Home > Uncategorized > Oh Boy! Poor Performing Online Platform Sees “Great Tailwind” On the Horizon… While Public Schools Face Unparalleled Headwinds

Oh Boy! Poor Performing Online Platform Sees “Great Tailwind” On the Horizon… While Public Schools Face Unparalleled Headwinds

June 24, 2020

The headline for Hechinger Report’s Sarah Butromyowitz’ latest article reads:

Education companies see an “upside to the pandemic” for business

Online education company K12 Inc. told shareholders it expects increasing acceptance of online education, increased enrollment

The article goes on to describe the rosy forecast issued to K12 shareholders based on the premise that online education will continue and parents will be seeking out alternatives to the slapdash programs put together by public schools. This might be acceptable if some kind of regulations or some kind of oversight was in place to monitor the performance of online schools… but because none exists a flawed enterprise like K12 could rake in millions as a result of the pandemic. And, Ms. Butromyowitz’ article notes, K12 DOES have a flawed performance:

K12 Inc. has faced frequent criticism about poor student performance and been subject to legal scrutiny. In 2016, the company reached a $168.5 million settlement with the California attorney general over allegations that it used ads that misled parents about student success and parent satisfaction, and that it inflated attendance numbers to get more money from the state. The company paid the state $8.5 million and expunged/wiped clean $160 million owed by the schools it managed. K12 has denied all wrongdoing and says it had never attempted to make schools pay this money.*

And as posts over the years on this site and others have noted, the problem is not limited to a single corporation: it is baked into the business model used to turn a profit:

Problems such as low graduation rates, dismal student achievement and high student turnover at many K12 schools are the result of a business model that prioritizes keeping down the costs of educating students, said Neil Campbell, director of innovation for K-12 Education Policy at the Center for American Progress, a left-leaning policy institute.

“They can have their marketing materials talk about all this personalized attention and all this increased flexibility, but what they don’t talk about is they massively understaff all these schools … and unload all of that on to parents,” Campbell said.

And therein lies the problem: the kind of online programs public schools pulled together on short notice often came across as supported homeschooling as opposed to computer assisted tutoring. This shifting of responsibility to parents could make them susceptible to advertising pitches like those made by the likes of K12, and profiteers like K12 are ready to roll out all kinds of advertisements in the months ahead:

(K12) also plans to spend more advertising dollars to reach prospective students and parents through websites such as Facebook and YouTube. “We’ll have more digital and viral messages than we’ve ever had before,” (K12 CEO) Davis said. Between 2017 and 2019, K12 spent on average $37.4 million annually on advertising, according to SEC filings.

Assuming K12 pays its teachers $35,000 per year (which is probably on the high side), they could have used their advertising budget to hire over 1000 teachers— which almost assuredly would have improved the performance of its students without sacrificing its bottom line. But K12 sees no reason to change its model…. it sees only happy days on the horizon:

On the earnings call (to major shareholders and investors), Davis emphasized that the pandemic could increase acceptance of online education. “This moment will permanently change how the general public, school districts and regulators think about our business,” Davis said. “The short-term positive impact of the pandemic may be modest … The long-term effect we see providing a great tailwind to our business model.”

Just what public schools need: a “great tailwind” to a failed business model and the very time they are facing a headwind unlike any experienced since the Depression.

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