Analysis of the Performance and Financial Practices of For-Profit, Virtual Charter Schools

By Meg Benner and Neil Campbell

For-profit virtual charter schools have an incentive to maximize profit. A new report from the Center for American Progress looks at the outcomes and business practices associated with the virtual for-profit charter school industry, which enrolls a growing percentage of public elementary and secondary students. Key findings from the report include: For-profit virtual charter schools graduate about half of their students, which is about 30 percentage points lower than the national average. K12, Inc., one of the companies highlighted in the report, pays exorbitant executive compensation, runs elaborate marketing campaigns, and boosts the company’s bottom line for shareholders. K12 Inc.’s executive performance framework rewards enrollment increases without regard to student outcomes. Explore the data on for-profit virtual charter schools » The report underscores other rigorous research that shows that for-profit, virtual charter schools have a negative impact on student achievement. CAP includes recommendations for lawmakers and regulators to help improve student outcomes and reign in troubling business practices. The recommendations include: States should ban for-profit operators from opening and managing virtual charter schools. Implement rigorous transparency and accountability for all virtual charter schools. Prohibit incentive compensation for student enrollment for all public elementary and secondary schools. These policies would help distinguish the outcomes and practices of fully virtual charter schools managed or closely tied to for-profit companies from the rest of the charter school sector, which offers many students innovative, high-quality programs.