RELEASE: New Report Finds Rampant Abuses Plague the For-Profit Virtual Charter School Industry

Washington, D.C. — Today, the Center for American Progress released a new report that looks at the outcomes and financial practices associated with the virtual for-profit charter school industry, which enrolls a growing percentage of public elementary and secondary students. These schools hurt the brand of high-performing charter schools that are transforming outcomes for students across the country. The report examines the financial documents of K12 Inc., the largest for-profit virtual school provider in the United States. Key findings from the report include:

  • For-profit virtual charter schools graduate about half of their students, which is about 30 percentage points lower than the national average.
  • K12, Inc. diverts significant portions of their revenue to pay exorbitant executive compensation, fund elaborate marketing campaigns, and boost the company’s bottom line.
  • K12 Inc.’s executive performance framework does not prioritize maximizing student outcomes.

The report also includes policy recommendations for lawmakers and regulators to ensure greater accountability for students. A few of these recommendations include:

  • States should ban for-profit companies from opening and operating virtual charter schools.
  • Implement rigorous transparency and accountability for all virtual charter schools.
  • Prohibit incentive compensation for student enrollment for all public elementary and secondary schools.

“Policies have not kept pace with the growth of virtual education, enabling many for-profit operators to take advantage of fully virtual instruction to boost their bottom line and drive dollars away from instruction at the expense of student outcomes,” said Meg Benner, senior consultant for K-12 Education Policy at CAP. “As a result, the poor outcomes and scandals around for-profit virtual charter schools are hurting the brand of charter schools overall.”

“Our look at publicly available data showed how one company directed millions of dollars in education funding to advertising and executive compensation, said Neil Campbell, director of innovation for K-12 Education Policy at CAP. “This is something that should concern everyone, including lawmakers that have an opportunity to intervene to protect students and taxpayers.”

The report’s release comes on the same day senators have written the Government Accountability Office to open an investigation into the industry’s practices. It also comes on the heels of the closure of Electronic Classroom of Tomorrow—the largest virtual school in Ohio—following demands that it repay funds to the state for students whose enrollments it could not verify.

Click here to read “Profit Before Kids” by Meg Benner and Neil Campbell.

For more information or to speak with an expert, please contact Colin Seeberger at cseeberger@americanprogress.org or 202.741.6292.