Monday, March 4, 2019

Ron Packard: The New David Brennan

Not many people paid much attention to the passing of the torch, but when Ron Packard -- the infamous former owner of the oft-maligned K12, Inc. (whose diplomas aren't accepted by the NCAA) -- started buying up David Brennan's former White Hat Management empire in 2015, it didn't mark the end of an era.

It marked its continuation. (Except for the massive political contributions -- for now.)

A little background. Packard founded K12, Inc. and was paid millions to run the only school operation ever sold on the New York Stock Exchange -- a notoriously poor-performing online charter school operation that at the time of his departure was the nation's largest. Now he runs the Accel Schools chain in Ohio, which according to the latest data from the Ohio Department of Education operates 37 Ohio charter schools.

Tellingly, Accel started barely a handful of these schools. Nearly all were snatched up from mostly White Hat Management, including OHDELA -- long the cash cow of the White Hat operation, along with the dropout recovery Life Skills operation. And while Packard portrays himself as a turnaround guy, what he really seems to be is the education sector's Gordon Gecko -- an education corporate raider.

Accel recently took another page out of White Hat (which has dissolved into several small operations that run one or two Life Skills schools) and started splitting off some of its schools. Instead of operating all 37 under the single Accel Schools umbrella, now Accel schools in Akron, Canton, Columbus and Cleveland are run by splinter Accel Schools operators. 

Why would Packard do this?

Perhaps to boost the academic rating of the Accel Schools umbrella brand? 

See, prior to the splintering, Accel rated a D as a charter school operator, according to the state. This year, with those schools now run by "different" operators, the ones remaining under the umbrella Accel Schools operation got a C.

That's a higher grade than the D received each of the last three years by the revered Breakthrough Schools in Cleveland (a result I will examine more closely in a future post).

But see, here's the thing. In a recent story about how Ohio Charter Schools want a 22% raise from the state, Packard is quoted as saying, 
"Brick and mortar schools are a very low margin business."
This is what happens when you say you want to run schools like a business. You get guys talking about profit margins in education like they're restaurants or something.

But aside from that, this quote is straight Brennan. Remember K12, Inc.? The nation's largest online charter school operator that Packard founded and ran for many years?

Guess which state propped up his national operation? If you said, "Ohio", you'd be half right. Between Ohio and Pennsylvania's generosity with their taxpayers' money, Packard consistently reported to the SEC that about 1/4 of his company's total revenue came from those two states.

As he reported in his annual 10-K from 2012 (and other years around that time):
"In fiscal year 2012, we derived approximately 12% and 13% of our revenues, respectively, from the Ohio Virtual Academy and the Agora Cyber Charter School in Pennsylvania. In aggregate, these schools accounted for approximately 25% of our total revenues. If our contracts with either of these virtual public schools are terminated, the charters to operate either of these schools are not renewed or are revoked, enrollments decline substantially, funding is reduced, or more restrictive legislation is enacted, our business, financial condition and results of operations could be adversely affected."
He knows that in Ohio, there is a TON of profit to be made in the online charter school sector. In fact, there's enough for Ohio taxpayers to essentially subsidize an entire national operation.

Which is why he felt the need to qualify his "low margin business" quote to the PD to just the brick and mortar sector. And why he probably leaped at the chance to grab OHDELA from Brennan's fire sale.

But see, here's the problem. Brick and Mortar schools are not a very low margin business. We are told, even by charter school proponents, that they are a "non-profit" business. In fact, all charters are considered "non-profit" by the state.

Except the schools can hire sharks like Packard to run their operations. And Packard is allowed to make a profit. This profiteering hasn't led to billion dollar scandals or anything, has it?

Wait. Perhaps it has. 

Which is why Packard's growth and increased voice in Ohio should worry Ohio taxpayers who have been burned by 20 years of charter school profiteering.

This is why I'm so encouraged by House Speaker Larry Householder saying a few weeks ago that "those management entities, I believe should be nonprofit."

Not low profit margins. No profit margins.

Amen, brother. Amen.

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