Sunday, October 05, 2014

Vladimir de Jesus, a community college student, dreams of becoming an art teacher. But after first enrolling at LaGuardia Community College in 2008, he’s still working toward his degree.
Continue reading the main storyShare This Page
On a Friday afternoon last spring, Dennis D’Amelio, an artist and teacher in late middle age was presiding over a class in color theory atLaGuardia Community College, whose location in the immigrant hub of western Queens makes it one of the most ethnically diverse colleges in the country. It was the end of the semester and the students were tackling a challenging assignment — a test of the reactive properties of color, which required the meticulous rendering of small sequential blocks of paint, an exercise that would serve as a lesson in deductive reasoning and consume hours.
Vladimir de Jesus, a child of Puerto Rican parentage and Soviet enthusiasms, had arrived early with various supplies and considerable energy. At 23, he had been at LaGuardia sporadically over six years, amassing fewer than half of the credits he needed to progress to a four-year college.
For all of that time, and really for so long before it, he had known that he wanted to pursue a life in the arts. In an essay he wrote in March, he talked about painting and drawing pastels as a young boy, and the link that art provided to his mother, who had also painted and who died in the early 1990s of AIDS, a disease that also claimed his younger sister.
Continue reading the main story
Degrees and Difficulty
Articles in this series will look at the obstacles confronting LaGuardia Community College's 50,000 students, most of them low-income.
After the deaths, the family moved to Puerto Rico, living for several years in cars or in shelters, before returning to New York, where Mr. de Jesus attended Washington Irving High School, which has a long record of dismal performance. He eventually dropped out and earned an equivalency diploma.
Mr. de Jesus is tall, with an angular face and long hair he often wears in braids, and much of his skin is covered in tattoos — of Che Guevara and roses and the words of Bob Marley.
“All I cared about was art and global history,” he told me one afternoon in the apartment he shares with his father and stepmother in subsidized housing on Roosevelt Island. “I was really rebellious, and I was cutting classes all the time.” At 17, he had a child.
As a community college student, Mr. de Jesus is both prototype and outlier. The majority of community college students come from low-income families, and many arrive at school, as he did, with competing obligations (29 percent of community college students in the United States are parents), as well as the need for extensive remediation. The widely held impression that community colleges are essentially vocational is inaccurate. Data released by the American Association of Community Colleges in September indicated that most of the associate degrees awarded in 2012 were given in the liberal arts and sciences, outnumbering those for nursing, say, or marketing.
In recent years, mounting concerns about inequality have fixated on the need for greater economic diversity at elite colleges, but the interest has tended to obscure the fact that the vast majority of high school students — including the wealthiest — will never go to Stanford or the University of Chicago or Yale. Even if each of U.S. News and World Report’s 25 top-ranked universities committed to turning over all of its spots to poor students, the effort would serve fewer than 218,000 of them. Community colleges have 7.7 million students enrolled, 45 percent of all undergraduates in the country.
Photo
Vladimir de Jesus started studying at LaGuardia Community College in Long Island City, Queens, in 2008. Although he has a high GPA, Mr. de Jesus, 23, an artist, has fewer than half the credits he needs to transfer to a four-year program.CreditJake Naughton for The New York Times
LaGuardia was founded in 1971 out of the struggles for a more egalitarian world that had characterized the previous decade. At any time, it has approximately 50,000 students from 150 countries who among them speak 129 languages. In February, Mayor Bill de Blasio chose the college as the site of his first State of the City address. Gail O. Mellow, the president of LaGuardia and a community college graduate who went on to get her doctorate, has been an entrepreneurial and enlightened leader, forging relationships with Goldman Sachs, for instance, and the Japanese government. The school recently won a $2.9 million grant from the United States Department of Education for a proposal to enhance student engagement; it was one of 24 colleges to be awarded money, in a competition that drew 500 applicants.
And still its challenges, like those of nearly every other community college, can appear insurmountable. More than 70 percent of LaGuardia students come from families with incomes of less than $25,000 a year. The college reports that 70 percent of its full-time students who graduated after six years transferred to four-year colleges, compared with just 18 percent nationally, but only a quarter of LaGuardia students received an associate degree within six years.
Over the past decade, while the amount of money going to community college students in the form of federal Pell grants has risen significantly, financing for the colleges themselves, which rely to a great extent on government appropriations and foundation grants, has risen only modestly. In 2010, Congress rejected plans for an $8.8 billion aid package that would have been directed toward helping community colleges raise graduation rates.
Among individual donors, community colleges ignite little charitable impulse. An endowment fund begun at LaGuardia in 2003 has raised $11 million, of which $8 million has been spent. To put those sums in perspective, Prep for Prep, the organization started in the 1970s to help channel bright, disadvantaged New York City children into top private schools and ultimately the Ivy League, raised $3 million on a single night in June when it held its annual gala.
Disturbed by the grievous imbalances in higher education, Dr. Mellow has written and spoken frequently about the problems that community colleges face. As she and others have repeatedly pointed out, although community colleges serve the most vulnerable students in the country, private research colleges spend three times as much per student as community colleges do. Community colleges represent the only sector in higher education where over the past five years, revenues per student have actually declined when adjusted for inflation.
Photo
The hallways of LaGuardia Community College are crowded with students in the mornings.CreditJake Naughton for The New York Times
Vladimir de Jesus started taking classes at LaGuardia in September 2008 but left after his first semester. When he returned to the college in the fall of 2012, he had already declared a major in fine arts, with the goal of transferring to Hunter College to earn a bachelor’s degree and, eventually, getting a master’s and teaching studio art and art history. From a certain vantage point on Roosevelt Island he can see Hunter across the river on Manhattan’s East Side. But getting there has proved more difficult than he had envisioned.
I first met him late last winter in an English composition class taught by Noam Scheindlin, a young scholar of Proust and Georges Perec who displayed a dazzling talent for making complex literary ideas relevant to students’ lives. Mr. Scheindlin will be eligible for tenure in two years, which makes him unusual at LaGuardia, where only 39 percent of the classes are taught by instructors who are full-time members of the faculty.
In Mr. Scheindlin’s class, many of the students were foreign born, having come from Ecuador, Yemen, Mexico, Nigeria and Pakistan. Almost all struggled with aspects of vocabulary (words including “stable” and “infelicitous”) or analyzing texts. One morning, during a discussion of a Julio Cortázar short story that centered on the idea of a narrator, a young woman paused to ask, “When it’s not true, it’s fiction, right?”
Mr. de Jesus began the winter semester auspiciously; he received an A for an early personal essay. In addition to his English and art classes, he was taking a remedial course, Math 96, which is algebra-based and focuses on linear and quadratic equations.
Passing this class, which teaches math that most affluent children study in eighth or ninth grade, is required for graduation and the ascent to four-year programs. But at community colleges across the country, the basic math requirement has been a notorious hindrance to advancement. More than 60 percent of all students entering community colleges must take what are called developmental math courses, according to the Carnegie Foundation for the Advancement of Teaching, but more than 70 percent of those students never complete the classes, leaving them unable to obtain their degrees.
Continue reading the main story
ROOSEVELT I.
NORTHERN BLVD.
LONG ISLAND CITY
QUEENS BLVD.
LaGuardia Community College
HUNTERS
POINT
QUEENS
30TH ST.
BROOKLYN
Mr. de Jesus was taking Math 96 for the third time last spring, having failed it twice. On one attempt he had fallen short by just a few points on the final exam; on another, he did not bother to show up for the exam at all because he was already failing. But in math, too, he had started the spring semester well, with grades in the 80s and 90s on the initial exams, his professor, Yelba Gutierrez, an adjunct at the time, told me.
When Mr. de Jesus came to school, he was present and engaged. In his English class, he typically offered observations that were sharper than those of the other students. But as the semester wore on, he had trouble getting to his classes on time — or at all.
In this habit, he was like many others. “You’ll see them come the first few weeks and then they disappear,” Ms. Gutierrez said. One morning in May, 10 of 28 students in her class were absent. One woman who had come explained that she hadn’t completed a particular assignment because in addition to school, she had a full-time job and slept only four hours a night.
Among community college students, work and child rearing present the biggest barriers to consistent attendance. Relative to their peers, LaGuardia students face some of the longest commuting times in the country. Mr. Scheindlin’s class, for example, met twice a week at 9:15 a.m., and on some of those mornings Mr. de Jesus had to take his 6-year-old daughter, Svetlana, to school, traveling from Roosevelt Island to the Tremont section of the Bronx by way of the F and D trains and then the B42 bus, before he could get to LaGuardia’s campus, more than an hour away.
In March, he suffered further distraction when he learned that two close childhood friends had been shot in a house in Pennsylvania, in a drug-related crime. “That really put me in a depression,” Mr. de Jesus told me a few months later. “They were my homies and I loved them so much. Wrong is wrong but they were supporting their families. They messed up their lives and they couldn’t get good-paying jobs.”
Photo
Mr. de Jesus playing with Svetlana, his daughter, on Roosevelt Island before bringing her back to her mother’s house in the Bronx. CreditJake Naughton for The New York Times
On some occasions, Mr. de Jesus didn’t make it to class, he told me, because of flare-ups from the ulcers that had afflicted him for a few years and, he said, had caused him to be hospitalized at 21 and lose 30 pounds. He attributed his illness to the constant anxiety he felt about money and life. In addition to caring for Svetlana, he worked when he could as a freelance tattoo artist, though the money was uncertain.
“In a week you can make $500 or no hundred dollars,” he said. In a good month he might make about $700. Although he receives financial aid, he is responsible for a portion of his tuition (which for a degree student is approximately $4,500 a year) as well as his daughter’s fees at a Catholic school. He also gives his father $200 a month toward household expenses. Not much is left. “You don’t just want to waste all of your money on transportation and food,” Mr. de Jesus said. “You want to buy a shirt. You want to pay your phone bill.”
When Mr. de Jesus told his father that he was going to have a baby with his high school girlfriend, the announcement was not met favorably. “I was against him having children at such a young age,” Frank de Jesus, a former tool and die maker and bus driver told me one afternoon as he sat in his living room, where a wall of bookshelves included the works of Wilhelm Reich, Friedrich Engels and at least 14 volumes of Joseph Stalin’s writing. “I thought his life would be ruined. I didn’t make it difficult for them to stay together but I didn’t make it easy,” he said of his son’s relationship. The couple broke up not long after Svetlana was born; Vladimir shares custody of his daughter.
Named for Lenin, the younger Mr. de Jesus did not grow up in a house distinguished by an impoverishment of words; education was paramount. As a young man, Frank de Jesus had wanted to be a doctor. His mother was a teacher and his father was a waiter at the Carlyle Hotel. A rejection from the Bronx High School of Science was dispiriting, Mr. de Jesus told me, but he went on to take classes at Columbia University and the City College of New York before falling away, into the political movements of the late 1960s when he joined the Young Lords, the Puerto Rican civil rights group, in East Harlem.
He read mightily to his children — “The Hobbit,” works of Taoism — and his son has taken the same approach with Svetlana, accompanying her frequently to Barnes & Noble. One day when I was visiting the family, she emerged from her room, pulled the Bible off the shelf, sat on the floor of the living room and began reading it.
Photo
Mr. de Jesus in the halls of LaGuardia Community College. CreditJake Naughton for The New York Times
There are times when regardless of personal circumstance, parenthood can feel like a series of quotidian decisions that amount to a crude choice between your own success and the sparkling future you wish for your child. In a sense, any time someone in Mr. de Jesus’ position sits down with his child to help her understand addition, for instance, he is neglecting the work that will, in his own life, propel him forward.
Unlike the students at private universities, who are offered an array of supports — academic, social, psychological — community college students rarely get the help they need from their chronically underfunded institutions. Many students come to community college struggling with how to navigate bureaucracies, and battling issues with executive function and time management. They arrive, in effect, having little understanding of how to be students.
“People will say, ‘How come these kids can’t get their act together?’ ” Melinda Karp, assistant director of the Community College Research Center at Columbia University’s Teachers College, told me. “And part of it is structural, obviously, the result of growing up in chaotic environments.” A recent examination of studies on student support services conducted by the center showed that students given individual “coaches” for two semesters or more — coaches who actively helped them address various challenges in their lives while keeping watch on their academic performance — were more likely to remain in college and finish.
Toward the end of last semester, Mr. de Jesus had fallen behind on his math homework. There were domestic complications: the death of his grandfather, and the stresses of a college student’s typically strained romantic life. At one point he lost the lab work that he had done in class, which would make up 5 percent of his total grade. Not having a computer of his own, he had been checking laptops in and out of the library. In the process of returning one, he had left the lab work behind. When he went back to retrieve the papers, they were gone.
The final exam for Math 96 would make up 35 percent of the total grade, and as the day of the test approached, Mr. de Jesus knew that with the demerits he would face for his poor attendance and his unfinished homework, there was little chance he would pass. On the morning of the exam, he didn’t show up, and he failed the class for the third time. As it happened, more than 40 percent of the students in the class also failed.
Photo
Clockwise: The atrium of the college’s E Building; a display for the Chinese Student Club in the M Building; Mr. de Jesus during a philosophy class, which is one of his favorite; taking notes on Plato. CreditJake Naughton for The New York Times
“This whole thing with math just hits your spirit in the wrong way,” Mr. de Jesus remarked recently. “It demolishes your spirit. You become lazy.”
When I conveyed his sentiment to Dr. Mellow, LaGuardia’s president, she agreed and praised his wording. Dr. Mellow stands on one side of an intense debate among educators about the necessity of algebra for students who do not plan to pursue concentrated study in math- or science-related fields.
“I once got a note from a student who said, ‘This developmental algebra is a stainless-steel wall and there’s no way up it, around it or under it,’ ” she told me in her office one afternoon recently.
What makes algebra so hard for community college students? One factor is that many have been taught so poorly before they arrive. They have developed a debilitating reliance on calculators, Abderrazak I. Belkharraz, the chairman of the LaGuardia math department, told me, “for things as simple as what is the cosine of pi over two.” And the pedagogy tends to focus on computation rather than the underlying concepts, leaving the practice of math to seem far removed from the students’ experiences.
A few years ago, the Carnegie Foundation decided to tackle the algebra problem, believing that if developmental math were reconceived, the overall effect on graduation rates could be tremendous. The foundation devised two curriculums, one in quantitative reasoning and another that was more statistics-based; both were aimed at imparting the kind of mathematical knowledge more useful to students in their daily lives. “You want to be able to understand risk. If you smoke, what is the probability of getting cancer?” Dr. Mellow explained. “If you have unprotected sex, what are the chances of getting pregnant?”
Photo
An endowment fund begun in 2003 at LaGuardia Community College has raised $11 million, of which $8 million has been spent.CreditJake Naughton for The New York Times
LaGuardia is one of more than 20 colleges around the country experimenting with these curriculums. Nationally, the program is in its third year and the results have been impressive, with students passing the classes at a much higher rate than students who took the standard, algebraically based remedial math courses.
To move on to Hunter, Mr. de Jesus needs to accumulate 60 credits, in addition to passing Math 96, a course that confers no credit. In his six semesters at LaGuardia, he has acquired 27 credits.
In the spring, he decided that he would not take algebra again this fall and would instead postpone it for a time when he could focus on it exclusively. He ended the term with an A-minus in art and a C in English. Mr. Scheindlin said that when the papers in English composition became more research-intensive, Mr. de Jesus seemed to produce them hastily. “Here’s a very, very intelligent student, with an intelligence of the best kind, an intelligence guided by an intuitive sense of how to make connections,” Mr. Scheindlin said. “There’s no question in my mind that had he had the time to do the work, he would have written really wonderful work.”
Over the spring, Mr. de Jesus looked for additional work in art galleries in Manhattan and Brooklyn to supplement his income, but he had not found anything and he remained conflicted about the wisdom of taking a full-time job. “If I had a regular job I’d have such a hard time staying in school,” he explained one afternoon over the summer. “I see people leave all the time for jobs that pay $15 an hour.”
When he first started at LaGuardia in 2008, he worked at a clothing store, the Children’s Place, while attending classes and helping to care for his infant daughter. But the schedule became too overwhelming, and he dropped out that December. It took him four years to return.

During his time at LaGuardia, Mr. de Jesus has been particularly moved by his art teacher, Mr. D’Amelio, who inspires his students to believe that art is not inimical to making a living and that a career born of passion is not simply a right of the privileged. Twice over the past few months Mr. de Jesus has shown his paintings at a gallery on Roosevelt Island. In February his work was selected for inclusion in an exhibition at LaGuardia about race in the 20th century.
This semester he is taking a class in the philosophy of art and another in design. He began the fall term with a 3.49 G.P.A., but he has been unable to shake his despondency. His worries about money have escalated to the point that he has recently begun to think about a job with the Sanitation Department.
“I don’t just want to be in school. I want to learn in school,” he said. “I know that I can pass these classes, but my mind is always elsewhere. I’m thinking all the time of the future, the future, the future, but I’m stuck here in this present.”

Monday, September 29, 2014

Venture Capitalists and For-Profit Firms Poised for a Feeding Frenzy at Public Ed Trough

Venture Capitalists Are Poised to ‘Disrupt’ Everything About the Education Market

(Reuters/Tom Mihalek)

This story was reported in partnership with the Investigative Fund at the Nation Institute.

In his book, Finding the Next Starbucks: How to Identify and Invest in the Hot Stocks of Tomorrow, Michael Moe, describes how carefully crafted business strategies have transformed markets to create huge profits in unlikely sectors. The title relates to how Starbucks became a global corporation of almost $15 billion in revenue by capturing and streamlining the café experience.

Moe, a former director at Merrill Lynch, wrote that at one point in the United States, even healthcare was an undesirable and difficult industry for investment, and that bankers once worried if profit-making in such a realm was worth their effort. In 1970, healthcare spending comprised 8 percent of GDP, yet market capitalization in healthcare stood at less than 3 percent.

That shifted quickly not only as the boomer generation aged, but as a wave of privatization hit hospitals, insurers, and other segments of the healthcare system. More than thirty years later, Moe wrote, healthcare companies are among the largest in the world, and represent more than 16 percent of US capital markets. “We see the education industry today as the healthcare industry of 30 years ago,” Moe predicted.

That book came out eight years ago, before the current wave of education investing, when the prospect for growth seemed dim. Unlike in healthcare, energy and other areas of the economy that have moved from public to private hands, K-through-12 education has stubbornly remained largely out of the control of investors.

Next year, the market size of K-12 education is projected to be $788.7 billion. And currently, much of that money is spent in the public sector. “It’s really the last honeypot for Wall Street,” says Donald Cohen, the executive director of In the Public Interest, a think tank that tracks the privatization of roads, prisons, schools and other parts of the economy.

That might be changing soon as barriers to investment are rapidly fading. As Eric Hippeau, a partner with Lerer Ventures, the venture capital firm behind viral entertainment company BuzzFeed and several education start-ups, has argued, despite the opposition of “unions, public school bureaucracies, and parents,” the “education market is ripe for disruption.”

Hippeau’s vision is the growing sentiment among investors. Education technology firms secured a record $1.25 billion in investments across 378 deals in 2013, while analysts predict that number will continue to surge this year. Since 2010, Moe has led what has been billed as the premiere education investment conference, which takes place annually in Scottsdale, Arizona. The first year attracted around 370 people and 55 presenting companies. This year, that number soared to over 2,000 with over 290 presenting companies and speeches by luminaries including former Governor Jeb Bush, Magic Johnson and Commerce Secretary Penny Pritzker. One of the largest start-ups, a Herndon, Virginia–based company called K12 Inc., a for-profit largely online charter chain, posted nearly $1 billion in annual revenue for its last fiscal year in August.
Many are attempting to duplicate that success. “There’s a dramatic shift in how investors are thinking about this industry,” Fahad Hassan, an education entrepreneur with his own venture-backed start-up, told a meeting of entrepreneurs earlier this year.

The explosion of investor interest in education raises a number of questions, among them: What kind of influence will the for-profit education sector attempt to exert over education policy? And if school reform is crafted to maximize the potential for investor profit, will students benefit, as boosters claim—or will they suffer?

There’s also the question of the effect of privatization on costs. And there, the healthcare example gives reason for concern. The privatization of health services has corresponded closely with skyrocketing costs, leaving millions of Americans without access to care or deeply in debt for seeking treatment for their illnesses. While new laws, including the Affordable Care Act, have extended insurance coverage to some 10 million Americans, many remain without coverage. The United States still spends $8,745 per capita on healthcare, far above the average for all other industrialized countries.

The tantalizing prospect of tapping into the K-12 market has drummed up new level of zeal from education reformers.

A good barometer of this passion is a document distributed by Moe, who now leads a firm called GSV Capital, which invests heavily in education start-ups including Knewton Inc. and Avenues, a New York–based private school with plans to expand into a global chain. Like any sweeping manifesto, his education reform blueprint sets the stage by listing massive social upheavals—the Arab Spring, the Fall of the Berlin Wall and the Spanish Civil War—and asks, for the “Second American Revolution,” one fought to decide the fate of education policy, “Which side of history will we be on?”

An example of how privateers snatch our public dollars for their profit-maximization schemes/hustles.
The revolution GSV goes on to describe is a battle to control the fate of America’s K-12 education system. Noting that this money is still controlled by public entities, or what’s referred in the document as “the old model,” the GSV paper calls for reformers to join the “education battlefield.” (A colorful diagram depicts “unions” and “status quo” forces equipped with muskets across businesses and other “change agents” equipped with a fighter jet and a howitzer.) The GSV manifesto declares, “we believe the opportunity to build numerous multi-billion dollar education enterprises is finally real.”

This opportunity exists in part because of major policy changes under the Obama administration. States moving to adopt the federal government’s Common Core standards, which include new standardized testing requirements, have incentivized the private sector to provide solutions to schools. According to Paul Irby, a market analyst with Onvia, states striving to implement the new standards could spend upwards of $12 billion, with much of the money going to updating IT, professional development for teachers, and testing technology.

Moreover, the Obama administration’s signature “Race to the Top” program, which provides states with large cash grants in exchange for changing how students and teachers are evaluated, is being viewed as a potential cash cow for education start-ups. In a blog post, Alex Hernandez, a partner with the Charter School Growth Fund, writes that school districts are “raising more money than you can shake a stick at” and the money granted to local school systems from Race to the Top may be used on the latest tech innovations. The most recent round of Race to the Top Funding, he adds, means districts “should be unwrapping new toys for a while.”

The Department of Education under Obama has seen a flow of revolving door hires from the education investment community. In May of this year, the Senate confirmed Ted Mitchell, the chief executive of the NewSchools Venture Fund, as the Under Secretary for the US Department of Education. Prior to his government position, Mitchell, a personal investor in an array of education start-ups, forged a partnership last year with the creators of Facebook app FarmVille to create new education game products. James Shelton, the Deputy Secretary, is a longtime education investor and the former co-founder of LearnNow, a charter chain that was sold to Edison Learning, a for-profit charter management company.

In an interview with EdSurge, a trade outlet, Shelton explained that the Common Core standards will allow education companies to produce products that “can scale across many markets,” overcoming the “fragmented procurement market” that has plagued investors seeking to enter the K-12 sector. Moreover, Shelton and his team manage an education innovation budget, awarding grants to charter schools and research centers to advance the next breakthrough in education technology. Increased research and development in education innovation, Shelton wrote in testimony to Congress, will spark the next “equivalent of Google or Microsoft to lead the global learning technology market.” He added, “I want it to be a US company.”
The other transformative changes come from the state and local level as a new class of politicians, including scores of Democratic mayors and Republican legislators and state officials, have ushered in new laws in recent years to divert taxpayer funding to charter schools, which are often run as for-profit companies and are more willing to embrace tech-centric classroom solutions than their public sector counterparts. In many states, including Florida, Pennsylvania, Tennessee, and Ohio, parents may opt to apply the amount the state would normally spend on their child’s education (between roughly $5,000 to $10,000) to send their children to a charter.

The opening up of the K-12 money for privately run schools, through charter schools or through vouchers applied to private schools, with restrictions on launching charter schools increasingly relaxed in many states, has created a boom in charter businesses hoping to persuade parents to trust their children, along with their money, with them. At present, more than 4 percent of students are enrolled at the more than 6,000 charter schools in operation. Few figures exist on how many of these students are taught by for-profit operators (in most states, charter schools must be registered as nonprofits, though they may outsource their operations to proprietary companies.)

The breakneck speed at which these schools have taken off, often with little oversight, has led to scandals. Since 2013, the FBI has investigated more than five charter schools in Illinois, Indiana, Ohio and beyond on suspicion that management has misplaced or stolen funds. In Florida, a state with famously lenient rules for operating charters and among the highest concentration for-profit K through 12 schools, the Miami Herald has reported on a continuing laundry list of poorly run charters: students going weeks without textbooks, class attendance sheets faked, and children charged illegal fees for standard courses. In a growing phenomenon, one Florida for-profit company, Academica, has earned over $19 million a year by charging leasing fees to public school land already owned by its charter schools.

Does free market competition ensure accountability in education by turning bad operators into economic losers? That’s what privatizers claim, but the record so far suggests otherwise.
K12 Inc., the for-profit charter behemoth that enrolls 123,259 students, went public in 2007 with the help of Moe’s previous investment firm, and has since been a darling of Wall Street. In January of this year, students from Newark Prep Charter School, which is K12 Inc.-operated, joined executives from the company to ring in the bell of the New York Stock Stock Exchange. In Moe’s revolutionary manifesto, K12 Inc. is listed as among the businesses he considers the “special forces” that will remake the education landscape.

The rising revenues of K12 Inc. have been matched by poor performance. In the 2010-2011 school year, only 27.7 percent of K12 Inc.-operated schools met the Adequate Yearly Progress (AYP) standard, far below the 52 percent average of brick and mortar public schools. An investigation in Colorado, where K12 Inc. has been ejected from several school districts, found that nearly half of online students left within a year, and when those students returned to brick and mortar schools, they were further behind academically than when they started. Similar investigations in Florida and Ohio found K12 Inc. teachers instructing classes without certification and instructing online classes of over 250 students.

In several states, K12 Inc.-operated virtual charter schools have faced a backlash because of poor performance and high drop-out rates. In July, Tennessee’s education commissioner announced the closure of the Tennessee Virtual Academy, K12 Inc.’s affiliate school, at the end of the 2014-2015 school year because of the charter’s failure to score above the state’s lowest level of academic achievement. Last month, Pennsylvania’s Agora Cyber Charter School, the largest school managed by K12 Inc., voted to consider ending its relationship with the company after revelations that the school allegedly manipulated attendance sheets and performance data in an attempt to conceal incredibly high rates of student turnover.

Still, despite wave after wave of negative press, K12 Inc. figures as a solid investment opportunity to many. Baird Equity Research, in a giddy note to investors this year about the potential growth of K12 Inc., noted, “capturing just two million (3.5%) of the addressable market yields a market opportunity of approximately $12 billion … Over the next three years, we believe that the company is capable of 7%+ organic revenue growth with modest margin expansion.” How will it achieve this growth? According to Baird, K12 Inc.’s “competency in lobbying in new states” is “another key point of differentiation.” The analyst note describes “K12’s success in working closely with state policymakers and school districts to enable the expansion of virtual schools into new states or districts” as a key asset. “The company has years of experience in successfully lobbying to get legislation passed to allow virtual schools to operate,” Baird concludes.

Indeed, K12 Inc.’s spectactular growth over the years stems largely from the extraordinary amount the company spends on lobbying, as well as on marketing and advertising, with promises in some areas that enrollment comes with a free computer. USA Today found that the company spent $21.5 million on advertising in the first eight months of 2012. The company sponsors billboards, radio advertisements, and spots on children’s cable television.

K12 Inc.’s lobbyists helped author model legislation to develop sweeping voucher laws through the American Legislative Exchange Council, a conservative group that provides state lawmakers with template legislation. Though state by state lobbying figures are difficult to come by, given the patchwork of varying laws, K12 Inc. has hired dozens of local officials to ensure that these voucher laws are quickly passed with few amendments. “We have incurred significant lobbying costs in several states,” K12 Inc. noted in a filing with the SEC.

“The stockholders benefit from those students’ enrollments, but the students get stuck with a lousy education that will follow them the rest of their lives,” says Jeff Bryant, the director of the Education Opportunity Network.

Nevertheless, Moe and his cohort have pledged to grow the industry by leaps and bounds in coming years. At the last two conference he organized, there was talk of organizing a bipartisan campaign to persuade 2016 presidential candidates to sign onto a statement of principles endorsing charters and other education innovations. The pledge also called for the federal government to create new tax incentives for spending on education companies akin to a health savings account.

At the last conference in April, Moe closed on an optimistic note. “How do you balance this whole idea between making a profit and helping kids?” he asked. “The way that we think we’re going to create the greatest returns for our investors is by investing in companies that have the greatest educational impact.”

Read more from our special education issue

Kenzo Shibata: “5 Books to Build a Movement for Education Justice
Dana Goldstein: “The Tough Lessons of the 1968 Teacher Strikes
Michelle Fine and Michael Fabricant: “What It Takes to Unite Teachers Unions and Communities of Color
Daniel Denvir: “How to Destroy a Public School System
Pedro Noguera: “Why Don’t We Have Real Data on Charter Schools?
Diane Ravitch: “The Secret to Eva Moskowitz’s ‘Success’
Gordon Lafer: “What Happens When Your Teacher Is a Robot?

------------------------------

-----------------------