. Since its inception, K12 Inc.’s revenue has exceeded $5 billion dollars, almost all of it paid for by American taxpayers.
The policy landscape supporting virtual charter schools has grown substantially over the years K12 Inc. has been in existence. In just the last eight years, more than 157 bills passed in 39 states and the District of Columbia, all expanding the online school juggernaut.
In many cases, the anti-public school, pro-cyber school legislation was a result of aggressive lobbying and political involvement by the American Legislative Exchange Council (ALEC) and the member of its Digital Learning Subcommittee, a group of education reform entrepreneurs that includes K12 Inc.
Explaining an important aspect of its success, K12 Inc., its board of directors and staff have been especially active when it comes to political donations and lobbing activities at the federal and state level.
Federal Election Commission reports reveal that since its inception, individuals directly connected with K12 Inc. have donated well in excess of $1.5 million dollars to federal candidates and political action committees, helping to ensure that the company and cyber schools, in general, received a place of honor in both the administrations of President George W. Bush and Barak Obama.
The virtual school industry has received consistent and bi-partisan legislative and administrative support.
In fact, the No Child Left Behind Act, the Race to the Top initiative and the recently adopted, Every Student Succeeds Act, all make room for the significant expansion of virtual schools.
In addition to the company’s work at the federal level, the Center for Media and Democracy reports;
Since 2004, K12 Inc. and its employees have pumped almost $1.3 million into state-level politics in 23 states (as of 2012), including contributions to candidates for office, party committees, and ballot initiatives.
On top of K12’s direct involvement in political campaigns, K12 Inc. has also focused on direct lobbying activities, spending more than $120,000 spent on federal lobbyists in the last two years, all while hiring more than 150 lobbyists in 28 states between 2003 and 2012, according to the National Institute on Money in State Politics.
A prime example of K12’s involvement in state politics can be found in the role it played in Georgia’s referendum to amend its state constitution in order to make it easier to open charter schools in that state. K12 was a major supporter of the effort, donating at least $300,000 in 2012 to “Families for Better Public Schools,” a Georgia political action committee behind a constitutional amendment that would further the charter school industry by bypassing the legislature and state board of education to create a new, politically appointed commission that would have the authority to independently override state and local control and approve new charter schools and online virtual schools.
With additional financial support from the Koch Brother’s Americans for Prosperity StudentsFirst, the Walton Family Foundation and other major corporate education reform players, the amendment passed with proponents outspending the opposition by about ten-to-one.
In yet another example, the Center For Media and Democracy reports,
In Pennsylvania, where ten percent of its revenue is generated, K12 Inc. has spent $681,000 on lobbying since 2007, according to the New York Times. It registered 11 lobbyists in the state from 2007 through 2012, according to the National Institute on Money in State Politics.
K12 Inc. has also used ostensibly benign front groups to lobby and organize protests on its behalf. The K12 Inc. funded group Pennsylvania Families for Public Cyber Schools spent $250,000 on lobbying in the last five years, according to the Times.
The paper also reports that K12 Inc. is connected to My School, My Choice, a group that organized protests in Ohio against reforming the state formula for financing charter and online schools. The protesters turned out to be paid temp agency workers. Tim Dirrim, the founder of the organization, is the board president of the K12 Inc. managed Ohio Virtual Academy.
In states across the country and at the national level, political donations, lobbying, public relations and advocacy and extensive marketing campaigns have served as the building blocks of K12’s lucrative online schools.
However, perhaps the most telling points about how K12 Inc. and other online charter school succeed in the present economic and political climate can be found in the narrative that the company lists as “Risk Factors” in their most recent quarterly report to the Security and Exchange Commission (SEC), factors that make it clear that the for-profit education reform industry has become an active part of the advanced capitalist system.
Warning Wall Street and its investors, K12 Inc. outlined the potential barriers to its success, noting;
- From time to time, proposals are introduced in state legislatures that single out virtual or blended public schools for disparate treatment.
- We have been, and will likely continue to be, subject to public policy lawsuits filed against virtual and blended schools by those who do not share our belief in the value of this form of public education.
- Opponents of virtual and blended public schools have sought to challenge the establishment and expansion of such schools through the judicial process. If these interests prevail, it could damage our ability to sustain or grow our current business or expand in certain jurisdictions.
- Beyond academic performance issues, some virtual school operators have been subject to governmental investigations alleging the misuse of public funded or financial irregularities. These allegations have attracted significant adverse media coverage and have prompted legislative hearings and regulatory responses.
- As a public company, we are required to file periodic financial and other disclosure reports with the SEC…The disclosure of this information by a for-profit education company, regardless of parent satisfaction and student performance, may nonetheless be used by opponents of virtual and blended public schools to propose funding reductions or restrictions.
- As a non-traditional form of public education, online public school operators will be subject to scrutiny, perhaps even greater than that applied to traditional brick and mortar public schools or public charter schools. (A claim that is blatantly false considering there is little to no federal or state oversight of virtual charter schools.)
And finally, in what may be the most telling and honest observation of all, K12 reports;
- Parent and student satisfaction may decline as not all parents and students are able to devote the substantial time and effort necessary to complete our curriculum.
While these “risk factors” paint a picture of potential problems facing K12 Inc. and other virtual schools, the supposed legitimacy of the virtual school industry has allows them to expand operations and continue to rake in the cash, all at the expense of taxpayers and real public schools.