July 3, 2013

Special Report: The profit motive behind virtual schools in Maine

Documents expose the flow of money and influence from corporations that stand to profit from state leaders' efforts to expand and deregulate digital education.

By Colin Woodard cwoodard@pressherald.com
Staff Writer

This story originally was published on Sept. 2, 2012.

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• KEY FINDINGS

PULLING THE STRINGS: Maine's digital education agenda is being guided behind the scenes by out-of-state companies that stand to profit on the changes.

FLORIDA CONNECTION: The LePage administration has relied heavily on former Florida Gov. Jeb Bush's Foundation for Excellence in Education, a conservative think tank, in writing policies to create taxpayer-funded virtual schools in Maine.

FOLLOW THE MONEY: This foundation and its top officials receive funding from online education companies, which will profit if the initiatives go forward.

REMOTE CONTROL: The foundation wrote much of the language in Gov. Paul LePage's Feb. 1 executive order on digital learning, which embraces foundation policies.

BACKSTAGE MEETINGS: The secretive American Legislative Exchange Council -- a corporate-backed political group for state legislators -- developed digital learning legislation that was introduced by Maine lawmakers. Stephen Bowen (pictured) was a private-sector member until he was appointed education commissioner in Maine.

FAILING GRADES: Virtual schools have no classrooms, little or no in-person teaching and a poor track record compared to public schools. (Sidebar, A5)

CRITICS REACT: National education leaders say democratic governance is being superseded by corporate control.

• BACKGROUND DOCUMENTS

Comparison of Gov. LePage's executive order on digital learning and the
draft order provided by the Foundation for Excellence in Education.

Digital Learning Now! agenda (adopted by LePage administration)

American Legislative Exchange documents leaked to Common Cause showing Stephen Bowen's membership and attendance at ALEC meetings.

Emails between Stephen Bowen and Patricia Levesque, executive director of Foundation for Excellence in Education.

Patricia Levesque's compensation (from Foundation for Excellence in Education's 2010 IRS filing)

• ADDITIONAL READING

New York Times Dec 2011 investigation of K12 Inc.

Stephen Bowen was excited and relieved.

Maine’s education commissioner had just returned to his Augusta office last October after a three-day trip to San Francisco where he attended a summit of conservative education reformers convened by former Florida Gov. Jeb Bush’s Foundation for Excellence in Education, which had paid for the trip.

He’d heard presentations on the merits of full-time virtual public schools – ones without classrooms, playgrounds or in-person teachers – and watched as Bush unveiled the “first ever” report card praising the states that had given online schools the widest leeway.

But what had Bowen especially enthusiastic was his meeting with Bush’s top education aide, Patricia Levesque, who runs the foundation but is paid through her private firm, which lobbies Florida officials on behalf of online education companies.

Bowen was preparing an aggressive reform drive on initiatives intended to dramatically expand and deregulate online education in Maine, but he felt overwhelmed.

“I have no ‘political’ staff who I can work with to move this stuff through the process,” he emailed her from his office.

Levesque replied not to worry; her staff in Florida would be happy to suggest policies, write laws and gubernatorial decrees, and develop strategies to ensure they were implemented.

“When you suggested there might be a way for us to get some policy help, it was all I could do not to jump for joy,” Bowen wrote Levesque from his office.

“Let us help,” she responded.

So was a partnership formed between Maine’s top education official and a foundation entangled with the very companies that stand to make millions of dollars from the policies it advocates.

In the months that followed, according to more than 1,000 pages of emails obtained by a public records request, the commissioner would rely on the foundation to provide him with key portions of his education agenda. These included draft laws, the content of the administration’s digital education strategy and the text of Gov. Paul LePage’s Feb. 1 executive order on digital education.

A Maine Sunday Telegram investigation found large portions of Maine’s digital education agenda are being guided behind the scenes by out-of-state companies that stand to capitalize on the changes, especially the nation’s two largest online education providers.

K12 Inc. of Herndon, Va., and Connections Education, the Baltimore-based subsidiary of education publishing giant Pearson, are both seeking to expand online offerings and to open full-time virtual charter schools in Maine, with taxpayers paying the tuition for the students who use the services.

At stake is the future of thousands of Maine schoolchildren who would enroll in the full-time virtual schools and, if the companies had their way, the future of tens of thousands more who would be legally required to take online courses at their public high schools in order to receive their diplomas.

The two companies have at times acted directly, spending tens of thousands of dollars lobbying lawmakers in Augusta and nurturing the creation of the supposedly independent boards for the proposed virtual schools they would operate and largely control.


Click to enlarge

More often they have worked through intermediaries. K12 Inc. donated $19,000 to a political action committee that supported LePage's candidacy in 2010. K12 and Connections Education provided support to Jeb Bush’s foundation and to a controversial corporate-funded organization for state legislators, the American Legislative Exchange Council, or ALEC. Both K12 and Connections Education built relationships with Maine lawmakers and officials who introduced laws and policies beneficial to the companies’ bottom lines.

DIVERSIFYING THE LANDSCAPE, OR MILKING PUBLIC EDUCATION?

Defenders of full-time virtual schools say the schools will diversify and enrich Maine’s educational landscape, providing additional options – and substantial new curricular resources – for parents and students who wish to use them. The big online education companies have developed a wide range of courses and products, which they can provide at a lower per-pupil cost than a conventional class.

“We took a cautious approach in Maine, and the winner here will be everybody: the company that provides a good product; the state; and most importantly the student,” says Sen. Garrett Mason, R-Livermore Falls, who sponsored the 2011 charter school law that made such schools possible.

“The number one reason parents chose this form of education is the ability to have a more personalized form of schooling that will better suit their student’s needs,” says Connections Education CEO Barbara Dreyer. “Maine has a lot of independent-minded people in it who will find an education that’s very flexible and personalized very attractive.”

Critics charge that the online education companies that wish to operate Maine’s virtual schools divert precious public education dollars into profits and dividends while providing education of dubious quality. (See sidebar).

“There’s this drumbeat at state legislatures to pass what I think is a scam to milk dollars out of public schools,” says Rep. Andy O’Brien, D-Lincolnville, sponsor of an unsuccessful amendment to last year’s charter school bill that would have closed the door to full-time virtual schools, which already exist in 27 states. “If you’re an investor these days with the economy going down, where are you going to invest? Oh, look, there’s a trillion dollars in public education funds waiting to be manipulated.”

“Speaking as an educator and someone concerned about the next generation of kids and their health and well-being, these things are disastrous,” says Gene Glass, professor emeritus at Arizona State University and a senior researcher at the National Education Policy Center at the University of Colorado in Boulder. “But do they have a future? Yeah, they probably have a great future financially because they line up with the need of states to cut their costs and they are cheap.”

CRITIC SAYS COMPANIES 'CREATE MARKETS FOR THEMSELVES'

In many states, the companies have also advanced their interests through their memberships in the American Legislative Exchange Council. While ALEC claims to be a nonpartisan professional association for state legislators, critics say it is really a corporate-funded conduit allowing businesses to write legislation for compliant lawmakers. Virtually all of its funding comes from its corporate members – which include K12 Inc. and Pearson’s Connections Education – who have collective veto power over the text of its model bills, which cover everything from “right to work” labor laws to “stand your ground” gun laws. They also in effect pay the expenses of many legislative members to attend meetings.

ALEC’s membership lists and the model bills they provided to legislators were secret until last year, when they were obtained and published by a watchdog group, the Center for Media and Democracy.

The corporate chair of ALEC’s education committee was revealed to be Mickey Revenaugh, Connections Education’s senior vice president of state relations, and members included K12, the International Association for K12 Online Learning, and Bush’s Foundation for Excellence in Education. (Connections Education withdrew its membership in May.)

Bowen was also an ALEC member in March 2011, the month he was confirmed as commissioner, according to a second set of ALEC documents leaked to Common Cause and posted on their website earlier this summer. Bowen – then a senior adviser to LePage and the head of education initiatives for the conservative Maine Heritage Policy Center – served as a private sector member of ALEC’s education committee, where he worked alongside officials from K12, Connections and other interested companies evaluating and approving model bills – including one creating centralized state clearinghouses for the sale of online courses.

The leaked documents also showed that ALEC-sponsored digital education bills have been introduced in state legislatures across the country in recent years.

“This is the ideal form of crony capitalism,” says Glass from the National Education Policy Center, which receives some of its funding from a teachers union, the National Education Association. “These are free market entrepreneurial companies manipulating the law to create markets for themselves.”

Here in Maine, several ALEC model bills that would benefit online education companies were introduced by the current Legislature. They included several measures that sought to use public funds to pay private school tuition, a law that allows public schools to act like charter schools, and parts of the charter school bill sponsored by Sen. Mason, who said ALEC was among the many interested parties he consulted while creating it.

“There were interested parties who wanted to make sure their interests were being represented, and we listened to all of them,” Mason says. “To say one party was driving the policy would not be correct.”

K12 was especially engaged in lobbying on the charter school bill and other legislation connected with digital learning. K12 has paid $33,074 to Augusta lobbyists since 2009, and contributed $19,000 to LePage’s election effort through the RGA Maine PAC. Connections paid Maine lobbyists $3,950 last year, all of it in connection with the charter bill, which allowed virtual schools but required that they be governed by local nonprofit organizations.

HOW TWO VIRTUAL SCHOOL APPLICATIONS CAME TO BE

Late last year, K12 Inc. contacted several influential individuals in Maine, suggesting they form a board, apply for a charter, and hire the Virginia company to provide the services.

“They did approach us and before we made a provisional decision to go along with them we went out to look at other companies,” says Maine Turnpike Authority director Peter Mills, who serves as secretary of the eight-member board of the proposed Maine Virtual Academy, one of two taxpayer-financed virtual schools proposed in Maine. “K12 is pretty impressive so we stuck with them.”

“They have enormous capacity and their materials and methods have been extremely well thought out,” adds Mills, on being asked about studies that question the company’s educational performance. “Whether they succeed or fail everywhere is another question; it depends on how strong the local board is.”

Connections Education helped set up a rival bid to create the Maine Connections Academy. Their board consists of Rep. Amy Volk, R-Scarborough, sponsor of several ALEC-drafted education bills this past term; state Republican Party vice chair Ruth Summers, wife of Secretary of State and U.S. Senate candidate Charlie Summers; Pioneer Telephone founder Peter Bouchard; and former state Sen. Carol Weston, whom ALEC named 2008 State Legislator of the Year and who now heads the Maine chapter of Americans for Prosperity, an organization founded by conservative billionaires Charles and David Koch, who are also major donors to ALEC.

(Dreyer, Connections Education’s CEO, said she didn’t know the particulars of what happened in Maine, but that typically the company is contacted by enthusiastic people in the state “who have already done their research” and want to work with the company. “It’s not a case where we go in, identify a state, and then call up our friends and buddies and say, ‘Do you want to be on the board?’ ” she said.)

Earlier this year, both entities applied to the new independent state charter school commission for permission to start full-time virtual schools in Maine. According to its application, K12’s school was to grow to 1,000 students, and expected to receive $6,287 to $6,735 for each one from the state treasury, depending on grade level. Connections’ school would have 3,000 students.

On June 7, the charter school commissioners set aside both applications, expressing concern both about the proposed schools’ level of independence from the for-profit online education companies from which they would contract their services, and the all-volunteer commission’s competence to evaluate their proposals in the time available.

“By statute, you have to have a governing board that has an arm’s-length relationship with any organization they would hire to perform the virtual contract,” says the charter commission’s chair, Jana Lapoint. “Those contracts need to be scrutinized very carefully because unfortunately they don’t have that sort of relationship.”

For instance, in their application, Maine Virtual Academy delegates all day-to-day management and operations to two officials, both of whom are to be recruited and employed by K12, as will all teachers.

The school’s board plays little or no role in the hiring of these officials. “K12 itself is in the best position to make final hiring and supervisory decisions relative to the administrators,” the application reads.

The charter school commission’s decision to postpone evaluation of the virtual schools’ applications elicited a fiery June 11 letter from LePage, who suggested they reconsider or resign.

The commissioners stood by their decision, and both entities recently withdrew their applications, though they say they intend to reapply next year.

In the process, however, each provided a glimpse into who actually calls the shots.

Maine Connections Academy board member Volk was listed as the primary contact person on the school’s application. She responded to a request for comment only after first consulting with Barrie Drum, Connections Education’s senior director of state relations in Baltimore. “I just spoke with her and she said that they were not withdrawing the application, but had asked to have it taken down off the website,” Volk said, before referring follow-up questions to Drum and providing a cellphone number.

Drum answered and appeared flustered to be speaking to a journalist and said she would call back.

Thirty minutes later she called back and said: “The board has requested that the application be taken down now (from the commission’s public website) because it’s not an active application,” she said. “It’s not active, so why should it be up there?”

Asked if she was on the board or authorized to speak for them, she responded in the negative and tersely referred further queries back to the board.

On Aug. 7, Mills advised the Maine Sunday Telegram by email that “K12 has also decided to withdraw its pending application and then refile it later after the charter commission has had further training on virtual education.”

Asked if that should instead be a decision of K12’s local board, Mills wrote back: “I’m sorry. The board did, in fact, make that decision. We met specifically for that purpose. K12 agreed with it.”

In an interview a few days previously, Mills had been surprised to learn that rival Maine Connections Academy had withdrawn its bid, and said it was not something he and his board colleagues had considered for their application and didn’t see why it would be necessary.

Mills had also said that he wanted to be sure virtual schools were “brought here in a responsible way, a measured way, in a way that makes sure that a board member like me is able to track their performance and report back to the charter school commission.”

“If they weren’t performing well, I’d turn on them in a moment and everyone knows I will,” he added.

STATE LEADERS EMBRACE FOUNDATION’S DIRECTIVES

Digital education companies also have something less than an arm’s-length relationship with Bush’s Foundation for Excellence in Education, the organization Commissioner Bowen has leaned on in developing administration policy.

The foundation’s Digital Learning Now! initiative receives funding from Pearson, K12, textbook publishing giants Houghton Mifflin-Harcourt and McGraw-Hill, and tech companies such as Apple, Intel and Microsoft, and digital curriculum developers Apex Learning and IQ Innovations iQity. The initiative – whose 10-point strategy has been formally embraced by the LePage administration – focuses on removing legal barriers to public financing of virtual classes.

The “10 elements” include dozens of specific policy directives, including for states to:

eliminate restrictions on online student-to-teacher ratios, enrollments, class sizes, budgets, providers, or the number of credits a student can earn;

not regulate “seat time” in classes, or require that online providers, their teachers, or their governing board members be located in the state;

avoid assessment of “inputs such as teacher certification, programmatic budgets and textbook reviews” and focus instead on “student learning data” from digital testing;

fund digital learning “through the public per-pupil funding formula;”

provide all students with access to “any and all” approved online providers;

require students to take online courses in order to graduate;

pay for the online classes of all students, including homeschoolers and those in private schools;

ensure by law that full-time virtual schools are available for all students;

deprive school districts of “the ability to deny access to approved virtual schools and individual online courses” even as they pay for their students to use them out of their per-pupil budget allocation.

“One of the striking things about these reforms is the extent to which they remove control of the schools from democratic governance and turn them over to corporate decision-making and appointed bodies,” says Alex Molnar, research professor at the University of Colorado at Boulder’s National Education Policy Center. “Education policy is now being made to some degree by people who have a financial stake in what they are making policy about.”

Levesque promotes these initiatives as the executive director of Bush’s foundation, but she and her deputy, Deirdre Finn, receive no salary, the organization’s tax returns show. Instead, the foundation pays fees – $156,848 in 2010 – to Meridian Strategies LLC, a consulting firm jointly owned by the two women, with the stipulation that the payment be divided between them. The foundation’s Florida subsidiary paid Meridian an additional $156,848 in “consulting and management” fees. Meridian earns additional fees lobbying in Florida for digital education concerns including iQity, The College Board, software provider Blackboard Connect, and Hayes Computer Systems.

It was to these two individuals that Bowen has repeatedly turned for help in developing digital and other education policies for Maine, according to emails obtained through a public records request by In the Public Interest, a Washington, D.C.,-based group that scrutinizes efforts to privatize public services. The group – which made similar requests in other states – forwarded nearly 1,100 pages of department emails to The Portland Press Herald and Maine Sunday Telegram.

JEB BUSH SEES ‘POTENTIAL FOR (MAINE) TO BE A MODEL’

At Bowen’s request, Levesque and her staff forwarded drafts of legislation on a wide range of reforms, including language requiring that all students take at least one Advanced Placement class online in order to graduate. When Bowen was unable to get the Legislature’s education committee “where we needed them to be” on a bill that would require school districts to pay for any online class any of their students chose to enroll in elsewhere in the state, he asked for further help.

Legislators had instead encouraged the administration to create a study commission to examine digital learning issues. “We have a chance to shape the study commission a bit,” Bowen wrote to the foundation Jan. 10. “Specifically, I think we want to have a strategic plan developed that lays out a road map for getting us meeting the 10 (Digital Learning Now!) standards. Is there still some support available for something like this?”

Finn responded affirmatively to Bowen’s plea for help, and they scheduled a telephone call. Bowen’s emails to others show he was seeking funding from conservative foundations to “bring in a project manager of some kind to help shepherd the development of the plan.” He also agreed to coordinate with his old employer, the conservative Maine Heritage Policy Center, to further the plan.

Bowen wrote Finn a few days later that he thought he should have LePage issue an executive order to implement the “10 elements,” but needed help with the language. The order would be issued on Feb. 1 to coincide with what the foundation had proclaimed to be the “first ever National Digital Learning Day.”

“That is a great plan,” Finn responded. “We can definitely help develop an executive order. I believe Governor LePage and Maine will be the first to issue an executive order on the 10 elements, which is spectacular.”

When LePage read out his executive order at a news conference Feb. 1, most of his words were those written by the foundation, including the assertion that Maine “will benefit from the development of a strategic plan to adopt and implement the policies defined by the 10 elements.” The changes the administration did make were to replace references to its own education plan with the “10 elements,” including a specific order to Bowen’s department to “develop policy recommendations consistent with and organized around the 10 elements.”

As Bowen and LePage pushed the “10 elements” agenda, foundation officials informed him that Jeb Bush had “singled out Maine as a state he believes can be at the forefront of digital education reform.”

In February, Bowen was invited to Bush’s “Governor’s Symposium” in April in North Carolina to “share Maine’s approach to the system changes that must occur” in digital learning. “We are excited about the work you and Governor LePage are doing, and the potential for your state to be a model,” a foundation official wrote him.

“Happy to be of service to Governor Bush,” Bowen wrote back a few minutes later. “Looking forward to working with you on this.”

Reached for comment, Bowen distanced himself from the “10 elements,” saying his department looked at them as “a road map to bounce our state policy objectives off of” rather than objectives they had committed to.

“When you are developing public policy, you look at what states are doing and you look at national policy and you try to put it all together,” he said. “I think we share the aims of Digital Learning Now! in that we want to broaden access to digital learning, and that where somebody lives shouldn’t determine if they have access. Some of what we try to move forward will be consistent with DLN, some of it won’t.”

Bush, the commissioner said, was likely excited about Maine because of former Gov. Angus King’s pioneering laptop program, which has equipped all seventh- and eighth-graders, about half of high school students, and all middle and secondary schoolteachers with Apple computers. “This is one piece that no other state has,” he noted.

Bowen rejected the notion that online education companies were having undue influence on the department’s policies, which in any case would be scrutinized through the democratic process, needing to pass legislative committees and floor votes.

“Lots and lots of people are involved in public policy, and at the end of the day, the ideas are what matters, and I have to have good ideas when I am standing downstairs at the (State House’s) education committee,” Bowen said. “Our job as policymakers is to take ideas from wherever they come from and throw them against the wall and see what they can do.”

“If I’m being accused of asking around and getting ideas from some of the people who are working on this nationally,” he said, “then I’m guilty.”

Staff Writer Colin Woodard can be contacted at 791-6317 or at:

cwoodard@mainetoday.com

CLARIFICATION : This story was updated Sept. 5 to clarify that K12 Inc. contributed $19,000 to the Republican Governors Association's Maine PAC, which made independent expenditures to help Gov. LePage win election.  

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