New Report Exposes the Cyber Charter School Racket in Pennsylvania
From Bucks County Beacon
This piece looks at the new Ed Voters and puts it in the context of a deep dive into cyber charter shenanigans.
A couple of decades ago, a retiring superintendent gave me some advice about future wealth. No, not plastics. Cyber charters. “Start a cyber charter school,” he said. “It’s like printing money.”
That was not quite right. Pennsylvania cyber charters have turned out to be extremely lucrative, but rather than printing money, they just keep taking it, hand over fist, from Pennsylvania taxpayers. As revealed by a new report from Education Voters of Pennsylvania, the collecting of assets by cyber charters has accelerated dramatically in the past six years.
In 2018, the four largest cybers in the state reported net assets and fund balance of $566,858.
In 2022, they reported net assets and fund balance of $486 million.
That’s an additional $485.5 million of taxpayer dollars squirreled away in just four years.
How did we get here?
States started passing laws allowing charter schools in the early 1990s, and cyber charters followed soon after. Pennsylvania passed its own charter school law in 1997. The law was tweaked to include cyber charter schools in 2002, and Pennsylvania quickly became one of the leading states in the cyber charter movement.
Why is Pennsylvania the cyber charter capital of the United States? The likeliest answer is funding: while other states use a variety of formulas and oversight methods, Pennsylvania simply and generously funds cyber charters as if they were bricks and mortar charter schools. As pointed out by a 2022 report from the PA Charter Performance Center of Children First, of the 27 states that have cyber charters, none fund them as Pennsylvania does. And while other states may require cyber charters to win approval from school board members elected by taxpayers in local districts, Pennsylvania cybers need only win approval in Harrisburg.
Pennsylvania has more students enrolled in cyber charters than any other state, with that number swelling during the height of the pandemic. In 2021, cyber charters took in an estimated $980 million in revenue. The Pennsylvania Cyber Charter School Association estimates the current price tag is $1.4 billion, but that assumes $10,000 per student for 144,000 students, and many of those students will be bringing even more taxpayer dollars to the cyber coffers—taxpayer dollars that have been diverted from public school systems. And a 2019 study suggests that poor districts get hit the hardest.
Cyber charters, like brick and mortar charters, are privately owned and operated but funded with taxpayer dollars. From the beginning, the sector has attracted investors whose primary interest is not delivering quality education to students.
K12 (now rebranded as Stride) was founded in 2000 by Ron Packard, former banker and Mckinsey consultant, and quickly became the leading national company for cyber schooling.
One of its first big investors was Michal Milken. That investment came a decade after he pled guilty to six felonies in the “biggest fraud case in the securities industry” ending his reign as the “junk bond king.” Milken was sentenced to 10 years, served two, and was barred from ever securities investment. In 1996, he had established Knowledge Universe, an organization he created with his brother Lowell and Larry Elison (Oracle), who both kicked in money for K12.
In 2011, the New York Times detailed how K12’s schools were failing miserably, but still making investors and officers a ton of money. Former teachers wrote tell-alls about their experiences; tales of overwork and pressure to make the numbers abound. Florida caught them using fake teachers. The NCAA put K12 schools on the list of cyber schools that were disqualified from sports eligibility. In 2014, Packard turned out to be one of the highest paid public workers in the country, “despite the fact that only 28% of K12 schools met state standards in 2011-2012.”
Packard was himself sued for misleading investors with overly positive public statements, and then selling 43% of his own K12 stock ahead of a bad news-fueled stock dip. Shortly thereafter, in 2014, he stepped down from leading K12 to start a new enterprise. But the list of K12 legal troubles continued on and on.