Profits and Questions at Online Charter Schools

By almost every educational measure, the Agora Cyber Charter School is failing.

Nearly 60 percent of its students are behind grade level in math. Nearly 50 percent trail in reading. A third do not graduate on time. And hundreds of children, from kindergartners to seniors, withdraw within months after they enroll. By Wall Street standards, though, Agora is a remarkable success that has helped enrich K12 Inc., the publicly traded company that manages the school. And the entire enterprise is paid for by taxpayers. Agora is one of the largest in a portfolio of similar public schools across the country run by K12. Eight other for-profit companies also run online public elementary and high schools, enrolling a large chunk of the more than 200,000 full-time cyberpupils in the United States. The pupils work from their homes, in some cases hundreds of miles from their teachers. There is no cafeteria, no gym and no playground. Teachers communicate with students by phone or in simulated classrooms on the Web. But while the notion of an online school evokes cutting-edge methods, much of the work is completed the old-fashioned way, with a pencil and paper while seated at a desk. Kids mean money. Agora is expecting income of $72 million this school year, accounting for more than 10 percent of the total anticipated revenues of K12, the biggest player in the online-school business. The second-largest, Connections Education, with revenues estimated at $190 million, was bought this year by the education and publishing giant Pearson for $400 million. The business taps into a formidable coalition of private groups and officials promoting nontraditional forms of public education. The growth of for-profit online schools, one of the more overtly commercial segments of the school choice movement, is rooted in the theory that corporate efficiencies combined with the Internet can revolutionize public education, offering high quality at reduced cost.