Failing students, falling stock prices, and investor law suits

We've discussed the sorry state of Ohio's virtual schools before, and noted that for-profit virtual school operator K12 is the fastest growing in the state

Despite taking $58,944,956 from the state to run their Virtual academy, and despite packing their classrooms at a student teacher ratio of 51:1, their stock price has been falling rapidly

Shares of online education provider K12 Inc. LRN +1.86% were down 4% Wednesday, touching a one-year low earlier in the session at $20.29 after declining sharply on Tuesday. A New York Times article this week said that one of K12's main charter schools frequently failed to graduate students on time, and fell short of grade-level standards in math and reading.

Now the company is being sued by shareholders for being misleading

A shareholder in Virginia-based K12 Inc. has filed a lawsuit against the virtual-schools operator in federal court, alleging that the firm violated securities law by making false statements to investors about students’ poor performance on standardized tests.
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The lawsuit comes after a spate of national news stories — including in The Washington Post — raised questions about the effectiveness of virtual schools, K12’s in particular. The firm’s stock has since plummeted.

Key among those stories was a New York Times investigation published Dec. 12 that found a mismatch between K12 student achievement and statements made by chief executive Ronald J. Packard.

During one investment conference call, the Times reported, Packard said that test results at one of the company’s largest online schools — Agora Cyber Charter — were “significantly higher than a typical school on state administered tests for growth.”

In fact, the article said: “Weeks earlier, data had been released showing that 42 percent of Agora students tested on grade level or better in math, compared with 75 percent of students statewide. And 52 percent of Agora students had hit the mark in reading, compared with 72 percent statewide. The school was losing ground, not gaining it.”

Despite failing students, falling stock prices, and investor law suits, K12, Inc. CEO Ronald J. Packard earns a windfall

Ronald J. Packard, the chief executive of Herndon-based education company K12 Inc., earned a total compensation package worth $5 million in fiscal 2011, according to an amended annual report filed Thursday with the Securities and Exchange Commission.

That’s nearly twice the $2.67 million Packard earned in 2010. It includes $551,000 in cash, $4.2 million in stock awards and about $290,000 in other compensation.

A awful lot of that fat paycheck came out of the pockets of Ohio tax payers, and some complain about teachers pay.