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.

White Hat Sale Proves Ohio Charter Regime Failing

Finally.

Now we know what White Hat Management is all about. There was always a pretty strong indication that White Hat was about making money, not educating children.

After all, when you get exactly 1 A on a state report card and have 72 opportunities to get an A, you're probably not in the game for the same reasons most educators are.

When you've collected more than $1 billion in taxpayer money without having to make a single appearance before a legislative committee, as White Hat founder David Brennan has been able to do, you're probably not in the game for the same reasons most educators are.

When you contribute more than $4 million to politicians, you're probably not in the game for the same reasons most educators are.

But then we got the news last week that Brennan's White Hat Management was going to sell off their least profitable, "highest performing", and most at-risk for closure schools to a group run by K12, Inc.'s founder Ron Packard. That's right, the same guy who gave us the Ohio Virtual Academy and all its "success."

But White Hat will keep its cash cow online school, OHDELA, which has the worst performance index score of any statewide E-School -- and that's saying something, given how abjectly horrible Ohio's statewide E-Schools perform. Its performance index score actually dropped more than 4% from four years ago, the only statewide E-School to see such a precipitous drop. Again, that's saying something.

It will also keep its other bloated carcass -- Life Skills -- which proudly graduated 2 out of 155 students in one of its locations last year. But don't worry, the state won't ever be able to close these schools because Brennan had the legislature essentially create an exemption for his atrociously performing schools.

So White Hat is now able to sit back and rake in the money from its online operation (the state pays OHDELA enough that the school could provide 15:1 student-teacher ratios, $2,000 laptops to every child every year and still clear 34.5%), while continuously milk Ohio taxpayers through the perpetually operating Life Skills schools, which will never be able to be closed even though no one in their right mind would possibly think that graduating 2 out of 155 children is, in any way, serving our communities' most at-risk children.

Why am I cynical about this sale? Well, look at the reasons White Hat has had schools close. The only ones to ever close because of the state's closure law were the Hope Academies (now called simply the Academies). Five of those schools have closed overall (then re-opened under different names). Only one Life Skills has ever closed, and that was for slipping enrollment, which means the school wasn't hitting their profit margin. This relative instability in the Academies led to this sale, not any other reason.

What's so ironic is the Academies are White Hat's best performing schools. Again, a little perspective is helpful. When your other schools don't get As or Bs on the state report card and graduate as few as 2 out of 155 students, that's not a very high bar. But the 1 A and 5 Bs White Hat schools earned on the state report card last year came out of the Academies. So the company is dumping its "highest performing schools" so it can keep their worst performing schools because they don't really have to worry about closing.

Is there a greater indictment of the state's charter school regime, by the way, then saying it makes business sense to keep your worst schools because at least they'll stay open?

Obviously, the greatest danger to White Hat's bottom line is a strong state school closure law. Even this state's pretty weak one (only 24 of the 571 schools that have opened in Ohio have ever been closed under that statute) has nailed a few White Hat schools.

So this sale will minimize any instability in the White Hat portfolio. They will just sit on their remaining, horrible educational options, collect their millions from us taxpayers, and enjoy their lives.

If only the children they refuse to serve could too.

I know it was automatically generated, but I found meaning in the fact that the link to the Cleveland Plain Dealer story about the White Hat sale ended in "opera" (short for operation) because that's exactly what the Ohio White Hat story has been -- a Wagnerian, tragic, endless tale of cursed gold, hopelessly flawed, even evil gods, and fallen heroes. Only this isn't an opera. It's kids lives -- lives that have been sacrificed so one man's epic quest for gold can continue.

Where is our kids' Brunnhilde? We need her to brave the flames. Now.

Ohio Virtual Academy Fudging Attendance to get Paid?

An Associated Press story last night about the Ohio Virtual Academy (OHVA) -- the nation's second-largest for-profit school -- has been picked up nationally. Apparently a whistleblower at the school has released information showing that OHVA has been paid for nearly 400 students that simply weren't logging on to their computers.

The matter has been referred to state authorities.

This is not a new occurrence in Ohio's E-Schools. Ohio's first E-School, the Electronic Classroom of Tomorrow (ECOT) --now the country's largest for-profit school -- was fined $1.7 million by State Auditor Jim Petro in 2001 after it couldn't account for all the kids it claimed to be educating.

OHVA is run by the notorious K-12, Inc. -- the nation's largest operator of E-Schools, with schools in 33 states. However, OHVA is K-12's biggest cash cow, accounting for at least 10% of its total revenue, according to the company's SEC filings. The company recently lost its operating contract with its other cash cow -- Pennsylvania's Agora online school. So its dependence upon OHVA's cash has only increased.

As the company noted in its SEC filing last year (emphasis added),

“[I]f our contracts with either of these virtual public schools (OHVA and Agora in Pennsylvania) 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.”

Indeed.

I have a hunch this isn't the last we'll hear about OHVA. The state's E-School sector is a disaster academically and financially. This is a perfect time to start talking about its role and why the state needs to be sending about $250 million a year to these schools.

Mass. Teaches Ohio How to Hold Charters Accountable

I was sent an interesting story from Massachusetts today that highlighted one of the major issues with how Ohio administers its charter school program. In the story, it is revealed that within 4 years of opening, Massachusetts' Greenfield Commonwealth Virtual School has been put on probation for failing to meet state standards and not providing meaningful experiences for special education or English language learners. And it appears they were warned after three years to get their act together.

Seems that Massachusetts is following what the Stanford CREDO study found on charter school performance -- namely "WYSIWYG" -- what you see is what you get. Charters tend not to improve much when they're in place, and the best way to improve charter school performance, again according to CREDO, is eliminate as many poor performers as quickly as possible.

Why does this matter for Ohio? First of all, Greenfield is run by the infamous K-12, Inc., which runs the second-largest for-profit school in the country, the Ohio Virtual Academy (eclipsed in size by Ohio's own Electronic Classroom of Tomorrow). K-12, Inc. also opened up a new online school last year called the Insight School of Ohio.

See, here's the issue: Ohio's K-12 operation has had the exact same issues as its Massachusetts affiliate, yet has operated since the 2002-2003 school year unimpeded with little fear of closure any time soon. Oh, and did I mention that the NCAA won't accept OHVA diplomas? There's that too. At least the Massachusetts school didn't make that list.

OHVA received Fs on the last report card for the measures that determine whether the school is meeting state standards, student growth among special education students and whether achievement gaps exist between English language learners -- the very subjects that caused Massachusetts' concerns.

Ohio doesn't issue specific grades for how well schools serve the needs of English language learners. The only measure that includes performance gaps among English language learners is something called AMO, which measures performance gaps between demographics groups, English language learners, and special education kids, among others. On that, OHVA got an F.

So on all the measures that Massachusetts was concerned enough about to put the school on probation after 4 years, Ohio's operation gets to operate for three times that long without any similar concern.

Here's why: Contrary to the CREDO findings, Ohio gives way too many chances for charter schools to fail. First of all, schools in their first two years of operation don't have their report cards count for closure purposes. So that's two years of mulligans. Then they can fail for 2 out of 3 years, if they're serving grades lower than high school, and 3 out of 4 if they're serving high school kids. So that means they can stay open another 3-4 years. Then once they've been told they're closing, they can operate for one final year before being shut down. So that means they can operate (depending on which grade levels they serve) for as many as 7 years before actually closing. And don't talk to me about how loose the standards are for the state's worst performing charter schools -- dropout recovery schools.

I urge everyone to go to www.KnowYourCharter.com and check out OHVA's performance. Then realize that since the school opened in the 2002-2003 school year (including this school year), it will have collected $572.3 million from state taxpayers -- money that was meant to be spent in school districts. And OHVA received more state funding per pupil (without buildings, buses, lunch ladies, janitors, etc.) in the 2012-2013 school year than 563 of Ohio's 612 school districts.

Ohio needs to wake up.