I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Monday, November 12, 2012

K12 Inc Comes Clean: "Reform" Is All About the $

Ken Libby points us to the transcript of a K12 Inc. conference call to investors. K12 is a charter school management company that specializes in "virtual" or "blended" learning, replacing brick-and-mortal schools with on-line instruction. NEPC released a report this past summer that shows K12's students fall further behind students in traditional schools. K12's school in Tennessee is under fire for poor performance, and critics in Florida say the schools there have unqualified staff. K12 is heavily involved in politics, lobbying and making campaign contributions to support friendly state and local officials.

Given all this, the way K12 presents itself to investors is fascinating (all emphases mine):
Now I would like to make some brief comments on the elections. First, I would like to congratulate President Obama in his reelection. Secretary Duncan has done a fantastic job over the past 4 years, advancing things like common core, school choice, innovation education, and we look forward to additional progress over the next 4 years. He has always been an innovator since he first became CEO of Chicago Schools and helped create, in partnership with K12, one of the nation's first hybrid schools. That school, which is managed by K12, was recently named one of Chicago's Best High Schools by Chicago Magazine. We are also quite excited by several other election results. It was especially encouraging to see that the voters of Georgia overwhelmingly supported an amendment to allow charter schools in the state. This is a significant milestone for educational liberty. There were several other initial positive developments, Tuesday, that we believe should help advance K12's mission of providing expanded learning options for students.
A milestone of educational liberty... or a milestone for K12's bottom line?
Kelly A. Flynn - Crédit Suisse AG, Research Division
Okay. And then just switching gears, I know you talked about the Georgia victory, so to speak. Can you just kind of translate that to some extent into the numbers, like is that a material event for this year and just sort of how should we think about that order of magnitude as far as the benefits that yields to K12?
Ronald J. Packard - Founder, Chief Executive Officer and Director
Kelly, I'm not prepared to comment on the specific order of magnitude, but I would say that, that was a very significant event for K12, not only the future but potentially this year, but certainly in the future it was a very significant event for K12.
Kelly A. Flynn - Crédit Suisse AG, Research Division
Okay. And then lastly, wasn't there something on the ballot in North Carolina? Can you address that? Maybe I missed it.
Ronald J. Packard - Founder, Chief Executive Officer and Director
Other than the ballot in North Carolina, I think the new governor-elect in North Carolina is very much in favor of educational freedom. So I think in that way, North Carolina was a positive development.
The only way their business model works is to have a favorable political climate. The way they get a favorable political climate is to get favorable politicians in office, or pass referenda that support their expansion. They freely admit it, right here.

Anyone who tells you ballot questions promoting charter schools are not about profits is just dead wrong.

Need more proof?
Sara Gubins - BofA Merrill Lynch, Research Division
And then last question, Ron, any comments on the new state pipeline, particularly now after the elections. You sounded relatively optimistic. I'm wondering if anything is looking more likely over the next 6 to 12 months.
Ronald J. Packard - Founder, Chief Executive Officer and Director
Well, yes, as you know, I tried -- tend not to talk about prospective states but I will say just the following of the results of the elections in several of the states were very favorable for K12 with regard to potentially opening a new school and in other cases, increasing the enrollment cap. So we were actually quite pleased with the results in several of the states on Tuesday night.
Oh, I'll just bet you were.

ADDING: I guess this call didn't go so well: Mike Klonsky says K12 stock is sinking like a stone.

1 comment:

darciecima said...

Those transcripts are filled with gems like the ones in your post. Check out the one I unearthed from last year:

http://mothercrusader.blogspot.com/2012/06/virtual-charters-earn-real-money.html

Amy Junker - Robert W. Baird & Co., Inc. — Analyst And then are — do Obama and Duncan, are they distinguishing at all between for-profit versus not-for-profit? Or do they seem not to care?

Ron Packard - K12 Inc. — CEO
I have not seen that distinction by either one of those two individuals. And I think it should be noted that our hybrid school in Chicago was — you know, we worked very closely with now Secretary Duncan then Superintendent of Chicago Schools to open that school. So my experience with Secretary Duncan is that he wants solutions that work for children. And it doesn’t matter to him whether it comes — whether it’s provided by a private provider or by a not-for-profit or by district. (emphasis mine)

Obama and Duncan <3 for profit providers! How heartwarming...