Ron Packard made $4.1 million in 2013 as CEO of Virginia-based K12, Inc, the parent company of subsidiaries that teach 123,000 students at home through virtual charter schools. 

The 14,500 students in his 11 California Virtual Academies (CAVA) did not fare as well.

“In every year since it began graduating students, except 2013, CAVA has had more dropouts than graduates,” according to a report (pdf) from In the Public Interest, a Washington, D.C.-based research group that focuses on contracting and privatization. It is a project of Partnership for Working Families.

CAVA’s graduation rate was 36% for the latest three years available, 2010-11 through 2012-13. That compares rather unfavorably to state averages of 78% during the same period. The worst CAVA year was the first of the three, when only 16% graduated.

CAVA kids also don’t do well on standardized tests. “API scores show that CAVA ranks poorly and that its academic performance declined most years since 2005,” according to the report. They also don’t fare well when measured against schools with comparable demographics. The state’s similarity rating for CAVA of 4.3 meant that the students performed worse than 57% of schools.

In a statement, CAVA Head of Schools Katrina Abston said the study was “inaccurate and deeply flawed.” The statement blamed “powerful special interests opposed to charter schools and parent choice,” singling out a union helping CAVA employees to unionize.

As of the 2012-2013 school year, nearly 243,000 students (pdf) were enrolled nationally in 338 full-time online schools like CAVA, which combine elements of charter schools and homeschooling.

K12, Inc. is a for-profit company that receives taxpayer dollars, while weighing expenditures on education against the desire of its shareholders. The stock was trading at $16.93 Thursday, 54% off its five-year high of $36.78 in September 2013.

It is the nation’s largest full-time virtual school, with students in pre-kindergarten through high school in 29 states and the District of Columbia.

K12 manages its California schools and controls their finances through its CAVA subsidiary, while also functioning as the main vendor, doling out no-bid contracts. The parent company sold management, technology and administrative services to CAVA for $47 million in 2012-13.

That was nearly half of the $95 million CAVA received in public funding, leaving the rest “to pay for all program expenses, including teacher’s salaries, district oversight fees, services for special education students, administrative office expenses, insurance and accounting services.”    

The report cites 273 references, including data from California’s Department of Education, Ed-Data, media reports and CAVA teacher interviews, in concluding that the result of this divvy is, “low quality educational materials, understaffing of clerical employees and low teacher salaries” which “indicates that an additional investment of resources in the classroom is necessary for improvement.”

Oversight, the report said, is virtually nonexistent. Technically, each of the 11 CAVA schools has a governing board that oversees it, but they don’t meet often and just approve what’s on the agenda. The school district, or authorizer, that approved the charter school has oversight responsibilities, but CAVA schools are usually in small districts with few resources. That leaves the state Department of Education, which apparently doesn’t do much.   

Packard, who founded K12 in 1999, resigned as CEO in January 2014 and formed a similar company that would focus on international venues.

–Ken Broder

To Learn More:

Virtual Charter School Network Making Profit at the Expense of California Schoolchildren, Study Finds (by Katy Murphy and Jessica Calefati, San Jose Mercury News)

Virtual Charter Blasted in Report (by Maureen Magee, U-T San Diego)

Report Slams Virtual Charter Schools that Graduate Just 36% of Students (by Molly Hensley-Clancy, BuzzFeed)

Public Financing Supports Growth of Online Charter Schools (by Carol Pogash, New York Times)

Profits and Questions at Online Charter Schools (by Stephanie Saul, New York Times)

FBI Cracks Down on Fraudulent Charter Schools (by Noel Brinkerhoff and Steve Straehley, AllGov)

Virtual Public Education in California (In the Public Interest) (pdf)