Cashing in on Kids

K12 Inc. corporate profile

Overview Founded in 2000, K12 Inc. is one of the largest for-profit virtual schools in the country. The company currently operates schools in 27 states and the District of Columbia, with plans to expand in the future. K12 is a publicly traded company on the New York Stock Exchange (Symbol: LRN). Early start-up capital for K12 came from junk bond king Michael Milken, Larry Ellison of Oracle, and Andrew Tisch of Lowe's Home Improvement.


K12’s annual report for 2012 estimated $708.4 million in revenue, up from $522.4 million in 2011. The company estimates $87 million in profits for 2012, up from $67 million the previous year. Approximately 25% of all revenue comes from two schools, the Ohio Virtual Academy (12%) and the Agora Cyber Charter School in Pennsylvania (13%).

A USA Today analysis found that K12 spent over $20 million in the first eight months of 2012 alone.

$5 million in compensation in 2011. According to the company’s 2012 proxy statement, Packard received $3.9 million in 2012.


New York Times investigation into the company indicated a variety of problems, including pressure to enroll students ill-suited to online learning.

former K12 employees allege the company pushed to enroll students ill-suited for online learning, and manipulated enrollment numbers to increase revenues. These allegations and other media coverage of the company led to a class action lawsuit filed by K12 investors. The parties reached a preliminary settlement in 2013 with K12 agreeing to pay $6.75 million to investors without admitting any wrongdoing.

confidential memo obtained by the Florida Center for Investigative Reporting and StateImpact Florida indicated the student-teacher ratio reached 275:1. An investigation by the Florida Department of Education revealed the company used teachers without proper certification.

drew criticism from lawmakers, and a leaked email from the school instructing teachers to erase bad grades further tarnished the company’s image. The state refused to allow K12 to open a second school, citing ongoing concerns.

threatened to close one of K12’s schools for special education violations. A Virginia district that authorized a statewide K12 charter school cited concerns about its ability to provide oversight of students, many of whom lived far from the district. Attorneys expressed concern that the district had little capacity for overseeing K12 but could be held legally responsible, for example, for guaranteeing K12’s instruction of special needs students complied with federal law.

serious concerns regarding its ability to effectively oversee such schools.”

Colorado State Board of Education approved a different school that will contract with K12 to provide services.

award-winning special report on virtual schools in the state of Maine showed how K12 works with advocacy organizations, including Jeb Bush’s Foundation for Excellence in Education and the American Legislative Exchange Council (ALEC) to pass legislation that benefits for-profit education providers.

William Bennett suggested, “…you could abort every black baby in this country, and your crime rate would go down." Bennett resigned in the wake of his comment.

Academic Performance

2012 study by the National Education Policy Center found that students attending K12 “are falling further behind in reading and math scores than students in brick-and-mortar schools.” The report also indicated the proficiency rates at schools operated by K12 were significantly lower than the statewide average. A 2011 report (PDF) by Stanford’s Center for Research on Education Outcomes (CREDO), using a different methodology, indicated students in Pennsylvania’s online charter schools “have significantly smaller gains in reading and math than those of their traditional public school peers.” While the study looked at all online schools in the state, K12 enrolled a significant portion of those students.

Political Contributions

more than $1 million to political expenditures during the past 9 years. However, this figure does not include the amount K12 spends on lobbying and the company’s support of the American Legislative Exchange Council and other organizations.

Further reading

Profits and Questions at Online Charter Schools