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K12 Inc. Sued Over For-Profit Education Company’s Tax-Subsidized Funding Manipulation


This piece comes to us courtesy of a partnership between WHYY/NewsWorks and the Philadelphia Public School Notebook.
Dozens of former employees claim that K12 Inc, a for-profit education company, used dubious and sometimes fraudulent tactics to mask astronomical rates of student turnover in its national network of cyber charter schools.
K12 manages Agora, the second largest cyber charter in Pennsylvania. The company is also involved in pending applications to open two new cybers in the state. The Pennsylvania Department of Education is expected to decide on the proposals later this month.
The former employees allege that K12-managed schools aggressively recruited children who were ill-suited for the company’s model of online education. They say the schools then manipulated enrollment, attendance and performance data to maximize tax-subsidized per-pupil funding.
These claims by anonymous “confidential witnesses” are spelled out in court documents filed last June as part of a class-action lawsuit by the company’s investors.
ALLEGATIONS TOUCH UPON AGORA
Many of the allegations come from people who worked for the Agora Cyber Charter School, based in Wayne, Pa. With more than 8,000 students, Agora enrolls roughly a quarter of the 32,000 Pennsylvania students that have opted to attend cybers, which are independently managed schools providing mostly online instruction.
The class action suit against K12, Inc. and its executives was filed last January, shortly after a critical article about the company appeared in the New York Times. The investors allege that the company committed securities fraud when senior officials, including CEO Ronald J. Packard, “concealed from the market” information about high rates of student withdrawal and poor academic performance.
“The core omission behind the Defendants’ fraudulent success story was that K12 students were dropping out at staggering rates,” reads the complaint. MORE

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