Education Town Hall News Briefs:

Education Sector “Run Amok”?#Shutdown at DOEOptions PCS Faces Lawsuit

Full recording of today’s Education Town Hall news and discussions with Aona Jefferson, of AFSA’s Council of School Officers, and education advocates Matthew Frumin and Mary Levy.

The Education Town Hall is broadcast Thursdays at 11 a.m. (Eastern) on We Act Radio.

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Shutdown at Dept. of Education

Most federal Department of Education employees are furloughed due to the shutdown of the U.S. government. The DOE website is not being updated during the shutdown, but an announcement posted on the site explains contingency plans:

$22 billion in Title I funding scheduled for dispersal to states in early October will go out, despite the shutdown. If the shutdown continues beyond one week, the DOE will call back employees necessary to ensure that Pell Grants and direct loans to college students are not interrupted. The contingency document is linked from our blog.

Among those most affected in the early days of the shutdown are thousands of Head Start students. Depending on funding schedules, some sites will remain open, but students at 50 cites across Illinois, Mississippi, Connecticut and Florida are affected already. Another 11 sites are expected to close, if the shutdown does not end by tomorrow. (See, e.g., Wall Street Journal and MSNBC reports)
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On-Line Learning: Run Amok?

Meanwhile, the on-line segment of the for-profit education industry is headed for collapse, according to one analyst:

“Like subprime lending and for-profit colleges, the business makes sense on a small scale but, fueled by lax regulation and easy government money, the sector, led by K12, has run amok,” Hedge fund manager Whitney Tilson told investors on September 17. His presentation included an analysis of K12 corporation’s business practices and its educational record, explaining links between the two:

I wouldn’t be short K12 if it were carefully targeting students who were likely to benefit from its schools — typically those who have a high degree of self-motivation and strong parental support. But K12 is doing the opposite: numerous former employees say that K12 accepts any student and actually targets at-risk students, who are least likely to succeed in an online school.

In addition to referencing educational research – the same reports cited on the Education Town Hall over the last year (January, February, and April, e.g.) — Tilson interviewed former employees of K12. He also notes, e.g., that software expenses are capitalized in order to make the company appear more profitable than it is in reality. PDF version of Tilson’s K12 presentation, and here is an on-line link

Tilson, a former Teach for America participants, identifies himself as having a day job as a hedge fund manager and a night job as an “ed reformer.” While his remarks on shorting K12 stock received attention in the financial world, he was also criticized for having a conflict of interest. In response, Tilson noted that K12 leaders are heavily invested in the company’s financial success:

“So let’s be clear: they have far more incentive to try to put lipstick on this pig than I do to point out that it is, in fact, a pig.”
— from Whitney Tilson’s School Reform Blog

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Options PCS Faces Lawsuit, Charter Revocation

Six weeks after it was notified of possible financial irregularities at Options PCS, DC’s Public Charter School Board recommended revocation of the school’s charter.

A lawsuit filed by the District alleges that three former employees diverted $3 million in funds to enrich themselves. Jeremy L. Williams, who was the chief financial officer of the D.C. Public Charter School Board until Aug. 21, is also implicated. (see Emma Brown’s Post story)

On-going proceedings include consideration at the Public Charter School Board’s October 16 meeting. A formal hearing will follow.
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