Putting Education Reform To The Test

Read The Virginia Lawsuit Accusing K12 Of Misleading Investors

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A federal lawsuit could shed more light on how the nation's largest online education company earns its money.

Florida is investigating K12, the nation’s online educator, but we could learn more from a federal lawsuit filed in the company’s home state of Virginia.

The Arkansas Teacher Retirement System filed the lawsuit, which alleges the company misled investors in what K12 did and did not report about how it makes money.

A judge must decide whether the suit can go forward. If it does, K12 could be forced to reveal new information about its operations.

The lawsuit compiles a lot of evidence from confidential witnesses, but also includes the first mention of the emails between company officials and Seminole County teachers StateImpact Florida and the Florida Center for Investigative Reporting reported last week.

Among the allegations, which must be heard in court:

  • The company did not tell investors how much their business depends on “churn,” signing up new students when others drop out. The company also did not reveal that more than half of students at some K12 school did not return the following year.
  • The company listed students as inactive rather than sending them back to their home district. That allowed K12 virtual schools to continue collecting that student’s funding.
  • Some teachers reported having as many as 400 students.

We’ve posted a copy of the complaint with some notes attached to key sections.


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