Online Schools Make Big Profits from Tax Dollars - | Nashville News, Weather & Sports

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Online Schools Make Big Profits from Tax Dollars


By Ben Hall
Investigative Reporter

It's a controversial bill that could change the way Tennessee kids go to school. 

A multi-million dollar company is pushing a bill in the Tennessee Legislature that would allow for-profit companies to operate full-time, online schools.

K12 Inc. is the country's largest provider of online schools.  The company has hired a lobbyist and wants to partner with school districts across the state.

K12's promotional video explains how its virtual schools work.

"When the day starts for a K12 student, instead of taking a school bus, the Internet is the bus," according to the spokesman on the video.

Students don't go to school, they sit in front of a computer at home, and parents often act as coaches.

This unorthodox education is paid for by taxpayers but operated by a for-profit company.  

Representative Mike Stewart (D) Nashville, blasted the proposal saying it's not a good deal for taxpayers.

"The virtual school bill just provides a method whereby these for-profit companies can take Tennessee tax dollars and put it in the their pockets," Stewart said.

Representative Stewart calls the program a scam that enriches people like Michael Milken who is a major investor and who went to prison for securities fraud in the 90's. 

School districts receive thousands of dollars from the state for each student they educate. It comes to approximately $6,000 per student. 

Under the proposed bill, when a student enrolls in a virtual school, districts could send all of that money and possibly more, to the private company.  It depends on what the district negotiates. 

"Every new student they sign up is essentially pure profit for them with a few ancillary costs," Representative Stewart said.

Cyber schools don't have to pay for buses, cafeterias or upkeep of schools buildings, but they are required to provide learning materials and an Internet connection.

It's led to big profits.  Last year K12's CEO, Ron Packard, received $2.4 million.

And NewsChannel 5 Investigates learned he sold company stock worth nearly nine million dollars in just the last four months.

"There's nothing wrong with a company trying to make a profit," said Representative Harry Brooks (R) Knoxville, who is sponsoring the bill. 

He says it's up to school boards to decide which virtual company, if any, to hire and to negotiate their contract.

"It's their responsibility.  If they're worried about a large profit then they don't have to contract with that person," Representative Brooks said.

But a letter from Representative Stewart to fellow lawmakers warns that for-profit companies have extra incentive to cut corners. 

He points out K12 actually outsourced the evaluation of student papers to India, but stopped when it became public.

"Somebody's got to be a human and right next to that student to have an impact," said Ann Robertson who has taught in Metro schools for more than 30 years.

She worries the bill will hurt students.

"I'm concerned over the fact it's going to take kids away from teachers," Robertson said.

Supporters say it's an idea whose time has come, and school boards should have the right to decide if this is appropriate for students in their districts. 

Critics see something else.

"We should just say to for profits like K12 Inc., take your scam to some other state," Representative Stewart said.

A spokesman for K12 says school districts already use many for-profit companies. 

He says virtual schools have shown strong performance in other school districts across the country. 

The bill passed out of the House Finance Sub Committee on Tuesday with an amendment that puts a four year trial period on the law. It is scheduled before the Senate Finance committee on Wednesday.


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