Georgia Cyber Academy Annual Report December 2018 Prepared by the Georgia Department of Audits and Accounts Greg S. Griffin, State Auditor Table of Contents Enrollment & Attendance ....................................................................................................................... 1 School Enrollment ..................................................................................................................................... 2 Student Attendance .................................................................................................................................... 6 Attrition ..................................................................................................................................................... 7 Student Persistence .................................................................................................................................... 9 Course Segment Completion Rate........................................................................................................... 11 Student Engagement ................................................................................................................................ 12 Academic Achievement ......................................................................................................................... 13 College and Career Ready Performance Index ........................................................................................ 14 Value Added Analysis ............................................................................................................................. 17 Beating the Odds Analysis....................................................................................................................... 18 Other Academic Goals............................................................................................................................. 18 Comparison of Academic Growth and Achievement Prior to Placement ............................................... 19 Alternative Academic Options ................................................................................................................ 21 Management & Staffing ........................................................................................................................ 25 Agreements for Corporate Management Services ................................................................................... 26 Governance and Management ................................................................................................................. 27 Staffing and Teacher Qualifications ........................................................................................................ 30 Development Plans for Leadership with no Administrative License ...................................................... 32 Operations & Planning.......................................................................................................................... 33 School Finances ....................................................................................................................................... 34 Academic Performance as a Ratio of Per-Student Expenditures............................................................. 37 Innovative Practices................................................................................................................................. 37 Future Goals and Plans ............................................................................................................................ 38 Appendix A Georgia Cyber Academy's Educational Products and Services Agreement, 2014 - 2021 ...................... 39 i ii Enrollment & Attendance Georgia public schools are responsible for tracking and reporting data for student enrollment and attendance. This section contains enrollment, attendance, and various statistics which indicate the level of student participation at Georgia Cyber Academy. Key points in this section include: Cyber is the largest public school in the state with enrollment of approximately 14,300 students in each of the last two years. Its student demographics are similar to Georgia's public school students, with the exception being a slightly lower portion of English language learners and a slightly higher portion of economically disadvantaged students in the 2017-18 school year. Student attendance at Cyber is higher than most schools. The variance may be partially attributed to the methodology Cyber uses to calculate attendance, which is necessarily different than a traditional brick-and-mortar school. This variance can also be attributed to the ease of access to education associated with virtual schools. Like many virtual charter schools, Cyber has relatively high withdrawal and student mobility rates. Slightly more than one-quarter of students withdrew before the end of the 2017-18 school year, with many transferring to another Georgia public school or to home schooling. The school's student mobility rate, which captures enrollments and withdrawals between October and May, was 32%, higher than the statewide median rate of 16%. Of students who completed the 2016-17 school year at Cyber, approximately 75% returned the following year. The retention rates were highest in high school, reaching 84% for those in 11th grade in 2016-17. In the 2017-2018 school year, the overall course segment completion rate was 78%, with completion rates generally higher as the grade level increased. The rate of students completing courses with a passing grade was 66% across all grade levels. 1 School Enrollment Cyber had 14,286 students across grades kindergarten through 12 in the 2017-18 school year. This was approximately the same number of students who were enrolled the previous year.1 As shown in Exhibit 1, the number of students in most of the subgroups tracked by Georgia Department of Education (GaDOE) was similar over the two years, though the number of students classified as economically disadvantaged increased by nearly 500.2 Exhibit 1 Cyber enrollment, 2016-17 to 2017-18 school years Total Students 2016-17 14,319 2017-18 14,286 Gender Male Female 6,883 7,436 6,890 7,396 Race Hispanic American Indian Asian Black Pacific Islander White Two or More Races 1,091 46 277 4,966 22 7,086 831 1,158 47 273 5,088 24 6,799 897 Other Subgroups Student With Disabilities English Language Learners Economically Disadvantaged Source: GaDOE student enrollment records 1,824 80 9,161 1,902 132 9,626 Cyber has a racially diverse student population, somewhat similar to the demographics of Georgia's public school students. As shown in Exhibit 2, Cyber's student body has a greater portion of white students than the statewide enrollment and a smaller portion of Hispanic and Asian students in 2017-18. 1 For school funding purposes, student enrollment is captured during October and March full-time equivalent (FTE) counts. GaDOE uses the October count when reporting enrollment for a school year. 2 GaDOE defines economically disadvantaged as the number of students eligible to receive free or reduced-price meals. However, Cyber does not serve lunch. 2 Exhibit 2 White students represent a greater portion of Cyber enrollment, 2017-18 school year1 Cyber Statewide 48% 40% 36% 37% 16% 8% 2% 4% 6% 4% Hispanic Asian Black White Two or More Races 1Total enrollment for American Indian and Pacific Islander students was less than 1% each. Source: GaDOE student enrollment records When looking at the other subgroups identified in federal law, Cyber had a similar portion of students with a disability as the statewide public school population (see Exhibit 3). The population of economically disadvantaged students is slightly higher than the statewide population, while the portion who were English language learners was lower than the statewide population. Only 1% of Cyber students were English language learners in 2017-18, compared to 8% statewide. Exhibit 3 Cyber has a larger percentage of economically disadvantaged students enrolled, 2017-18 school year Cyber Statewide 67% 61% 13% 12% 8% 1% Disability Source: GaDOE student enrollment records English Learners Economically Disadvantaged Cyber had a smaller percentage of students in elementary school and higher percentages in middle school and high school than statewide public school enrollment (see Exhibit 4). Nearly half of all Georgia public school students were in elementary school during the 2017-18 school year, but the percentage was just 32% for Cyber. 3 Nearly 40% of Cyber's students were in high school, about ten percentage points higher than the statewide number. Exhibit 4 Cyber had a high portion of middle school and high school students than the statewide average, 2017-18 school year Cyber Statewide 48% 32% 29% 23% 39% 30% Elementary Source: GaDOE student enrollment records Middle High As shown in Exhibit 5, most Cyber students are from metropolitan Atlanta, with more than 500 enrolled students residing in the Cobb, Clayton, DeKalb, Fulton, and Gwinnett school districts. There are between 251 and 500 students from 7 districts. Fifty-six school districts have 10 or fewer residents enrolled at Cyber, though all school districts have at least one enrolled. 4 Exhibit 5 Students enrolled at Cyber are primarily located in the Atlanta metropolitan area, 2017-18 school year1 1In addition to the state's 180 public school districts, the map shows Fort Benning and Fort Stewart as separate school districts. 5 Student Attendance Student attendance is one predictor of academic performance in school. Low attendance rates are associated with decreased achievement in school and higher high school dropout rates. Measuring attendance in a traditional, brick-and-mortar school is relatively straightforward: a student is present if they are present in the classroom. Attendance in a virtual environment is less obvious. Because students may attend live lessons, view recorded lessons, or work offline, virtual schools may use a variety of methods to gauge attendance. Typical considerations include assignments submitted, teacher interactions, login data, and self-reported records provided by students or their learning coach (i.e., adult monitoring the student at home). Cyber calculates attendance based on submissions made by the learning coach. Cyber asks that the learning coach enter attendance daily. Students in the 6th 12th grades are expected to complete 28 hours of school per week, while students in grades K-5 must complete between 22.5 and 25 hours. While Cyber does ask students to submit weekly lessons, the student will be counted as present if reported present by the learning coach, even if no assignment has been submitted. For each school's annual report card, the Governor's Office of Student Achievement (GOSA) calculates the percentage of students who missed five or fewer days, 6 to 15 days, and more than 15 days. In the 2017-18 school year, nearly 100% of Cyber students missed five or fewer days, compared to just 52% of the students across the state (see Exhibit 6). Exhibit 6 Cyber has an attendance rate higher than the statewide average, 2016-17 and 2017-18 school years Cyber Statewide 99% 99% 53% 36% 52% 37% 11% 0.8% 0.5% 11% 1% 0.2% 5 days or less 6 to 15 days 15+ days 2016-17 Source: GaDOE student enrollment records 5 days or less 6 to 15 days 2017-18 15+ days 6 Attrition Virtual charter schools normally experience a high amount of student mobility, or attrition through withdrawals. Withdrawals serve as the basis to calculate school attrition, which refers to students who are enrolled in school but withdraw prior to the end of the school year. In a virtual school, some students withdraw because they determine that they are not well-suited for a virtual education, lacking the discipline or educational support at home. Others may have enrolled to satisfy temporary needs (e.g., health issues, extracurricular activities, family issues) without an intention to remain in the school throughout the year. Regardless of the reason for withdrawals, changing schools can negatively impact student performance. Curriculum can vary among school districts and different teachers and classrooms move at different paces. As shown in Exhibit 7, just over one-quarter of students who enrolled in Cyber during the 2016-17 and 2017-18 school years withdrew before the end of the school year. In 2017-18, 15,758 students enrolled at Cyber at some point during the school year and 4,412 withdrew prior to the end of the school year. Exhibit 7 Approximately one-quarter of students enrolled at Cyber withdrew during the 2016-17 and 2017-18 school years 27% 28% 2016-17 Source: GaDOE student enrollment records 2017-18 As shown in Exhibit 8, the most common reason for withdrawal from Cyber during the 2016-17 and 2017-18 school years was transferal to another Georgia public school, while a significant portion opted for home schooling. Approximately 2,000 students transferred to another public school each school year, representing almost 50% of withdrawals in each year. Students leaving for home study comprised 17% of students in both years. Cyber also removed just under 10% of students for non-attendance in each year. 7 Exhibit 8 Reported reasons for student withdrawal from Cyber 2016-17 school year Transfer to GA Public School 48% Attend Home Study 17% Unknown 12% Lack of Attendance 9% Transfer Out of State 7% Other 7% 2017-18 school year Transfer to GA Public School 47% Attend Home Study 17% Unknown 16% Lack of Attendance 8% Transfer Out of State 6% Other 6% Source: GaDOE student enrollment records GOSA also calculates a student mobility rate based on entries and withdrawals during the school year. GOSA determines this student mobility rate, also known as a "churn" rate, for all Georgia schools. The rate measures the percentage of a school's students who entered or withdrew from a school between October 1 and May 1. Because the churn rate also includes students who entered school in its calculation, it is slightly different from the withdrawal rate. As shown in Exhibit 9, Cyber had a student mobility rate of 32% during the 2016-17 school year. The school's rate is twice the statewide median rate. Research indicates that virtual schools generally have higher turnover rates than brick-and-mortar schools. 8 Exhibit 9 Cyber's student mobility rate is double the statewide median in the 2016-17 school year Georgia Cyber Academy Statewide Median 32% 16% Source: GOSA analysis Student Persistence Student persistence is the act of continuing towards an educational goal. It is a measure generally used in the postsecondary education environment, when students can more easily discontinue their education. Student persistence can be measured by a year-toyear retention rate for a school and can provide a proxy measure for students' satisfaction with the learning environment at their school. We found that 75% of students who completed grades between kindergarten and 11th grade in the 2016-17 school year returned the following year. As shown in Exhibit 10, high school students were most likely to remain at Cyber, while elementary and middle school students had similar, lower retention rates. The highest retention is for 11th graders at 84%, while 8th graders were at 66%. Exhibit 10 High school students re-enroll at the highest rates, 2017-18 school year 100% 90% Elementary Middle High 80% 70% 60% 50% 40% 30% 20% 10% 0% KK 1 2 3 4 5 6 7 8 9 10 11 Source: GaDOE student enrollment records 9 We also examined the persistence of students who are likely old enough to discontinue their education non-graduating seniors. In the 2016-17 school year, approximately 20% of seniors did not graduate. Of those non-graduating students, about one-third reenrolled the following year and half of those graduated, resulting in an additional 4% of 2016-17 seniors graduating from Cyber in the following year (see Exhibit 11). Exhibit 11 84% of the 2016-17 senior cohort graduated from Cyber Returned and Graduated Year Two, 4% Returned but Didn't Graduate, 4% Didn't Graduate/Didn't Return in Year Two, 13% Graduated in Year One, 80% Source: GaDOE student enrollment records 10 Course Segment Completion Rate Given student mobility and attrition, not all students will complete their enrolled courses. GaDOE data does not permit a determination of the percentage of students who complete a course, but we were able to determine the portion that complete a course segment. A yearlong course will often have two segments (first and second semester). Completing a single segment in a multi-segment course does not result in academic credit; a passing grade in the final segment is required. In the 2017-18 school year, the overall course segment completion rate was 78% (see Exhibit 12); the rate for core courses (English language arts [ELA], math, science, and social studies) was 77%. The completion rates were generally higher as the student grade level increased. The rate of students completing courses with a passing grade (i.e., successful completions) was 66% across all grade levels, with the highest levels in middle school. The percentage of students who completed the course with a failing grade (i.e., unsuccessful completions) was highest in grade nine. Exhibit 12 Course segment completion rates at Cyber increase as grade levels increase, 2017-18 KK 01 02 03 04 05 06 07 08 09 10 11 12 0% 10% 20% 30% 40% 50% 60% 70% 80% Successful Unsuccessful Incomplete Source: GaDOE course records 90% 100% 11 Student Engagement Student engagement is the degree to which students are attentive and interested in their coursework, and engaged students are more likely to perform well in school. Common measures of engagement, such as students raising their hands to pose or answer questions, participation in class discussion, or interactions between teachers and students in the classroom, are not available in an online environment. As such, virtual schools must develop other systems to define and capture student engagement. Cyber does not have a specific, school-wide method for measuring student engagement, but school officials stated that students are expected to submit at least one assignment in each class every week. Using that expectation as a measure of student engagement, we analyzed the records of 1,683 students who were enrolled the entire school year, determining whether they submitted at least one assignment in any class and one assignment in every enrolled class. We omitted weeks during which students would not submit assignments, such as winter and spring breaks, and weeks where students took milestones assessments. Most students submitted an assignment in at least one class each week, but it was common for students to fail to submit an assignment in every class in which they were enrolled. As shown in Exhibit 13, 94% to 99% of students submitted an assignment in at least one class each with the exception of two--just before and after Georgia Milestones testing. When considering all classes, the percentage submitted each week averaged 69%. The lowest rates, 53% and 59% respectively, occurred at the beginning and end of the year, or before and after Milestones testing. Assignment submissions peaked towards the middle of the school year, rising to 81% at the highest. Exhibit 13 97% of students submitted a weekly assignment in at least one core class; 69% of assignments across core classes were submitted each week, 2017-18 Assignments Students 100% 75% 50% 25% 0% Source: Cyber student records 12 Academic Achievement Charter schools are expected to use their flexibility from certain state and local rules to raise student achievement. Numerous methods are used to measure academic achievement in Georgia's public schools. Key points in this section include: Georgia Cyber Academy's College and Career Ready Performance Index (CCRPI) scores were below the state average for the elementary, middle, and high schools, with elementary and high school scores approximately 20 points below the state average. As part of the CCRPI score, the school earned nearly half the score of the state for "closing gaps," indicating students are not reaching the testing targets set by GaDOE. The value added impact score for Cyber is lower than its comparison district for elementary and middle schools and lower in most high school subjects. Cyber's impact score exceeds the comparison district in 9th grade Literature and American Literature. In comparison to similar schools during the 2016-17 school year, Cyber's performance was lower and therefore it was not "Beating the Odds". Student performance generally declined in the first year at Cyber, when compared to student performance in the previous year in a brick-and-mortar Georgia public school. Assessment test scores indicate that while these students tended to perform similarly in English language arts and science as they had during the previous year, they were less likely to be proficient in math and social studies. Alternate options for students enrolled at Cyber include attending a local district school, private school or home school. Most students live close to a traditional, brick-and-mortar public school with a CCRPI score higher than Cyber. Private schools charge tuition and may have attendance restrictions that limit the option for some students. Nearly three-fourths of Cyber's new student enrollments for 2017-18 transferred from another Georgia public school. Some new students also transferred from home school (12%) and private school (5%). Student mobility is among the factors that may negatively influence outcomes for some students, and student mobility is much higher in virtual schools than brick-and-mortar schools (see page 8). Student mobility includes anytime a student changes schools for reasons other than grade promotion, but often refers to students changing schools during the school year. Various studies have linked student mobility with lower school engagement, poorer grades and increased high school dropout rates. Research indicates that mobility may be more detrimental for students in early grades, which is the period when students learn many of the foundational skills necessary for success in later grades. 13 College and Career Ready Performance Index The College and Career Ready Performance Index (CCRPI) is an accountability tool the state uses to measure performance and hold schools accountable for student achievement. The CCRPI provides multiple measures of student performance. GaDOE redesigned the framework for measuring and reporting CCRPI and implemented the new methodology beginning in 2017-18. CCRPI is comprised of four main indicators used to assess students in multiple areas. All students are assessed based on content mastery, progress, closing gaps, and readiness. An additional assessment, a graduation rate, is also included for fourth- and fifth- year high school students. Exhibit 14 shows each of the CCRPI indicators and the measures used to score each indicator. Exhibit 14; CCRPI indicators and measures, 2017-18 school year Indicator Measure Content Mastery (30%) Performance on Georgia Milestones Assessment System and the Georgia Alternate Assessment (ELA, mathematics, science, and social studies) Progress (ES and MS = 35%, HS = 5%) Progress on assessments relative to other students with similar scores. (ELA and mathematic growth; Progress towards English Language proficiency) Closing Gaps (ES and MS = 15%, HS =5%) CCRPI improvement targets for academic achievement based on results of milestones tests Readiness1 (ES and MS = 20%, HS = 5%) Early grades - Foundational skills/concepts Later grades - Expanding opportunities and personalized learning Graduates - college/career ready Graduation Rate (HS = 15%) 1 All grades are measured based on the percent of students absent less than 10% or less of enrolled days Source: GaDOE Accountability Division Changes to the CCRPI for 2017-18 For the 2017-18 school year, GaDOE calculated CCRPI using a new method. GaDOE determined that the previous method allowed high-performing schools to meet state targets without improving, or in some cases declining, whereas low-performing schools could succeed in improving scores but still fall below set targets. Using stakeholder feedback and input from advisory committees, GaDOE developed a new CCRPI methodology. The redesigned CCRPI is intended to be more streamlined to assist in reading and comparing assessment results. It is also intended to make scores more understandable by scoring all sections out of 100. GaDOE also made changes to CCRPI targets, which are now focused on the individual school. 14 GaDOE calculates a score for each CCRPI indicator and an overall score for each school. Cyber's overall CCRPI score for 2017-18 (60.2) is lower than the state average (76.6); the state average is Cyber's "comparison district" for charter purposes because it is a statewide school. Cyber's overall CCRPI score for each grade band is also lower than the state average, as shown in Exhibit 15. Exhibit 15 Cyber's CCRPI scores lower than the state average, 2017-18 Content Closing Graduation Mastery Progress Gaps Readiness Rate Elementary Cyber 49.0 61.6 40.6 74.8 - State 65.7 84.4 85.0 79.1 - Overall Score 57.3 77.8 Middle School Cyber 54.2 73.2 47.1 87.1 State 65.1 81.0 78.8 82.4 - 66.4 - 76.2 High School Cyber 50.8 74.9 40.9 53.9 State 66.9 83.0 80.0 73.4 53.3 57.9 82.0 75.3 School Total Cyber N/A N/A N/A N/A State N/A N/A N/A N/A Source: GaDOE Accountability Division N/A 60.2 N/A 76.6 Elementary School Students' scores are lower than the state average for each CCRPI component. Compared to the statewide scores, students scored lowest in content mastery and closing gaps, as student scores fell short of target measures set for assessment scores. Students were closest to state scores, though still below, for the readiness component, as students at Cyber have a high percentage score for attendance. In addition to missing targets in each subject area, students also fell short of statewide scores for each indicator. Middle School Students' scores are higher than the state average in readiness; however, scores for other indicators and the overall score are below the state average. For content mastery, middle school students are below target scores in each subject, as well as the overall score, though they are above the target score for all subjects. For the progress indicator, students were below the state average in the amount of growth shown in ELA and math when compared to the growth of academically-similar students. The closing gaps score was nearly half the state average, as students miss target scores for each core subject, though students are closest to the target score in social studies. Finally, the readiness score that slightly exceeded the state average was driven by a literacy score higher than the state average, as well as high student attendance, and participation in classes beyond the four core subjects, most often physical education/health and fine arts. 15 High School Students' scores are lower than the statewide scores in all CCRPI components. For content mastery, Cyber's scores were above the target scores in science and social studies, but lower in math and ELA. In progress, students were below the state average in the amount of growth shown in ELA and math when compared to the growth of academically-similar students. The closing gaps score, at 40.9 is approximately half the statewide score, which is due to scoring below target scores set for all core subjects. Only one subgroup, economically disadvantaged students, met the 6% improvement target in science and social studies, and no subgroup met the improvement targets in all other core subjects. Finally, the graduation rate of 53.3% is much lower than the state score, though the five-year cohort's graduation rate is 54.78%. 16 Value Added Analysis The Value Added Analysis (VAA) established by GOSA measures the ability of state charter schools to positively impact student performance. The VAA controls for demographic, academic, and socioeconomic factors so that student achievement can be attributed to the school. After controlling for certain factors, the VAA calculates a predicted score for each student. The difference between the predicted and actual score is the school's impact on the student's achievement. GOSA uses two types of value added impact scores to measure school impact. Elementary and middle schools receive a single value added impact score that averages all subjects, using scores derived from the Georgia Milestones End-of-Grade exams administered to students in grades 3-8. For high schools, impact scores are calculated for each subject with a Milestones End-of-Course exam. A school's score is compared to its comparison district(s). As a school with a statewide attendance zone, Cyber's scores are compared to the statewide impact score. As shown in Exhibit 16, Cyber's value added impact score was lower than its comparison district for elementary and middle schools and lower in most high school subjects. The impact score exceeded the comparison district in 9th grade Literature and American Literature. It was lower in the remaining six subjects. Exhibit 16 Cyber's Value-Added impact scores are lower than the comparison district, 2016-17 school year Impact Relative to Grade Band/Course Comparison District Elementary Lower Middle Lower High School Courses 9th Grade Literature American Literature Algebra 1 Biology Economics Geometry Physical Science U.S. History Source: State Charter Schools Commission Higher Higher Lower Lower Lower Lower Lower Lower 17 Beating the Odds Analysis Beating the Odds (BTO), established by GOSA, is an outcome measure that compares charter schools' performance on the CCRPI with the performance of similar schools. If a school outperforms those with similar characteristics, it is considered to be Beating the Odds. Given that the analysis controls for certain characteristics, schools Beating the Odds could have low CCRPI scores while schools not Beating the Odds could have relatively high CCRPI scores. The characteristics used in the 2016-17 comparison include the following: 3 Percentage of economically disadvantaged students Percentage of English language learners Percentage of students with disabilities Percentage of students in each race/ethnicity Student mobility rates School size School grade cluster The BTO analysis includes only those students enrolled for the full academic year, which is 65% of the school year or course. For 2016-17, the BTO analysis used two different methods to measure economically disadvantaged students and thus calculated two scores for determining each school's BTO designation.4 The predicted score is compared to the actual CCRPI score to determine whether the actual score is statistically lower, equivalent, or higher. Schools with a higher score using either approach are deemed as Beating the Odds. For the 2016-17 school year, Cyber was not classified as Beating the Odds. Cyber's CCRPI score for this year was 61.9, which was 18 to 26 points lower than the BTO scores predicted using the two models. Other Academic Goals Cyber's charter does not include any additional academic goals other than those listed above. 3 Beating the Odds results for the 2017-18 school year will be released later during the 2018-19 school year. The results will be calculated using a revised formula and will provide additional context for the "Did Not Beat the Odds" category. Two additional school characteristics, percentage of female students and whether a school is non-traditional, will also be included in this calculation. Additionally, students will be counted in the demographics portion if they were enrolled as a Full-Time Equivalent. 4 One model uses the percentage of full academic year students who qualify for free or reduced-price lunch to measure economically disadvantaged students. The second model uses the percentage of students who are directly certified in the October FTE count for this variable. 18 Comparison of Academic Growth and Achievement Prior to Placement Students in their first year at Cyber tended to perform similarly in ELA and science as they had in their previous year at a brick-and-mortar Georgia public school. However, they were less likely to be proficient in math and social studies than they had been. In both subjects, students' academic growth declined in their first year at Cyber. Achievement The state uses the Georgia Milestones Assessment System to measure student achievement in grades 3 through 12. The Milestones tests measure how well students have learned the material and skills outlined in the state content standards for core content areas. Students in grades 3 through 8 take an end of grade assessment in ELA and mathematics, and students in grades 5 through 8 also take an end of grade assessment in science and social studies. High school students take an end of course assessment at the completion of the course for each of the ten courses designated by the State Board of Education.5 Based on Milestones tests, students may be placed into one of four achievement levels: beginning learner, developing learner, proficient learner, and distinguished learner (see text box). Student assessment scores are reported by grade and subject for the state, school system, and school. Assessment scores show that achievement generally declined for first-year students at Cyber during 2016-17.6 When examining all subjects, students performed at the proficient level or higher for about 33% of the assessment tests taken at a brick and mortar school; however, these students performed at the proficient level or higher on 29% of the tests taken during the first year at Cyber. The percentage of assessment tests on which students achieved at the distinguished level remained about the same. Georgia Milestones Assessment System Achievement Levels Beginning learner The student does not yet demonstrate proficiency in the knowledge and skills specified in Georgia's content standards for this grade level and course of learning. The student needs substantial academic support to be prepared for the next grade level or course to be on track for college and career readiness. Developing learner The student demonstrates partial proficiency in the knowledge and skills specified in Georgia's content standards for this grade level and course of learning. The student needs additional academic support to ensure success in the next grade level or course to be on track for college and career readiness. Proficient learner The student demonstrates proficiency in the knowledge and skills specified in Georgia's content standards for this grade level and course of learning. The student is prepared for the next grade level or course and is on track for college and career readiness. Distinguished learner The student demonstrates advanced proficiency in the knowledge and skills specified in Georgia's content standards for this grade level and course of learning. The student is well prepared for the next grade level or course and is on track for college and career readiness. Source: GaDOE Assessment and Accountability 5 These tests serve as a final exam for the course and contribute 20% to the final grade for the course. 6 Student achievement at Cyber was assessed by comparing 2016-17 assessment scores for students that enrolled at Cyber as a new student during 2016-17 with their 2015-16 assessment scores. This analysis was limited to students that were administered assessment tests at Cyber during 2016-17 and were administered assessment tests at a brick and mortar school during 2015-16. 19 Student achievement declined for first-year students at Cyber in two of four core subjects when compared to their achievement the prior year at a brick-and-mortar school. As shown in Exhibit 17, the percentage of assessment tests with scores at the proficient level or higher level declined in math and social studies. Those in the beginning learner category increased in math, science, and social studies, while those in the developing learner category increased in social studies. Student achievement for first-year students remained similar in ELA during this period. Exhibit 17 Academic achievement in math and social studies declined during students' first year at Cyber, 2015-16 to 2016-17 Beginning Developing Proficient Distinguished English Language Prior Year 26% 34% Arts (1,700 Students) Cyber Year 1 25% 36% 33% 6% 34% 5% Math (1,981 Students) Prior Year 27% Cyber Year 1 38% 43% 41% 23% 6% 18% 4% Science (677 Students) Prior Year Cyber Year 1 35% 42% 35% 30% 24% 6% 23% 5% Student growth percentile levels Low 1-34 Typical 35-65 High 66-99 Social Studies (458 Students) Prior Year 29% Cyber Year 1 37% 36% 42% 26% 8% 17% 5% Source: GaDOE Assessment data Academic Growth Academic growth indicates how a student has progressed academically over time. GaDOE uses the student growth percentile (SGP) to describe student academic growth relative to academically-similar students across the state. Using state assessment scores, GaDOE compares the change in a student's performance from one year to the next in relation to other students who had a similar score in the initial year.7 Regardless of their initial assessment score, all students are able to demonstrate growth or decline in relation to other students who started with a similar initial score. Student growth levels range from 1 to 99, with higher percentiles representing more academic growth. 7 Beginning in the 2016-17 school year, student growth percentiles were calculated for ELA and math only. 20 In the 2016-17 school year, first-year Cyber students' academic growth declined in math and ELA.8 As shown in Exhibit 18, the percentage of students in the high SGP category in math declined from 32% at the brick-and-mortar school to 19% at Cyber. The portion in the low category increased from 40% to 55%. Academic growth for first-year students at Cyber declined in ELA. The high category decreased from 35% to 27%, while the low category increased from 36% to 42%. The typical growth category was slightly larger. Exhibit 18 Academic growth in ELA and math declined during students' first year at Cyber, 2015-16 to 2016-17 Low Typical High Prior Year 36% 28% English Language Arts (1,311 Students) Cyber Year 1 42% 31% 35% 27% Math (1,470 Students) Prior Year 40% 28% Cyber Year 1 55% 26% 32% 19% Source: GaDOE Assessment data Alternative Academic Options Students enrolled at Cyber have several alternatives for obtaining an education, including attending a local district school, private school, or home school. The availability of these options may vary for some students. Local District School Students enrolled at Cyber have the option of attending one of 2,200 public schools throughout the state. These schools are operated by the 180 school districts (159 county, 21 city) and are available to students who live within the school's attendance zone. These schools are publicly funded and available to all students. We found that most students live close to a traditional, brick-and-mortar public school with a CCRPI score higher than Cyber.9 As shown in Exhibit 19, this is true for 8 Student growth at Cyber was assessed by comparing 2016-17 SGPs for students that enrolled as a new student at Cyber during 2016-17 with their 2015-16 SGP earned in a brick-and-mortar school. This analysis was limited to students that were administered assessment tests at Cyber during 2016-17 and were administered assessment tests at a brick and mortar school during 2015-16. 9 The student's zoned school is not reported; therefore, we determined the local school district school that is closest to the home address of approximately 11,800 Cyber students. We excluded schools that are not open to all students in a specific zone (e.g., magnet schools) and other special schools (e.g., alternative schools, residential treatment facilities). 21 elementary, middle, and high school students. We found that 59% of elementary students' local schools had a CCRPI at least 10 points higher. The number was 31% for middle school students and 62% for high school students. It should be noted that the CCRPI is only one measure of a school and there can be other reasons that a student chooses not to attend a local school district school. Exhibit 19 Most Cyber students live close to a local school district public school with a higher CCRPI score, 2017-18 Scores Students' Local School CCRPI is Higher Cyber's CCRPI is Higher 97% 85% 62% 38% 15% 3% Elementary School Source: DOAA analysis Middle School High School GaDOE also uses survey information obtained from students, parents, and school employees to assign each local school district school a climate rating. The climate rating is based on the following: Attendance Frequency of students' unexcused absences and frequency of employee leave Discipline In-school and out-of-school suspensions, as well as alternative school assignments and expulsions Safe and Substance Free Frequency of physical, bullying/harassment, and drug-related incidents Climate Perception Survey of students, parents, and employees about the school As shown in Exhibit 20, 70% of Cyber students live close to a school with a school climate rating of three or four. The ratings range from one (lowest) to five (highest). 22 Exhibit 20 Most Cyber students live close to a local school district public school with a school climate rating of 3 or 4, 2017-18 school year 42% 27% 20% 9% 3% 1 2 3 4 5 Source: GaDOE and Georgia Cyber Academy Availability of Private Schools Some students enrolled at Cyber may have the option to attend one of more than 600 private schools. Private schools are available in 107 Georgia counties. Fulton and DeKalb counties have a combined 122 private schools, 20% of all private schools in the state. Thirty-nine counties have a single private school. Private schools charge tuition and may have various attendance restrictions, limiting the option for many students. The cost of attending a private school in Georgia ranges from $1,042 to $51,280 per year, though scholarships may be available for qualifying students. In addition, the 600 private schools have attendance requirements based on grade level (e.g., K-5), religious affiliation, gender, or any other criteria that fits their mission. Students' Previous School Locations Using student enrollment records, we also identified where new Cyber' students in the 2017-18 school year had previously received their education. Of 7,201 new student enrollments, 72% (5,165) transferred from another Georgia public school (see Exhibit 21). Approximately 12% (833) transferred from home schools, while another 5% (342) transferred from a private school. About 12% of new students were in other categories, such as transferring from schools in another state or country, and half of the students in the "other" category never attended school before. 23 Exhibit 21 Most students that transferred to Cyber were from another public school, 2017-181 Other Public School 72% Home School 12% Other 12% Private School 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 1 Other includes students who transferred from schools in another state or country, as well as students who have not attended school before entering Cyber. Source: GaDOE student enrollment record 24 Management & Staffing Charter schools, unlike traditional public schools, operate under the terms of a charter and are governed by an autonomous non-profit board of directors. This section provides information about Georgia Cyber Academy's agreements, governance, staffing, and certification. Key points in this section include: Cyber has an educational services agreement with K12 Virtual Schools, LLC for educational materials, an online platform, staffing, purchasing, and other services. Cyber has a seven-member governing board. During its 2016-17 review, SCSC concluded that Cyber' governing board met all of the standards pertaining to governance. We noted that the agreement in effect during the 2017-18 school year contained many of the provisions necessary for the governing board to provide oversight to K12 Virtual Schools, LLC. However, a board is likely to have limited time and resources to provide oversight and, in the 2017-18 school year, all school staff were employees of the contractor. For 2017-18, Cyber's percentage of inexperienced instructors nearly twice the statewide average while its retention rates are comparable. Additionally, 1% of Cyber' teachers are rated as ineffective by GaDOE, compared to the statewide average of 2%. While Cyber does not require those in leadership positions to hold specific certifications, four of its leaders--two principals and two assistant principals--have a Standard Professional Leadership certification. 25 Agreements for Corporate Management Services Charter school governing boards may contract with education management organizations to assist with the school's operation. These corporate entities provide a variety of operational services to public school districts and charter schools. They can provide either comprehensive management or selective services. The scope of services may include educational and administrative services such as accounting, procurement, and reporting. During the 2017-18 school year, the school board contracted with K12 Virtual Schools, LLC (contractor) for a broad range of products and services (see Exhibit 22 and Appendix A). Notably, the head of school, teachers, and support staff were employees of the contractor. Exhibit 22 Cyber obtained a range of products and services through its agreement with K12 Virtual Schools, LLC Learning Products & Services License to use online curriculum and learning management system Instructional tool, supplies, and support Computer hardware and software Technology platform and support services for student account management system Maintenance of student records Management & Administrative Services Along with the board, select, hire and provide oversight for the head of school Provide supervision, oversight and discipline of teachers, teaching support staff, and other personnel Student recruitment, enrollment, admissions, orientation and other support services Professional development and other training Budgeting, financial management, and reporting Facility management Source: Georgia Cyber Academy Learning Products and Services These services include access to the company's online curriculum and learning management system and education materials, technology platform and support services, instructional tools, and related education services, such as training, pupil recruitment, enrollment and admissions. These types of products and services are used directly by teachers and students. Management and Administrative Services These services include oversight of school management, human resources, facility management and financial services. The agreement authorizes the contractor to "select, supervise, evaluate, transfer, promote, discipline and dismiss" teachers and 26 teaching support staff. The contractor also is responsible for the school's financial services and creation of an annual budget for the school board's approval. During fiscal year 2018, the school paid K12 Virtual Schools, LLC more than $89 million for educational management, products, and services.10 Curriculum and instruction material-related fees totaled approximately $47 million. These fees were based on a flat rate and a monthly fee per student per course for the curriculum and materials (digital and physical) based on each student's grade band and a per teacher fee for access to the online learning system. The amount also included payments made related to technology platform and support services (7% of program revenues) and management services (8% of program revenues).11 K12 was also reimbursed approximately $42 million for items such as teacher salaries, teacher training, and insurance that are not covered as part of contracted fees. It should be noted that the contract contained a provision protecting the school against an annual deficit. If the school had an annual deficit and no positive net assets, the contractor provided a credit or cash payment to the school. In fiscal year 2018, K12 Virtual Schools, LLC provided a credit of approximately $10 million. Governance and Management Charter schools operate under the leadership of a board that serves as the governing authority of the school. The primary responsibilities of the governing board relate to strategic planning and policymaking, budgeting and fiscal stability, hiring and providing oversight for the school leader, and ensuring accountability. The governing board is also responsible for ensuring compliance with laws and regulations, maintaining records of meetings, committees and policies, and monitoring school achievement. Board members with diverse backgrounds and skills in areas such as education, finance, human resources, and legal affairs can contribute to a board successfully performing its duties. State law and State Board of Education guidelines establish qualifications for governing board membership and member training requirements. O.C.G.A. 20-22084 requires board members to be a U.S. citizen and Georgia resident, and it prohibits members from being an employee of the school. The law also prohibits board members from being an officer or board member of any organization that sells goods or services to the school. State Board guidelines require board members to receive 15 hours of training in their first year and nine hours each subsequent year. The required training must consist of charter school finance and budgeting, best practices for charter school governance, requirements relating to public records and meetings, and other applicable laws, rules, and regulations. 10 Cyber incurred total charges of approximately $57 million for educational products and services provided by K12 Virtual Schools, LLC during the 2017-18 school year. To prevent Cyber from experiencing a negative net asset position during this period, K12 provided balanced budget credits of approximately $10 million to Cyber to cancel out its negative net asset position. 11 Program revenues include all income and funding generated or appropriated for and received by the school attributed to any student in the school. 27 Cyber's by-laws authorize between five and thirteen board members (there were seven members in 2017-18). The board elects its members and officers at its annual meeting. Members are elected to serve three-year terms and may serve up to four successive terms. They are not paid but may be compensated for expenses incurred in connection with their duties. A majority of board members are required to transact business at meetings. The board held eleven meetings during the 2017-18 school year. State Charter Schools Commission Review The State Charter Schools Commission (SCSC) concluded that Cyber met all standards pertaining to governance in the 2016-17 school year. In its Comprehensive Performance Framework for state charter school evaluation, SCSC states that a governing board must provide adequate oversight of school management and operations to ensure that the school is fulfilling its duties to students, employees, parents, and the general public. The framework consists of four standards for charter school governance as part of its expectations for operational performance. General Governance Examines compliance with applicable laws, rules, regulations, charter contract provisions and school policies relating to board governance. The review includes, but is not limited to, board policies, bylaws, conflicts of interest, board composition and membership rules, and restrictions on compensation. Open Governance Examines compliance with the Georgia Open Meetings Act and open records requirements. Governance Training Examines whether the school ensures that all governing board members participate in required trainings. These include annual attendance at SCSC-provided or approved training. Holding Management Accountable Examines school oversight of school management and contractors. This includes implementation of the Teacher and Leader Keys Effectiveness Systems, remedial action regarding employees not meeting expectations, and actions to enforce contractual provisions or terminate the contract of noncompliant educational service providers or other contractors. Accountability When contracting for education management services, the governing board is responsible for preserving its ability to exercise complete oversight of the school. This requires that agreements include provisions that enable the board to hold the company accountable for performance related to these services. It also requires that the board have the expertise and resources to assess the contractor's performance. Based on our research of best practices for contracting with education management organizations, we compiled a list of provisions that are necessary for governing boards to hold management companies accountable for performance. For example, the agreement should outline the services the school receives in exchange for its fee and give the governing board authority to terminate the agreement if it is not in the best interest of the school. As shown in Exhibit 23, the agreement Cyber had in place during the 2017-18 school year contained key provisions necessary for the board to hold contractors accountable for their performance. 28 Exhibit 23 Agreement for management & other services contain key provisions, 2017-18 school year Key Contract Provisions In Contract Explanation Financial Defines the fee structure, including an explanation of key components used in the calculation of the fee amount Yes Contractor is required to provide Outlines the services the school receives in exchange for its fee Yes a detailed monthly invoice for the educational products and services delivered. Agreement Period Gives the board authority to terminate the agreement if it is not in the best interest of the school Yes Does not renew automatically with a new charter term or continue for a specified time period into a new charter term Agreement extends through June No 2021, two years beyond the charter period, which covers July 1, 2014 to June 30, 2019. Services Ensures that the academic program implemented aligns with Georgia's standards and allows for modifications to address changes in state standards. Yes Agreement does not specifically address modifications. Does not require schools to utilize a related entity for certain services Yes Oversight & Monitoring Agreement gives Cyber Includes an effective contract monitoring system with clearly defined evaluation criteria, performance rewards and penalties. No responsibility for monitoring contractor's compliance with agreement; but does not clarify the criteria, rewards, or penalties. Source: DOAA Analysis While contract provisions provide a mechanism for governing boards to hold companies accountable, contracting for the management services presents unique challenges for a part-time board. In many government contracting relationships, the contracting entity procures services, but retains at least some management responsibility. It also has staff responsible for ensuring that the contractor fulfills contract terms. However, Cyber's contractor was responsible for virtually all aspects of school management and employed the head of school and all other school personnel during the 2017-18 school year. Changes to Georgia Cyber Academy's Agreement for Services Georgia Cyber Academy officials reported that they began renegotiating their contract with K12 Virtual Schools, LLC during the 2018-19 school year to move from an agreement for education management to an agreement for selected educational services. Under the new agreement, the school will be operated by the Head of School and staffed by employees of the governing board. All academic and instructional staff, cabinet level staff, special education, counseling and family support staff previously employed by K12 will become employees of the school. Cyber will continue to obtain the curriculum, online platform, marketing, enrollment services, payroll, and human resources from K12 Virtual Schools, LLC. As of December 2018, the new contract had not been executed; however, Cyber has already implemented these changes. 29 Staffing and Teacher Qualifications Both GaDOE and the Georgia Professional Standards Commission (GaPSC) have roles in assessing the qualifications of public school staff. GaDOE requires public school teachers to hold a teaching certificate and a clearance certificate issued by GaPSC. A clearance certificate is issued after completion of a criminal background check, while a teaching certificate has additional educational and testing requirements. All public school teachers--including those in charter schools--are required to have a clearance certificate. Charter schools may employ instructors without a teaching certificate. As shown in Exhibit 24, Cyber had 592 employees during the 2017-18 school year, 14 more than the previous year. Of the staff, 510 are in certified positions and 82 in classified positions. The certified staff include a small number in leadership roles and student support; the majority are instructors.12 Eighty-two employees are classified personnel who serve as administrative support, paraprofessionals, and coordinators. Classified personnel do not provide instruction or require a teaching certificate. Exhibit 24 Certified personnel increased at Cyber, 2016-17 to 2017-18 Description 2017 2018 Certified Personnel1 Leadership 14 11 Elementary Instructor 86 90 Middle School Instructor 81 84 Secondary Instructor 149 151 Special Education 46 63 Student Support 114 111 Total Certified Personnel 490 510 Classified Personnel Staff Support 88 82 Total Personnel 578 592 1With limited exceptions, these positions are occupied by individuals with state certification. Charter schools may employ those without a certificate. Source: GaDOE CPI data Cyber does not require those in leadership positions, such as principals and assistant principals, to hold a Standard Professional Leadership (SRL) license. In the 2017-18 school year, Cyber reported to GaDOE that seven employees had a current SRL license; four of those were in leadership positions. A Standard Professional Teaching license is required before an instructor can obtain an SRL, so these faculty members would hold most licenses. While Cyber does not have a written policy requiring its teachers to be certified in Georgia, school officials stated that they choose to hire teachers who are certified. In 2017-18, the school reported to GaDOE that all but one teacher had a certification. The instructor had a permit, which allows individuals with specific qualifications to teach in Georgia without completing an educator preparation program. 12 Instructors may be labeled as "certified" if hired for a position generally requiring a certificate, and the employee contract will specify a number of certified days required of the employee. An instructor may be reported as certified personnel even without a certificate. 30 As shown in Exhibit 25, GaDOE data shows that all of Cyber's instructors have a Bachelor's degree or higher. Over half have a Master's degree or higher. Exhibit 25 Most instructors at Cyber have obtained a master's degree, 2017-18 Doctorate, 1% Education Specialist, 12% Bachelor's, 33% Master's, 54% Source: GaDOE CPI data Between 2016-17 and 2017-18, the number of Cyber's teachers with five or fewer years of experience decreased, while those with between 16 and 24 years of experience increased (see Exhibit 26). Exhibit 26 Most instructors at Cyber have six to fifteen years of experience, 2016-17 and 2017-18 school years 2016-17 2017-18 320 320 78 60 0-5 Source: GaDOE CPI data 118 85 6-15 16-24 31 7 12 25+ GaDOE collects information allowing a comparison of each school's teachers to the state average in several areas, including the portion deemed inexperienced, the portion deemed ineffective, and portion of teachers retained. GaDOE defines inexperienced teachers as those with less than four years of consecutive instruction; ineffective teachers are those who scored a Level 2 or lower on their final Teacher Assessment on Performance Standards. As shown in Exhibit 27, Cyber has a lower portion of ineffective teachers than the state. Its teacher retention is slightly lower than the state, but the portion of inexperienced teacher is nearly 30 percentage points higher. Exhibit 27 Cyber has nearly double the amount of inexperienced teachers than the statewide average, 2017-18 school year 82% 86% 66% 37% Cyber State Inexperienced Teachers Source: GaDOE Annual Report Cyber State Teacher Retention 1% 2% Cyber State Ineffective Teachers Development Plans for Leadership with no Administrative License Cyber does not require school leaders to obtain a state certification, though 4 of 11 leaders do hold the Standard Professional Leadership (SRL) license. The school does not have a specific professional development plan for leaders who do not hold an administrative license. According to Cyber officials, they do provide professional development opportunities to those in leadership positions. Cyber schedules district leadership professional development and asks that those in leadership positions attend state-mandated and recommended trainings and conferences. Cyber also provides professional development for all faculty, including leadership, on K12 and internal system training. 32 Operations & Planning Charter schools can use their funding to implement innovative or unique programs that are not typically available in traditional public schools. This section discusses Georgia Cyber Academy's funding, innovative practices, and future plans. Key points in this section include: Cyber received 92% of its funding from state funds, which is approximately 40 percentage points higher than the state average. Like all state charter schools, Cyber does not receive any local funds. Cyber's per student full-time equivalent (FTE) expenditure of $5,804 is approximately 62% of the statewide average. Additionally, Cyber has a relatively high efficiency rating in comparison to the state's rating of 3.0 as calculated by GOSA in relation to per-student expenditures and test scores. Cyber identified innovative methods that it uses to provide additional support to low achieving students and provide flexibility to advanced learners who may prefer to move through the curriculum at a pace that fit their needs. Cyber reported future plans to improve assessment scores by reducing enrollment, mandating new attendance and engagement policies, and using data analytics programs to assess students and delivered targeted instruction. 33 School Finances During the 2017 and 2018 fiscal years, state charter schools received Quality Basic Education (QBE) funding and supplemental state funding from the State Charter Schools Commission (SCSC). The supplemental funds were provided because SCSCchartered schools are not eligible for local funds. Virtual charter schools received twothirds of the supplemental funding provided to brick-and-mortar schools, did not receive capital funding, and generally received no transportation or nutrition funding.13 Cyber's annual financial reports show that revenue increased from $85 million in fiscal year 2017 to $89.9 million in fiscal year 2018 (see Exhibit 28). Revenue in 2017 was approximately $2.7 million more than expenditures, while in 2018 revenue equaled school expenditures. State funds provide the majority of Cyber's funding, with federal funds and donations providing the remainder. It should be noted that in both years K12 Virtual Schools, Inc. provided a balanced budget credit to the school.14 The credit comes in the form of a reduction in the vendor's management fee from its contracted rate, resulting in lower expenditures on school administration than would occur without the credit. Exhibit 28 Cyber revenue comes primarily state funds, Fiscal Years 2017 & 2018 Description Revenue State Federal Other income Local Total Revenue 2017 $78,316,134 $6,648,407 $17,332 $0 $84,981,873 2018 $82,728,184 $7,166,871 $18,464 $0 $89,913,519 Percent Change 6% 8% 7% 6% Expenditures Instruction School Administration Pupil Services Improvement of Instructional Services General Administration Operation of School Support Services Business Total Expenditures1 $62,496,763 $14,151,631 $4,427,746 $271,507 N/A $945,215 N/A $82,292,862 $71,582,812 $11,412,682 $5,557,166 $443,224 $370,644 $337,196 $209,975 $89,913,519 15% (19%) 26% 63% (64%) 9% Revenues Less Expenditures $2,689,011 Source: Georgia Cyber Academy, Inc. audited financial statements $0 (100%) 13 With passage of HB 787 during the 2018 legislative session, funding for all state charter schools will increase and virtual schools will receive capital funding. 14 The contract states that K12 Virtual Schools, LLC will provide the school balanced budget credits to ensure that it does not end the fiscal year in a negative net asset position. Cyber received balanced budget credits of $13.7 million and $9.9 million in fiscal year 2017 and 2018, respectively. 34 We used GaDOE's fiscal year 2017 revenue and expenditure reports to compare Cyber's revenue and spending patterns to other public schools.15 As shown in Exhibit 29, Cyber relies on state funding much more than typical public schools. This is true of all state charter schools that do not qualify for local funding. State charter schools receive QBE funding and a state charter commission supplement to offset a portion of the local funding that they do not receive. Exhibit 29 State funds are nearly twice the revenue source for Cyber than the statewide average, 2017 Statewide Cyber State 53% 92% Local 0% 40% Federal 7% 8% 0% 20% 40% 60% Source: Statewide GaDOE financial report and DE46 financials 80% 100% It does not appear that Cyber classifies expenditure data in a manner that is comparable to other schools. As shown in Exhibit 30, Cyber reported spending a significantly higher proportion of funds on instruction than the state average per student and about the same on school administration. However, it reported spending virtually nothing on pupil services or general administration. Pupil services includes the purchase of materials such as e-books and periodicals, communication and coordination with parents, and additional educational offerings such as summer school. General administration includes administrative positions not covered in the school administration category (e.g., Title I director and homeless liaison), as well as some maintenance and technology services. It is possible that expenditures for these services are included in the instruction or school administration category. 15 The amounts in GaDOE's financial reports are slightly different than those in the school's financial statements due to the exclusion of certain revenue sources (e.g., in-kind contributions) and expenditure categories. However, GaDOE's reports allow a comparison to other Georgia public schools. 35 Exhibit 30 Cyber does not appear to classify spending in a manner that makes their data comparable to other public schools, Fiscal Year 2017 Cyber Statewide Instruction Maintenance and Operations School Administration Staff Services Transportation General Administration Pupil Services 0% 20% 40% 60% 80% 100% Source: Statewide GaDOE financial report and DE46 financials Cyber's expenditures per FTE were significantly lower than the statewide average. As shown in Exhibit 31, Cyber spent $5,804 per FTE in the 2016-17 school year. This was approximately 38% lower than the statewide average of $9,417. Exhibit 31 Per-pupil expenditures at Cyber are approximately 62% of per-pupil expenditures statewide, Fiscal Year 2017 $9,417 $5,804 Cyber Source: Statewide GaDOE financial report and DE46 financials Statewide 36 Academic Performance as a Ratio of Per-Student Expenditures GOSA calculates a Financial Efficiency Star Rating (FESR) for each school in the state. The FESR compares a school district's spending per student with its overall academic performance. The 2016-17 FESR compared each school's spending per student to its CCRPI score and assigned between 0.5 and 5 stars to each school. Schools in the highest spending category with low CCRPI scores received only 0.5 stars, while those in the lowest spending category with CCRPI scores at 90 or above could receive 5 stars. Cyber received 3.5 stars as part of GOSA's 2016-17 FESR. More than 1,200 schools (55%) received a lower rating, and 354 other schools (16%) received the same rating as Cyber. Innovative Practices Charter schools operate with freedom from certain regulations applied to traditional public schools. This freedom can allow the charter schools to adopt innovative practices or new approaches that may lead to better student outcomes. Innovation can be implemented in various areas of education, including instruction, governance and accountability. While student outcomes are generally the ultimate goal of innovative practices, intermediate goals may include increasing the learning opportunities for students or adopting the use of creative teaching methods. Examples of Goals for Innovation in Charter Schools 1. Increase learning opportunities for all students 2. Encourage the use of different and innovative teaching methods 3. Create different innovative forms of measuring outcomes 4. Establish new forms of school accountability 5. Create new professional opportunities for teachers Source: Minnesota Association of Charter Schools Cyber has implemented practices to improve academic outcomes for its students and provide flexibility to advanced learners. Cyber uses individual and small group learner conferences to provide additional academic support to students. These sessions can focus on specific assignments or standards based on the needs of students. Cyber also offers various educational options to support advanced learners. Students taking courses in kindergarten through 9th grade can take above grade level courses through content acceleration. Cyber also offers high school students an unlimited capacity for advanced placement and dual enrollment classes without the typical limitations of transportation and space. 37 Future Goals and Plans In the 2018-19 school year, Cyber reported the use of new plans and tools to increase CCRPI scores and student performance. Cyber stated that it will increase professional development for instructors in ELA and math, decrease class sizes, provide more instructional time, and increase real-time assessments of students using data tools available to instructors for tracking student progress. Using the student performance tracking tools, instructors will determine if students are struggling with course content and respond with targeted instruction to these students to bring up test scores. Cyber is also implementing a mandatory synchronous lesson policy, meaning that students will be required to attend or login to lessons to receive live instruction. Only older and high performing students will be permitted asynchronous coursework. Cyber will implement new enrollment policies that it believes will raise its CCRPI score. For grades three through eight, the new board policies state that only 20% of students may be newly enrolled, with the exception of the sixth grade, which allows for 30% of new students to enroll. Grade nine may have 30% new enrollees, 10th grade may have 10% new enrollees, and 11th and 12th grades only 5%. In addition, the school will limit enrollments during the school year to the first four weeks of the school year. Only homeless students, siblings of existing students, as well as children of board members, faculty, and staff, may enroll after the fourth week.16 16 In compliance with the McKinney-Vento Homeless Assistance Act, homeless students will continue to be eligible to enroll in any grade throughout the school year. 38 Appendix A Georgia Cyber Academy's Educational Products and Services Agreement, 2014 - 2021 39 EDUCATIONAL PRODUCTS AND SERVICES AGREEMENT Between GEORGIA CYBER ACADEMY INC And K12 VIRTUAL SCHOOLS LLC {00036289.DOC} TABLE OF CONTENTS - EDUCATIONAL PRODUCTS AND SERVICES AGREEMENT RECITALS 1. DEFINITIONS 2 2. K12 RESPONSIBILITIES, EDUCATIONAL PRODUCTS AND SERVICES 4 3. SCHOOL RESPONSIBILITIES 6 4. FINANCIAL MATTERS 7 5. TERM OF AGREEMENT 11 6. PRICING, FEES AND PAYMENT 11 7. GRANTS AND DONATIONS 12 8. PERSONNEL SUPPORT THE PROGRAM 12 9. PAYMENT OF PRODUCT AND SERVICE FEES 14 10. RELATIONSHIP OF THE PARTIES 16 11. OTHER SCHOOLS 17 12. TERMINATION EVENTS 17 13. TERMINATION EFFECTS 19 14. INTELLECTUAL PROPERTY RIGHTS 15. LIMITS ON LIABILITY AND DAMAGES 19 ..21 16. ASSIGNMENT 21 17. INDEMNITY 21 18. INSURANCE COVERAGE 22 19. REPRESENTATIONS AND WARRANTIES 23 20. OFFICIAL NOTICES 25 21. NON-SOLICITATION/NON-HIRING .26 22. DISPUTE RESOLUTION, VENUE AND GOVERNING LAW 26 23. MISCELLANEOUS 27 24. EXHIBIT A 30 25. EXHIBIT B 38 26. EXHIBIT C 39 {00036289.DOC} EDUCATIONAL PRODUCTS AND SERVICES AGREEMENT Between the GEORGIA CYBER ACADEMY INC. And K12 VIRTUAL SCHOOLS LLC This EDUCATIONAL PRODUCTS AND SERVICES AGREEMENT ("Agreement") is made and entered into upon the exchange of good and valuable consideration by and between Georgia Cyber Academy Inc. ("School") and K12 Virtual Schools, LLC ("K12") (each a "Party" and together the "Parties") as of the date signed by both Parties, and includes the following exhibits: Exhibit A (Products and Services) Exhibit B (K12 Proprietary Marks) Exhibit C (Georgia Cyber Academy Charter) RECITALS A. WHEREAS, the mission of the School is to utilize research-based learning and technology applications, combined with teacher/student/parent involvement to provide a new, innovative model of public charter school education adapted to the needs of elementary, middle and high school students throughout the State of Georgia. B. WHEREAS, K12 and its Affiliates were established, among other things, for the following purposes: Promoting and encouraging new methods of effective education; Implementing innovative and effective instructional systems in elementary and secondary education. C. WHEREAS, K12 will provide the School with a variety of educational products and services as set forth in Exhibit A and this Agreement, in furtherance of the School s mission. These educational products and services include providing the highly regarded K12 curriculum, online school and learning management systems; teacher training, recruitment and management; financial and school administration services; customer support services; technology services for a student account system and other administrative and technology support services as specified in this {00036289.DOC}1 Agreement and the Charter as applicable to the Program; D. WHEREAS, The Parties enter this Agreement in good faith with the intention to further establish and to operate the School in accordance with federal and state law and in a manner consistent Georgia high quality charter school ( HQCS ) standards. A HQCS must meet financial reporting deadlines, carry limited debts and remain financially sustainable, operate under the guidance and standards as required by an independent governing board that operates transparently and is vested with the ability to set the annual budget, to make personnel decisions, and to retain and s guidance from an independent audit firm and attorney. E. WHEREAS, each party acknowledges that the School will perform under this Agreement in a manner consistent with the HQCS standards, and that the School therefore will be responsible for setting and carrying out the policies and procedures set by its governing Board, in accordance with Section 10.1 below, including policies and procedures regarding educational, financial, and human resources operations. NOW, THEREFORE, The Parties mutually agree as follows: 1. DEFINITIONS For the purposes of this Agreement, capitalized terms used herein but not otherwise defined shall have the meaning ascribed to them in this Section 1 as follows: 1.1 An Affiliate of K12 is an entity that controls, is controlled by, or is under common control with K12, where "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of an entity, whether through the ownership of securities, by contract or otherwise. 12 Applicable Law means all federal and Georgia state law, , including the Georgia Constitution, statutes, and administrative rules, and specifically the Georgia Charter Schools Act and Charter Schools Commission Act and the Department of Education administrative rules corresponding with these Acts; the federal Elementary and Secondary Education Act, Individuals with Disabilities Education Act, Section 504 of the Rehabilitation Act of 1973, the No Child Left Behind Act, the Family Education Rights and Privacy Act ("FERPA"), and all other federal and state statutes, ordinances and regulations, applicable to the School and/or K12. 1.3 The Authorizer of the School is the State Charter Schools Commission, the entity with legal authority to (among other things) approve charter school petitions, enter charters with approved schools, and oversee the operation of the schools it approves, including the School. 1.4 The Board means the independent body legally responsible for governing the School consistently with the terms of the Charter and Applicable Law. {00036289.DOC}2 1.5 The Charter is the contract (Exhibit C hereto) between the School and the Authorize permitting the School to operate as a public charter school and entitled to receive public funds, appropriations and other revenues. 1.6 A Change in Net Assets is the difference in any given Fiscal Year between the Program Revenues and Program Expenses. 1.6.1 A Positive Change in Net Assets means Program Revenues exceeded Program Expenses in a given Fiscal Year. 1.62 A Negative Change in Net Assets means Program Expenses exceeded Program Revenues in a given Fiscal Year. 1.7 The Facility is the administrative office owned or leased by the School. 1.8 The Fiscal Year will run July 1 through June 30. 1.9 Full-Time means students who have enrolled in at least six (6) courses in the Program. l . lONet Assets means the difference between total assets and liabilities of the Program at the end of a given Fiscal Year. 1.11.1 A Positive Net Asset Position means that total assets exceed total liabilities at the end of a Fiscal Year during the Term. 1.11.2 A Negative Net Asset Position means that total liabilities exceed total assets at the end of a Fiscal Year during the Term. 1.12 Educational Products and Services, include all products and services that K12 will provide pursuant to this Agreement (Exhibit A), such as Technology Platform and Support Services, Management Services, and Additional Services 1.13 The Program is Georgia Cyber Academy's public online educational offering, which will utilize K12 Products and Services in accordance with this Agreement. 1.14 Program Expenses are defined in Section 4 below. 1.15 Program Revenues are all income and funding generated or appropriated for and received by or on behalf of the School attributed to any Student in (or previously in) the School and include all income and funding provided for under federal and state law attributed on a per-student basis or any other basis without limitation, such as funds attributed pursuant to Title I of the Elementary and Secondary Education Act of 1965, the Individuals With Disabilities Education Act the Georgia Quality Basic Education Act, other Georgia statutory provisions under which Commission charter schools such as the School are entitled to receive funding, State Board of Education Rules (such as Start-Up and Implementation Grants), other federal and state statutes and administrative enactments and all sums {00036289.DOCJ 3 received by or on behalf of the School through contributions and competitive and noncompetitive grant processes. If and to the extent that Applicable Law at any point within the Term of this Agreement requires any portion, amount, or source of Program Revenues to be excluded from the amount paid under this Agreement for any Program Expenses, Technology Platform and Support Fees, Management Services or Management Fees, Educational Products, Pupil Recruiting, Product Related Services, or other products or services, the definition of Program Revenues to be deemed amended to comport with such Applicable Law, without changing the definition of Program Revenues for any other purpose under this Agreement, 1.16 The School is the Georgia Cyber Academy, which operates under the terms of the Charter. 1.17 A Shareholder is a holder of greater than one percent (1 %) of K12's outstanding shares of common stock. 1.18 A Special Education Student is any student with an existing Individualized Education Plan ("IEP") or for whom an IEP must be created pursuant to federal and state law. 1.19 The State is Georgia. - 1.20 A Student is any Full Time student enrolled in and/or taking any - course(s) in the Program and any student who is less than Full Time and is enrolled in and/or taking any course(s) in the Program. 1.21 Students with Disabilities include any Student who qualifies to receive special education and/or related services under the Individuals with Disabilities Education Act, 601 et seq., as amended, 20 U.S.C.A. 1400 et seq. ( IDEA ) and any Student who qualifies as a student with a disability under Section 504 of the Rehabilitation Act of 1973, 504, 29 U.S.C.A. 794, the Americans with Disabilities Act of 1990, 2 et seq., 42 U.S.C.A. 12101 et seq., or other Applicable Law but does not qualify for IDEA services 1.22 The Term includes the Initial Term and any Renewal Terms during which this Agreement is in effect. 2. K12 RESPONSIBILITIES. - 2.1 Educational Products. For each school year during the Term, K12 and Affiliates will license to the School, on a non-exclusive, non-assignable, non sublicensable basis the products and offerings, as described in Exhibit A. to include the K12 curriculum, access to its online school and designated learning management system(s) and/or available third party curriculum, instructional tools and other products and offerings (collectively the "Educational Products"). During the Term K12 and Affiliates may license to the School products (e.g., new curriculum, supplementary curriculum, and/or educational programs) in addition to those listed in Exhibit A, provided that any such agreement is in writing as an addendum to this Agreement or as agreed to by the Parties as part of the budget process or budget modification process and will be governed by the terms of this Agreement. In no event will the School be placed in a {00036289.DOC}4 Negative Net Asset Position in any Fiscal Year as the result of K12 s providing and licensing to the School additional products necessary in order for the School to meet any requirement set by Applicable Law or the Charter. 2.2 Services. For each school year during the Term, K12 and Affiliates will provide, in addition to the Educational Products and Support Services, Pupil Recruiting and Product Related Services set forth in Exhibit A, the following additional support services (collectively, "Services"): 2.2.1 Technology Platform and Support Services, as described in Exhibit A, including a student account management system and related technical support services and other educational services; 2.2.2 Management Services, as described in Exhibit A, including teacher recruiting, training and management, teacher support and reporting, enrollment services, customer care support, compliance reporting and financial and school administration services; and, 2.2.3 Additional Services. Services other than those listed in Exhibit A, as agreed to by the Parties in writing as an addendum to this Agreement and governed by the terms of this Agreement. 2.3 Place of Performance. Performance of Services is not required to be rendered at the Facility, unless specifically stated in Exhibit A or for compliance with Applicable Law or the Charter. . 2.4 Special Education Services For each student eligible under IDEA, K12 will provide the Education Products and Services provided for in this Agreement and all special education services and related services specified in the Student s Individualized Education Plan and any other plan applicable to that student. For each student who qualifies as a student with a disability under Section 504 or the Americans with Disabilities Act but is not eligible for special education services provided under IDEA, K12 will provide the Education Products and Services provided for in this Agreement and all services specified in the student s accommodations plan. In the event of a student due process complaint or any other administrative or legal challenge regarding the School's provision of services to a student with disabilities, K12 and the School will act consistently with their best efforts obligations under this Agreement to appropriately defend, litigate, and mediate or otherwise resolve the matter, and the School will be represented by the legal counsel of its choice the cost of which shall be considered a Program Expense. 2.5 Standards of K12 Performance. 2.5.1 K12 Compliance. KI2 will provide the Educational Products and Services set forth in this Agreement and any amendments hereto and any Additional Services agreed to in writing by the Parties in accordance with Applicable Law and the Charter, as well as School and Board policies made known to K12 in writing. Subject to Section 12, K12 will also comply with changes in School and Board policies within thirty (30) days of receipt of written {00036289.DOCJ 5 notice and a copy thereof. 2.5.2 Confidentiality of Records. K12 will maintain the confidentiality of Program personnel, student and other records in accordance with the requirements of Applicable Law. The School recognizes and agrees that for purposes of the Family Educational Rights and Privacy Act of 1974, 20 U.S.C. 1232g; 34 CFR Part 99 ("FERPA") and the State open records act, K12 has a legitimate educational interest for purposes of the School's disclosing a student's educational records to K12. The School will define "school officials" and "legitimate educational interest" as permitted by FERPA, broadly enough to permit K12 to provide the Educational Products and Services to the Students. 2.5.3 Licensure or Other State Requirements. Except as otherwise provided in this Agreement, all personnel performing Educational Support and Administrative Services for K12 on behalf of the School must comply with all applicable licensure or other requirements of the State and any regulations promulgated thereunder applicable to persons who perform such services. 2.5.4 Non-Discrimination. K12 prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, religion, and sexual orientation. 2.5.5 Cooperation. K12 will reasonably cooperate with the School's monitoring and oversight. K12 will timely furnish the School all documents and information necessary for the School to perform its responsibilities under this Agreement, the Charter and Applicable Law. 3 SCHOOL RESPONSIBILITIES. 3.1. Payment Rates and Terms. The School will be responsible for reviewing and approving the rates and terms of service for the Educational Products and Support Services as set forth in this Agreement, as amended in writing and signed by the Parties or as agreed to by the Parties in the budget or budget modification process. In the performance of that responsibility, the School will act in accordance with its obligation under Applicable Law and the Charter to determine independently of K12 whether fees and terms proposed by K12 are reasonable, necessary, and fair market value compensation for the Educational Products and Support Services for each Term. 3.2. Monitoring of K12. The School will be responsible for the policy management of the School overall, including educational, financial, and human resources operations. K12, in entering this Agreement does not assume any obligation that the School may have to the State, the Authorizer, or any third party. The School will monitor and oversee K12 s performance under, and compliance with the terms of, this Agreement, but the School s failure to identify any problem with K12's performance will not relieve K12 of any responsibility it bears under this Agreement. 3.3. The School will perform its obligations under this Agreement and govern itself in a manner consistent with the Charter the Authorizer's policies and Applicable Law. ( 00036289.DOCJ 6 4 FINANCIAL MATTERS. 4.1. Financial Risks Assumed by K12. K12 assumes the risks, except as otherwise set forth in this Agreement, that its fees may not allow it to operate profitably, or to fully recover the amounts due K12 in accordance with this Agreement. K12 is willing to assume these financial risks subject to the risk controls set forth in this Agreement, each of which is a material term of this Agreement. 4.2. Balanced Budget Credits. The School and K12 agree to take all reasonable steps necessary to avoid a Negative Net Asset Position for the School in each and every Fiscal Year during the Term, but in an abundance of caution want to provide a means for the School, should it end a Fiscal Year in a Negative Net Asset Position, to accept "Balanced Budget Credits" from K12 and balance its budget and have certainty regarding the terms under which it will, to the extent provided for herein, repay K12. "Balanced Budget Credits" are credits that K12 will extend to the School, under the terms stated in this Agreement that will operate to cancel out Negative Net Asset Position. If the School notifies K12, or K12 notifies the School, in writing of a potential that the School may end the Fiscal Year in a Negative Net Asset Position, K12 will provide sufficient Balanced Budget Credits to K12 invoices payable by the end of that Fiscal Year to ensure that the School does not end the Fiscal Year in a Negative Net Asset Position. 4.3. Balanced Budget Credit Reimbursement. If K12 has issued Balanced Budget Credits in prior years for which a balance remains, the School will reimburse K12 for Balanced Budget Credits balance only under the following conditions: 4.3.1 The School will reimburse K12 only in those Fiscal Year(s) that the School ends in a Positive Net Asset Position, exclusive of the Reserve Fund (described below), as evidenced by its audited financial statements conducted in accordance with Generally Accepted Accounting Principles (GAAP). Balanced Budget Credits will not be due unless and until the School is in a Positive Net Asset Position, if ever. 4.3.2 The School will reimburse K12 only the cumulative amount of previously issued Balanced Budget Credits, and no amount in excess. In other words, the total amount that the School reimburses K12 over the Term will not exceed the amount of Balance Budgets Credits that K12 issued during the Term. 4.3.3 If the School ends a Fiscal Year in a Positive Net Asset Position the amount, if any, that the School will reimburse K12 for previously-extended Balanced Budget Credits will be determined as follows. These payment conditions and terms are to ensure that the School is never put into a Negative Net Asset Position. 4.3.3.1 In no single Fiscal Year will the amount that the School reimburses K12 exceed 50% of that Fiscal Year's Positive Net Asset Position, as determined by an independent audit conducted in accordance with Generally Accepted Accounting Principles (GAAP), which will occur before the School reimburses K12. 4.3.3.2 Of the first $100,000 or less of the Positive Net Asset Position, the amount due K12 will be 25% of such amount, not to exceed $25,000. 4.3.3.3 Of the second $100,000 or less of the Positive Net Asset {00036289.DOCJ 7 Position, if any, the amount due K12 will be 50% of such amount , not to exceed $50,000. The amount due K12 will not exceed $75,000, for the first $200,000 of Positive Net Assets. 4.3.3.4 If the Positive Net Asset Position exceeds $200,000 the amount due K12 will be 75% of the amount over $200,000 plus the $75,000 noted above. 4.4 K12 will forgive any Balanced Budget Credits that remain due at the end of the Term, subject to the Termination provisions of this Agreement. 4.5 Reserve Fund. K12 and the School agree that the School will maintain a reserve ("Reserve Fund") of no less than $250,000 of Program Revenues continually each year of the Term. The Reserve Fund will be used at the School board's discretion and in good faith for expenses incurred during the Term provided, however, that the Schoolwill notify K12 in advance of each expenditure (as to amount, purpose and payee) from the fund. The Board shall not use the Reserve Fund (i) to provide any compensation or consideration directly to any employee of K12, (ii) to reimburse K12 any amount of Balanced Budget Credits or (iii) for any commitments or expenditures that continue beyond a single Fiscal Year without the prior approval of K12. 4.6 Exclusivity. K12 will be the sole provider to the School of the Educational Products and Services unless otherwise waived in writing by an authorized officer of K12. Nothing within this provision, however, should be construed to preclude the School, pursuant to its governing Board s exercise of its fiduciary obligations to the School, from procuring services and/or purchasing goods from a third party(ies), provided that the School gives K12 a thirty (30) day right of first refusal to provide such services or goods not enumerated herein; or, in the event that the Board in good faith reasonably finds that it must take action sooner in order to fulfill its fiduciary responsibilities, a right of first refusal of as long a duration as the Board can extend and still act in a timely manner consistently with its fiduciary responsibilities. 4.7 Final Program Budgets. The School will adopt an annual Program budget for each Fiscal Year during the Term and the Parties agree that K12 will present to the School s governing Board a proposed Program budget for each such Fiscal Year prior to May 1 of the prior Fiscal Year. The proposed Program budget will include assumptions provided by K12, including the number of Student Support Staff to be employed, the number of teachers to be employed and projected enrollment, funding and expenses. The Parties will work in good faith to agree in writing on a final Program budget on or before June 1. In the event the Parties cannot agree upon a final budget (by June 1) or cannot agree on any budget modification least 30 days prior to the proposed effective date of the modification) they will engage in mediation with a mutually acceptable neutral mediator and will do so with all due speed. The cost of such mediation will be shared equally by the Parties. K12 will be obligated only to issue Balanced Budget Credits, if any, up to the amount stated in the original budget proposed and agreed between the parties. 4.8 Budget Modifications. K12 may submit to the Board, or the Board may initiate, proposed modifications to the Program budget to take into account the actual Student enrollment for such school year, other changes in key assumptions or other changes as K12 deems necessary or appropriate. The Parties will work in good faith to agree in writing on modifications to the final Program budget but, in any event, the Board will act on any modifications proposed by K12 within thirty (30) days of the proposal thereof. {00036289.DOC}8 4.9 Variances from Budget. In the event that the School causes (or its designees who are not K12 employees cause) the School to incur a Negative Net Asset Position by failing to take all reasonable steps as provided for in this Section 4, including its subparts, at the conclusion of any given Fiscal Year during the Term, greater than two percent (2%) or as otherwise agreed to by K12 in the Budget or Modified Budget, then K12 reserves the right to limit the Balanced Budget Credits up to such 2% or other agreed upon variance in writing. 4.10 Advances Made by K12 to the School. If the Program Revenues available are from time to time insufficient to cover payment of Program Expenses on a timely basis, the School may in its sole discretion seek to obtain funding from other sources to cover the deficiencies but is not obligated to do so. If the School does not seek funding from other sources, or if the School tries but is unable to obtain or unsuccessful in its efforts to obtain funding from other sources to cover the deficiency, K12 will, when the payments are due, advance to the School funds sufficient to cover the amounts due for such Program Expenses on a timely basis (collectively hereinafter referred to as "Advances") on the following conditions: (i) K.12 will have no obligation to make an Advance to pay for any Program Expense the cost of which is materially in excess of the amount agreed to by K12 in the approved budget or subsequently agreed to modification thereof; (ii) K12 will have no obligation to make an Advance for any amount the School is obligated to pay K12 or its Affiliates pursuant to this Agreement (for any matters as to which K12 or any other person or entity is entitled to indemnification under this Agreement. Amounts provided by K12 for startup expenses incurred by the School prior to the start of the 2014-2015 school year will be considered Advances under this Agreement will be due and owing to K12 by the School within thirty (30) days after - the School receives Program Funding for the 2014 2015 school year sufficient to reimburse K12 for startup expenses. 4.11 Financial Reports. K12 will, upon the School's written request: (i) prepare and submit reports on the Program's finances in addition to those financial reports required by Applicable Law or the Charter, and (ii) provide such other information as reasonably necessary and appropriate to enable the Board's to monitor School and/or Program performance to the extent required by the Charter and Applicable Law, including the effectiveness and efficiency of the Program operations. All such requests will be made in writing. K12 will also provide the Board with a revenue and expenditures statement prior to each regular Board meeting, but no less often than once per month. 4.12 Program Audit. The School will select an independent auditor and K12 will work in collaboration with such auditor to have an independent audit of the Program's financial statements on an annual basis. The cost of such audit will be a Program Expense. If the School and/or K12 deems necessary and appropriate, additional independent audit(s) may be performed under this provision. The costs of such audit(s) will be a Program Expense. 4.13 Program Expenses. All debts, liabilities, and other financial obligations the School incurs directly and those that K12 incurs on behalf of the School pursuant to the terms of this Agreement for Program Expenses? Program expenses will be determined in accordance with the budget process and will be paid out of the Program Revenues. The Program Expenses will include, but are not limited to, the following: 4.13.1 teacher salaries, benefits, computers and peripherals, software , travel (as required per student instruction) and all other reimbursable expenses per approved School policies { 00036289.DOQ 9 4.13.2 training and professional development for members of the School s governing Board, teachers, counselors, and administrators, including course/conference fees, facility rental (as necessary) and travel and all other reimbursable expenses per approved School policies; 4.13.3 offices for administrative staff, related business travel phone, internet service and other routine business expenses and all other reimbursable expenses per approved School policies; 4.13.4 Student Support Staff (defined in Section 8.9 below) teacher salaries, benefits, computers and peripherals, software, travel (as required per student instruction) and all other reimbursable expenses per approved School policies; 4.13.5 special education services and related services for each Student eligible under IDEA, as specified in the Student's Individualized Education Plan and any other plan applicable to that Student: 4.13.6 services and accommodations provided for all in the accommodations plan of each Student who qualifies as a student with a disability under Section 504 or the Americans with Disabilities Act; 4.13.7 related services expenses for Special Education Students; - 4.13.8 internet service provider subsidy for Full Time Students who request and qualify for a Free and Reduced Lunch under the National School Lunch Program (on a one subsidy per family basis), and to Program teachers and Program administrators consistent with approved School policies; 4.13.9 computers and related expenses that may be provided upon request to Full Time Students who qualify for a Free and Reduced Lunch under the National School Lunch Program; 4.13.10 proctored examinations, proctor payments, student test preparation, facilities, cost of exam administration and travel (as required) and all other reimbursable expenses per approved School policies; - 4.13.11 school outings, events, achievement incentive programs, face-to face learning coach training sessions, back to school events, competitions, graduation ceremonies and travel (as required) and all other reimbursable expenses per approved School policies; 4.13.12direct mail, printing and related expenses for enrolled Students; 4.13.13 fees and amounts billed by K12 and amounts due to K12 and its Affiliates, including interest on Advances and past due amounts; 4.13.14 reasonable legal fees as determined by the School by way of its governing board for representation of the School and/or its board, by the legal counsel of its choice other than legal fees and other costs related to litigation in which the School is adverse to K12; 4.13.15 insurance including directors' and officers' liability insurance, {00036289.DOC}10 general liability insurance, worker's compensation coverage and other Program insurance coverage, as appropriate; 4.13.16 accounting and reporting not provided by K12 payroll processing, audit, and/or tax preparation fees directly associated with the Program; supplemental curriculum and other academic services as agreed to by K.12 in writing; use, sales, excise, value-added, income, property or other taxes, if any; fees for required background investigations of School employees; 4.13.17 office and governing Board meeting expenses such as rent, maintenance, office, furniture, supplies, computers, servers, learning and tutoring center supplies and all other Program Expenses approved in the budget, provided that any Program Expenses that the School knows or reasonably should have known will exceed the approved budget or budget modifications by two percent (2%) or more must be approved in writing by K12. 5 TERM OF AGREEMENT. 5.1. Term. This Agreement will become effective, provided it is fully executed by the Parties, on July 1, 2014 ("Effective Date"), and will terminate on June 30, 2021 ("Initial Term") unless sooner terminated under Section 12 of this Agreement, including, but not limited to, Section 12.3 in the event that the Authorizer provides written notice that it has terminated, revoked, or non-renewed the Charter. In the event the Authorizer and/or the Charter changes, this Agreement will automatically survive and be performed in accordance with the new Authorizer's regulations and/or the new Charter unless this Agreement is otherwise terminated in accordance with Section 12 herein. Notwithstanding the forgoing, this Agreement shall not become effective on the Effective Date if the Authorizer has not granted the Charter to the School on or before the Effective Date. 5.2. Renewal. Following the Initial Term, this Agreement will automatically extend for any period of Charter reauthorization or renewal (each such period a "Renewal term") unless (a) either Party provides the other with written notice of non-renewal at least eighteen (18) months before the expiration of the then-current Initial term or Renewal Term (as - applicable) or (b) the Agreement is sooner terminated under Section 12. 6 PRICING. FEES AND PAYMENT 6.1. Educational Product and Support Services Prices. In consideration of the value of the Educational Products and Support Services provided by K12 as specified in detail in Exhibit A, the School will pay K12 and its Affiliates for the Educational Products in the then current national K12 Managed Virtual School Price List ( Product Price List ) paid by similarly situated schools, and provided separately by K12 to the School s governing Board at least 30 da\ s prior to the annual budget process or an \ budget modification process that may occur in any f iscal Year, and for the Educational Support Services specified in Exhibit A. Each fiscal year at least 30 days prior to the annual budget process or an \ budget modification process that may occur, K.12 will provide the School s governing Board for review the Product Price List and will notify the School in writing of any revision to the Product Price List that it has implemented for similarly situated schools. The Product Price List will be subject to change no more than once annually and will be provided to the School for its review. {00036289.DOC}11 6.2 Technology Platform and Support Services Fee. In consideration of the value of the Technology Platform and Support Services provided by K12 as specified in detail in Exhibit A, the School agrees to pay K12 and its Affiliates seven percent (7%) of the Program Revenues for the Technology Services (the "Technology Platform and Support Fee") each Fiscal Year of the Agreement. 6.3 Management Services Fee. In consideration of the value of the Management Services provided by K12, as specified in Exhibit A, the School agrees to pay K12 and its Affiliates eight percent (8%) of the Program Revenues each Fiscal Year of the Agreement Management Services Fee"). The Management Fee reflected herein will remain firm throughout the Term of the Agreement. 6.4 State Charter School Commission Fee. K12 agrees that the administrative fee payable to the Commission as set forth in the Charter will be included in the School's annual budget. 6.5 Priority of Payments. Payments from the Program Revenues will be paid in the following order of priority: (1) State Charter School Commission Fee. (2) Program Expenses identified in Section 4.12 above to include all Program teacher salaries and fees for Educational Products and Support Services; (3) Technology Platform and Support Services Fees and Management Services Fees payable to K12 and its Affiliates, including any fees for administrative, technology or educational support products and services purchased by the School in addition to those enumerated in Exhibit A; and, (4) Balanced Budget Credits and Advances, if any. 7. GRANTS AND DONATIONS. The School and K12 may, together or independently, on behalf of the Program, solicit and receive grants and donations from public funds through competitive or noncompetitive processes, and private sources consistent with the Program's objectives and the Charter; provided, however, that any solicitation of such grants and donations by K12 will be subject to the approval of the School. Such grants and donations will be deemed to be included in Program Revenues but not included in determining the Technology Platform and Support Fee or the Management Fee. Nothing in this Agreement will be construed to prohibit either Party from soliciting funds or grants solely for non-Program related purposes and using such funds or grants solely for such purposes. 8. PERSONNEL SUPPORTING THE PROGRAM. 8.1. K.12 Staff Assigned to the Program. To satisfy its obligations under this Agreement, K12 may assign personnel to the Facility or other locations as it deems necessary to carry out the Program. The School, per its governing Board s exercise of independent judgment consistent with its fiduciary responsibilities, hereby entrusts K.12 with the authority to select, sstuapfef,rvoisffei,ceevapleurastoen, nteral nasfnedr* promote, discipline and any other personnel as dismiss the teaching staff, teaching support appropriate and necessary to deliver the Educational Products and Services described in this Agreement. Such personnel may be assigned to the Program on a full or part-time basis. 8.2 Head of School ("HOS"). Matt Arkin will serve as the initial HOS. In the event of a vacancy in the position of HOS, K12 will advertise the HOS position and be responsible for the initial vetting and interviewing of candidates. The School through the {00036289.DOC}12 governing Board will designate any of those candidates, or any other person, to be interviewed by K12. K12 will recommend a candidate from among the persons interviewed, and the School s governing Board will interview that candidate and vote on whether to approve the candidate for hiring as HOS no later than the next regularly scheduled meeting after receipt of K12's recommendation. K12 will not offer the position to any candidate before receiving the approval, in writing, of the School s governing Board. K12 will have sole authority to set the salary and other terms of employment for the HOS, subject to the School's authority to approve the budget. The process for appointment of a HOS is intended to be accomplished in good faith and through collaboration by both parties. 8.3 Poor Performance by K 12 Staff. The HOS will inform the School (by way of directly contacting the Schools' governing board) of any discipline or termination of a K12 staff member assigned to the Program if the matter, in the HOS's reasonable judgment, merits Board attention. If the School's governing board is dissatisfied or concerned about the job performance of a K12 staff member assigned to the Program, the School's governing board shall discuss the matter first with the HOS or its equivalent. In the event the Board is not satisfied with the HOS's job performance, the Board will provide K12 written notice pursuant to this Agreement and set forth the specific issues and requested action, with supporting documentation if available and K12 shall review and respond within five (5) business days. If K12 and the School do not agree on the appropriate course of action within ten business days of K12's response, the School's governing Board will have the authority to act as it deems appropriate and consistent with the School's obligations under the Charter, including directing K12 to remove the HOS from their position at GCA at such time as the School has deemed appropriate, or take action that K12 alone is authorized to take as the employer of the HOS, up to and including discharging the HOS, in which case the provisions of Section 8.2 above will apply. 8.4. Employment of Teachers. Unless otherwise mutually agreed in writing, the Program teachers will be employed by K12 and all costs associated with teacher employment (including, without limitation, salaries, benefits, professional development and other Program related reimbursable expenses) will be a Program Expense. K12 will recruit, supervise, direct, train and discipline teachers, including master and lead teachers, to assist in the delivery of the Educational Products and Services. Teachers may work on a full- or part-time basis. Each teacher must be qualified in his or her grade level(s) and subjects), must meet all legal requirements for teachers in Georgia, and must have applied for or completed a criminal background check and unprofessional conduct check to the extent required by Applicable Law. 8.5. Teacher Discipline. K12 will be empowered to formulate and implement binding decisions on disciplinary matters pertaining to teachers. - 8.6. Student Teacher Ratios. K12 will make recommendations to the School's governing board for an appropriate ratio of teachers to pupils for the Program to ensure academic performance, including high school, subject to the terms and conditions of the Charter and/or Applicable Law. The School's governing board will not unreasonably withhold its consent to recommendations that are consistent with the terms and conditions of the Charter and Applicable Law. 8.7. Teacher Contract Renewals. Notwithstanding anything to the contrary herein, each year during the Term (except for the initial year) before any teacher contracts are extended for the following school year, K.12, in collaboration with the School's governing board, {00036289.DOC} 13 - will determine the maximum number of the then current Program teachers to return and the number of new teachers to be hired in the next Fiscal Year. K12 will determine which teachers should return and who will be retained or offered contracts for the upcoming school year. Such determination will be based on criteria including but not limited to: teacher performance, forecasted enrollments, funding, and Educational Products and Services to be offered. 8.8 New Teacher Hires. As part of the budgeting process the Parties will also agree on the number of new teachers to be hired based upon factors including, but not limited to, enrollment and funding. As enrollment for the upcoming Fiscal Year becomes more certain, the number of agreed teachers to be hired may be amended. 8.9. Student Support Staff. K12 will employ Student Support Staff for the Program. The School will be responsible for all costs associated with the employment of such staff (including, without limitation, salaries, benefits, travel and other Program related expenses) and all such costs will be Program Expenses. Student Support Staff is defined as any position that provides direct services to teachers, students and parents (which may include Special Education Coordinators, Registrar, Guidance Counselor, Nurse, Community Relations Coordinator, Truancy Officer, Related Services Coordinator, or similar positions). K12, in consultation with the Board, will recruit, set the terms of employment, hire, supervise, discipline and terminate Student Support Staff. 8.10. . Determination of Employer Entity The Parties anticipate that, except as otherwise required by Applicable Law or to the extent necessary for the School to maintain its status as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986 as amended ("IRC"), the HOS, teaching staff and other administrative personnel provided by K12 pursuant to this Agreement will be provided by K12. In the event that K12 determines that it is necessary or desirable that any of the K12 staff members providing services under this Agreement become an employee of the School (for example, due to a change in functional duties to a Student Support Staff position), K12 will notify the Board of such determination in writing and upon the written agreement of the Board, such K12 staff member will become an employee of the School; such change will become effective on the date specified by K12 in such notice. In the event that at any time or from time to time K12 determines that it is necessary or desirable that any of the School's staff members to become an employee of K12 because, for example, of a change in the employee's functional duties to an administrative position, K12 will notify the Board of such determination in writing and upon the written agreement of the Board such School employee will become an employee of K12; such change will become effective on the date specified by K12 in such notice. 8.11. Retirement Benefits. To the extent required by Applicable Law, qualified staff members will participate in the Georgia Teachers Retirement System and K12 will, pursuant to TRS, make the statutorily required employer contributions. 8.12. Background Checks/Investigations and Qualifications. Each person who works at the School, provides services to the School, or is assigned to the Program or reasonably expected to have contact with an enrolled Student(s) will be subject to both a criminal background check and unprofessional conduct search as a condition of hiring or accepting services from any person who works at the School, is assigned to the Program, or is reasonably expected to have contact with any Student(s). Upon the School's written request, K12 will provide the School with documentary evidence of the results of such screenings performed regarding K12 employees. Upon K12 s written request, the School will provide K12 with documentary evidence of the results of such screenings performed regarding School employees. 9. PAYMENT OF PRODUCT AND SERVICE FEES. {00036289.DOC}14 9.1. Payment Out of School Funds Managed by K12. The School authorizes K12 to pay itself the fees set forth in this Agreement, upon receiving approval from the School s governing board and as set forth in the School's expenditure authorization policy (as approved by the Board annually). 9.2. Invoicing and Payment of Fees. K12 will submit to the School a detailed invoice for the Educational Products and Support Services delivered for the prior calendar month. For any fees calculated as a percentage of Program Revenue, such fees will be calculated based upon the approved budget or approved budget modification in effect for the applicable calendar month and will be billed as services rendered on a monthly basis during the Term even though Program Revenue may be received by the School beyond the expiration of the Term. 9.3. Location of Payment. All payments made hereunder will be made to K12 or its applicable Affiliate, and at the address set forth above, or such other address provided by K12 in writing. 9.4. Payment Date and Interest. All invoices payable to K12 and its Affiliates are due within thirty (30) days from the invoice date. K12 will pay itself fees pursuant to each invoice within thirty (30) days from the invoice date, and no interest will accrue on any invoiced amount not paid within thirty (30) days due solely to K12 s failing to take the action necessary to - pay timely. In the event the School is at fault for late payment, interest will accrue on any unpaid invoice balance at one and one quarter percent (1.25%) per month but not to exceed fifteen percent (15%) per annum on each overdue amount. Advances will be reimbursed no later than thirty (30) days from the date on which the School receives Program Revenues sufficient to pay the invoice unless otherwise agreed in writing by both Parties. The School will pay interest on the overdue Advance at a rate of prime plus two (2%), not to exceed fifteen (15%) per annum. 9.5. Taxes. Except as otherwise stated herein, K12 is not responsible for any - taxes or third party charges related to the activities, ownership or operation of the Program. Without limiting the foregoing, the fees for the Educational Products and Support Services set - forth herein are exclusive of sales, use, property, excise, value added, or other similar taxes. The School agrees to pay any sales, use, property, excise, value-added, or other similar taxes, if any, imposed by Applicable Law, and except for taxes based on K12's income or value and will be paid from Program Revenues and included in the annual budget. - 9.6. Year End Adjustments. Within thirty (30) days after completion of the School's audited financial statements for each Fiscal Year, K12 will prepare and submit to the the School's governing board a statement of the total amounts of the Support Services , Technology Platform and Support Services and Management Services or other Service fees set forth in this Agreement (collectively "Service Fees") payable with respect to such Fiscal Year, including the calculation of such amounts (which calculations will be based upon the School's audited financial statements for such Fiscal Year on an accrual basis in accordance with Generally Accepted Accounting Principles). If the total amount of the Service Fees calculated in accordance with the foregoing sentence exceeds the total amount invoiced by K12 pursuant to Section 9.2, then the excess amount will be payable to K12 from the Program Revenues; if such total amount is less than the total amount invoiced by K12 pursuant to Section 9.2, then the shortfall amount will be {00036289.DOC}15 payable to the School. Payment of any such amount payable to K12 will be due thirty (30) days after the submission of the statement thereof. If at that time the School has insufficient Program Revenues to pay the amount due, payment to K12 will be due within thirty (30) days of the School s receipt of Program Revenues sufficient to pay the amount due.. Reimbursement of any such amount payable to the School, will be paid directly to the Governing Board c/o its Chair, with a copy to the HOS, and due thirty (30) days after K12 or the School in writing notifies the other of the amount of overpayment, provided, that each party may elect in its discretion to set-off the amount any such overpayment or underpayment against any outstanding obligations of the other party or any Affiliate of K12. 9.7 Disputed Amounts. If the School disputes any charge invoiced by K12 ("Disputed Amounts"), the School (or its authorized designee) must submit in writing a reasonably detailed description of the nature of the dispute, along with the Disputed Amount with documentation reasonably necessary to support the claim regarding the Disputed Amount - no later than ninety (90) days after the School s receipt of the then current Fiscal Year audit results. 10. RELATIONSHIP OF THE PARTIES. 10.1. Policy Management and Collaboration. The Parties acknowledge and agree that in providing the Services, it shall be the responsibility of K12 to recommend various policies for the operation of the Program and will implement procedures consistent with those policies, but that the School retains ultimate responsibility for adopting policies and for overseeing K12's implementation and K12 will cooperate with such oversight. K12 and the School will work collaboratively on the creation of School policies that may include, but are not limited to, policies relating to the budget, authorization of expenditures, curriculum, admissions procedures, student conduct, school calendars, procedures for resolution of parent or student complaints and disputes between School employees, and the responsible use of computer equipment and other instructional property. The School shall provide K12 written copies of all policies adopted and must promptly notify K12 in writing of any changes to such policies. 102. Status of the Parties and Relationship between the Board, the School, and K12. The School and K12 are the Parties to this Agreement. The Board is not a Party to this Agreement. No individual member of the Board is party to this Agreement. K12 is not a division or other part of the School. The School is an independent legal entity authorized under State law, and is not a division or a part of K12. The relationship between the Parties was developed and entered - into through arms length negotiations and is based solely on the terms of this Agreement. Nothing herein will be construed to create an employer-employee relationship, a partnership or a joint venture relationship by or between the School and K12. Neither Party will be the agent of the other except to the extent otherwise specifically provided for in this Agreement where K12 is authorized to take action on behalf of the School. Neither Party will represent to third parties, and will whenever needed disclaim to such parties, any ability to bind the other to any debt or duty imposed by contract or otherwise, other than as provided for in this Agreement or as otherwise agreed in writing by K12. Except as otherwise set forth in this Agreement, should a Party in violation of this provision purport to bind the other to a debt or other obligation, the violating Party will indemnify the other Party in full for any cost, expense or other form of liability incurred as a result of the violation. 10.3. Board's Role. The Board is the governing body of the School. Neither the Board nor any individual member of the Board assumes any liability under this Agreement nor is {00036289.DOC}16 the Board a third party beneficiary of this Agreement 10.4 No Related Parties or Common Control; Certain Permitted Participations. Nothing in this Agreement is intended to supplant the Board's authority or interfere with the Board in its governance of the School pursuant to the Charter. Except as contemplated by this Agreement (or any agreement between the Board and any Affiliate with respect to the provision of services described hereunder) K12 will not have any role or relationship with the Board that expressly or in effect limits the Board's ability to exercise its rights, including termination rights, under this Agreement or its ability to govern the School. No director, trustee, member, manager, officer, Shareholder, or employee of K12 will be a member of the Board, but the HOS - will serve in an advisory ex officio role in relation to the Board at its request and in its sole discretion. None of the Board's voting power will be vested in K12 or its directors, trustees, members, managers, officers, Shareholders, or employees, and none of the voting power of K12's board of directors or Shareholders of K12 will be vested in the Board or its directors, trustees, members, managers, officers, Shareholders, or employees. Each Party agrees that it will not take any action that would cause the Board and K12 to be members of the same control group, as defined in Section 1.150 et seq. of the regulations under the IRC, or related persons, as defined in Section 144(a)(3) of the IRC. The Board agrees to take such action as is necessary to permit employees or agents of K12 to attend executive sessions when the Board determines, at the Board's sole discretion, that such attendance is necessary and in keeping with the Board s duties and not reasonably likely to cause waiver of any attorney-client or other privilege or confidentiality otherwise applicable to executive sessions. 11. OTHER SCHOOLS. The Parties acknowledge that K12 and its Affiliates will have the right to render similar services to other persons or entities including other public or private schools or institutions within and outside of the State ("Other Schools"). K12 will maintain separate accounts for reimbursable expenses incurred on behalf of the School and Other Schools, if any. All grants or donations received by School, or by K12 for the specific benefit of School, will be maintained in separate accounts and used solely for the Program. The Parties acknowledge further that K12 and its Affiliates rendered services, prior to the Effective Date of this Agreement, to the school identified in the Georgia Department of Education records as Georgia Cyber Academy (Program of Odyssey School) that is a separate entity and unrelated under Georgia law to the School, that serves grades k-12, and that is governed by a board separate and distinct from the School s governing Board. K.12 will maintain the School and Georgia Cyber Academy (Program of Odyssey School) entirely separately and without intermingling the two schools' funding, accounts, policies, or records (to the extent possible) of any kind. 12. TERMINATION EVENTS. 12.1 Termination for Cause. The Parties will use good faith efforts to resolve all disputes relating to this Agreement as set forth in Section 22; however, either Party may terminate this Agreement at any time with ninety (90) days' prior written notice to the other Party for cause. Termination for cause will mean the breach of any material term or failure to fulfill any material condition, term, provision, representation, warranty, covenant or obligation contained in this Agreement, and a failure to cure such a breach within forty-five (45) days after receiving written notification from the terminating Party. Upon termination of this Agreement, the non-breaching Party shall be entitled to seek any remedies for which it would be entitled at {00036289.DOC}17 law or in equity. 122 Termination for Material Reduction in Program Revenue. K12 may terminate this Agreement in the event there is a material reduction in Program Revenue of more than 10 financial risk tpoeKrc1e2ntinbeplroowvidthinegamthoeuEndtufocarttihoenaplriPorroFdiuscctaslaYnedaSruthpaptowrtiSllemrvaitceersia. lKly1i2nwcrielal se the notify the Board of its intent to terminate under this provision and provide the Board ninety (90) days notice so that the Parties may work together to find alternative funding or other means to offset the reduction in Program Revenue. If the Parties are unable to find additional revenue or - other means in that ninety (90) day time frame, K12 may terminate this Agreement and such termination will be effective: (i) immediately upon written notice by K12 to the Board, if notice or publication of such reduction is given at least ninety days (90) prior to the commencement of the school year to which such reduction is applicable; or (ii) at the end of the school year upon written notice to the Board if notice or publication of such reduction is given during the school year to which such reduction is applicable. In the event K12 elects not to terminate this Agreement in accordance with this provision, K12 may in good faith reasonably revise and determine the level of products and services to be provided in accordance with Applicable Law, considering any such funding reduction. 123 Termination upon Loss of Program Approval or Charter. This Agreement - may be terminated immediately by either Party upon written notice to the other Party: (i) if the Authorizer provides written notice that it has terminated, revoked, or non renewed the Charter, or (iii) upon a final adverse determination by the highest court in the State that the Program is no longer valid under Applicable Law. K12 acknowledges that, in the unlikely event that the highest Court of the State takes action that causes the Charter to terminate or dissolve, the School will lack the authority and the ability to fulfill this Agreement and that its failure to fulfill its obligations under this Agreement in those circumstances will not constitute a breach of this Agreement. 12.4 Termination in the Event of Certain Changes in the Charter or School Policies. K12 may terminate this Agreement effective upon 90 days prior written notice to the School s governing board in the event that the Charter is amended or the Board or Authorizer adopts or amends a policy without the prior written approval of K12, and the effect of such amendment or policy could reasonably be determined to require K12 to increase materially the level of services required to be provided hereunder or to increase materially the financial risk to K12 arising from its performance of its obligations hereunder, thus rendering K12's performance economically unviable as determined in good faith by K12. In the event the Board or Authorizer adopts such an adverse policy while a school year is in process, K12 agrees to use its best efforts to complete the then current school year without waiving any rights and remedies hereunder. 12.5 Change in Applicable Law. If any change in Applicable Law enacted after the Effective Date could reasonably be expected to have a material adverse effect on the ability of either Party to carry out its obligations under this Agreement, such Party, upon written notice to the other Party (which notice may be given at any time following enactment of such change in Applicable Law, whether or not such change is effective on the date of such enactment or is effective at a later date), may request renegotiation of this Agreement. Such renegotiation will be undertaken in good faith. If the Parties are unable to renegotiate and agree upon revised terms within one hundred twenty (120) days after such notice of renegotiation, then this Agreement will be terminated effective at the end of the school year in which such notice was given, unless {00036289.DOC}18 earlier termination is necessary to protect the health, welfare, or safety of students. 13. TERMINATION EFFECTS. 13.1 Payments Due. Except as otherwise agreed by the Parties in writing, termination does not relieve the School of any obligations for payments due to K12 as of the date of termination. The School will owe K12 for products and services delivered through the date of termination but K12 will not be entitled to accelerate any payments that would be due under the Agreement but for termination, and the School will not be obligated pay any such payments. 132 Balanced Budget Credits . Outstanding In the event this Agreement expires or is terminated pursuant to Section 12, the School will fully exhaust its Net Assets in order to reimburse K12 for balanced budget credits outstanding up the amount of Net Assets available. If any Balanced Budget Credits remain after the Net Assets are fully exhausted, K12 will forgive the remaining Balanced Budget Credits. 133 Property. Upon termination or expiration of this Agreement, K12 will have the right to remove its equipment and all other property that may be in the School's possession. In contrast, the School will retain possession of equipment and other property that the School owns or leases from third parties. 13.4 Transition. For a fee acceptable to K12 and the School s governing Board and upon terms and conditions set forth in writing and signed by the Parties, K12 will assist the School for a period not to exceed 120 days following the effective date of termination of this Agreement, with the School's transition to another educational program or administrative services arrangement, to the extent that such transition is permitted by this Agreement. 133 Fees Owed. In the event this Agreement terminates as provided herein, or it expires pursuant to its terms, and unless otherwise agreed by the Parties in writing, the School will pay for all products and services actually rendered to it through the end of the then current Fiscal Year, including any fees due to K12 in accordance with the terms of this Agreement. Provided however, that if termination occurs prior to the end of the then current Fiscal Year, the payment of all such products, services and fees due K12 will be determined on an accrual basis in accordance with GAAP per the schools audited financial statement . 14. INTELLECTUAL PROPERTY RIGHTS. 14.1. Authority to Sublicense. The School acknowledges and agrees that K12 has the right to sublicense from its Affiliates to the School certain intellectual property rights and interests in and to K12 and its Affiliate's (and respective licensor's) intellectual property, - including but not limited to curriculum, trade secrets, know how, proprietary data, documents and written materials in any format, artwork, graphics, charts, software, licenses, marketing materials, website design and domain numbers and names for K12, its Affiliates and the Program, the Program name and website design(s) and other materials created for the Program, and curricular materials and any and all customization and derivative works thereof (collectively, "K12 Proprietary Materials"). The School further acknowledges and agrees that: (i) it has no intellectual property interest or claims in the K12 Proprietary Materials or any customization and {00036289.DOC}19 derivative works thereof or any other materials created for use in connection with the K12 Proprietary Materials, (ii) it has no right to use the K12 Proprietary Materials unless expressly agreed to in writing by K12, and (iii) K12 and its Affiliates (and respective licensors as the case may be) own all intellectual property rights in and to the K12 Proprietary Materials. - 14.2 Sub License of K 12 Proprietary Materials. K12 hereby grants the School a royalty-free, - nonexclusive, non-transferable sub license, during the Term and for a period of thirty (30) days following the expiration or earlier termination of this Agreement, to use and distribute the K12 Proprietary Materials solely in connection with the Program operations as contemplated in this Agreement. Notwithstanding the foregoing, the School will not: (i) modify or otherwise create, or permit third parties to modify or otherwise create, derivative works from or using the K12 Proprietary Materials, (ii) sublicense any rights under this Agreement without the advance written approval of K12, which approval may be withheld by K12 in its sole discretion, or (iii) frame any website owned by K12. Upon the termination of such license, the School will cease use of the K12 Proprietary Materials, and will return all KI2 Proprietary Materials to K12 promptly, including those in the possession of the Board, any teachers and School employees participating in the Program, and students participating in the Program. 143. Rights of K12 in K12 Proprietary Marks. The School acknowledges and agrees that, as between the School and K12, K12 only has the right to sublicense certain intellectual property rights and interests in and to K12 and its Affiliate's trademarks, service marks, and trade names (including K12, K12 (& Design), trade names, trade dress, program name, and the logo names and design(s) for the Program as well as those featured in Exhibit B (collectively, "K12 Proprietary Marks"). Hie School further acknowledges and agrees that it has no intellectual property interest or claims in the K12 Proprietary Marks or any customization and derivative works thereof or any other materials created for use in connection with die K12 Proprietary Marks and has no right to use the K12 Proprietary agreed to in Marks writing except in the in advance by limited capacity as set forth in K12, which agreement K12 may Section 14.4 or unless expressly withhold in its sole discretion. - . 14.4. Sub License of K12 Proprietary Marks K12 hereby grants the School a royalty- free, non-exclusive, non-transferable sublicense, during the Term and for a period of thirty (30) days following the expiration or earlier termination of this Agreement, to use the K12 Proprietary Marks relating to the Program solely in connection with the operations of Program as contemplated in this Agreement. Notwithstanding the foregoing, the School will not be permitted to sublicense any rights under this Agreement without the advance written approval of K12, which approval may be withheld by K12 in its sole discretion. Upon the termination of such license, the School will cease use of the K12 Proprietary Marks. 14.5. Limitations on Use of K12 Proprietary Materials and K12 Proprietary Marks by School. The School will use the K12 Proprietary Materials and the K12 Proprietary Marks only as provided in this Agreement. Notwithstanding the foregoing license rights, the School also agrees not to not alter, copy, disassemble, reverse engineer or modify the K12 Proprietary Materials and/or the K12 Proprietary Marks in any way, nor will the School act or permit action in any way that would impair the rights of K12 in them. The School's authorized use will not create any right, title, or interest in or to the K12 Proprietary Materials or the K12 Proprietary Marks any customizations and derivative works thereof or any other materials created for use in connection with the foregoing. K12 will have the right to monitor the quality of the School's use of the K12 Proprietary Materials and the K12 Proprietary Marks, and the School will notify K12 promptly in writing of any known infringement thereof and of any use of K12's Intellectual Property (including the K12 Proprietary Materials, and/or the {00036289.DOCJ 20 K12 Proprietary Marks) by an unauthorized party, other than set forth or contemplated by this Agreement, of which the School becomes aware. K.12 and the School agree to reasonably assist each other in pursuing measures to prevent further use of K12's Intellectual Property by said unauthorized party. Any references to or use of the K12 Proprietary Materials or the K12 Proprietary Marks by the School will contain the appropriate trademark, copyright or other legal notice provided from time to time by K12 and will be subject to additional trademark usage standards developed by K12 and modified from time to time by K12 with advance notice in writing. 14.6. Publicitv/Press Release. K12 may use the School's name and refer to the School s Program by name in a listing of new, representative or continuing schools in press releases, on its website, or in other marketing materials or dissemination of non-disparaging information. The Parties may agree to cooperate in joint marketing activities or in issuing a joint press release at the request of either of them, subject to prior written consent and approval of the form and substance of both the School and K12. 15. LIMITS ON LIABILITY AND DAMAGES. 15.1. Incidents and Maximum Liability. Each Party's maximum liability and obligation to the other for any cause whatsoever, including any claim in contract or in tort, relating to this Agreement will be limited to the extent of coverage in fact provided by insurers under the liable Party's insurance, which is required under this Agreement, and the recovery will be limited to the amount of actual direct damages paid by the insurer. 152. Specifically Excluded Damages. Neither Party will be liable for any damages other than those provided for provided for in Section 15.1 of this Agreement. Neither Party will be liable for any indirect, exemplary, punitive, special, incidental or consequential damages including, without limitation, any lost savings, lost profits, lost sales, business interruptions, delay damages, damages for third-party claims, or lost or destroyed data, even if - that Party has been advised of the possibility of such damages. Neither occasional short term interruptions of service or products, which are reasonable under comparable industry standards, nor interruptions of service or products resulting from events or circumstances beyond K12's reasonable control will be cause for any liability or claim against K12 under this Agreement, nor will any such occasion render K12 in breach of this agreement. 16. ASSIGNMENT. Except as otherwise provided in this Agreement, neither Party may assign or delegate any rights or obligations under this Agreement without the prior written consent of the other Party. Except as prohibited by Applicable Law, K12 may assign all of its rights and obligations under this Agreement to any Affiliate. K12 may delegate the performance of its duties hereunder to any person or entity but K12 shall be responsible for the performance, in accordance with the terms of this Agreement, of any services performed by its delegates. 17. INDEMNITY. 17.1 Indemnification. To the extent not prohibited by the Charter or Applicable Law, each Party to this Agreement will, as the "Indemnifying Party," indemnify, defend, and hold the other Party, as the "Indemnified Party," harmless from and against any and all claims, demands, suits, or other forms of liability (including without limitation costs and reasonable attorneys' fees) that may arise out of, or by reason of (a) the Indemnifying Party's breach of any {00036289.DOC}21 expressed representation or warranty, covenant or other obligation set forth in this Agreement, (b) the Indemnifying Party's noncompliance with any Applicable Law in connection with the School's operations, but excluding any Claims that arise from conduct undertaken in accordance with the Commission's or the School's instructions or written policies, except where such instructions arise from and are in accordance with the specific advice or recommendations provided by K12 (c) the Indemnifying Party's negligence, or (d) any action taken or not taken by the Indemnifying Party with respect to this Agreement, that results in death, injury or loss to person or property, except to the extent that such Claims arise out of actions or omissions of the Indemnified Party. The Parties jointly may purchase general liability and property policies, or by such other means achieve the indemnification required, as the parties agree. Nothing in this subsection or elsewhere in this Agreement will preclude the School or the Board from asserting or declining to assert a claim of governmental immunity. 172 Notice Requirement. The Indemnified Party must give written notice to the Indemnifying Party of the existence of a threatened or asserted claim promptly after such Indemnified Party first receives notice of the existence of the threatened or asserted Claim, provided that such Indemnified Party will not be foreclosed from seeking indemnification hereunder by any failure to provide such prompt notice except and only to the extent the Indemnified Party actually incurs an incremental expense or otherwise has been materially prejudiced as a result of the Indemnified Party's delay. 17.3 Defense and Settlement of Claims. The Indemnifying Party will - bear the cost of the Indemnified Party s defense-of any such third party action as described above. The Indemnified Party will be represented by counsel of its choice who will conduct the defense of such Claim. Except with the prior written consent of the Indemnified Party, the Indemnifying Party will not consent to entry of any judgment or enter into any settlement on behalf of the Indemnified Party. In the event that any Indemnified Party seeking indemnification hereunder has been advised by its counsel that the suck-indemnified Party and the Indemnifying Party may-have available to it have the same defenses and/or counterclaims available to them in response to the Claim, such that there is no conflict of interest to prevent any one attorney or law firm from representing the Indemnified Party and the Indemnifying Party with respect to the Claim, the Indemnifying Party will have the right to take over and assume control over the defense of such claim at the sole cost of the Indemnifying Party, provided that if such Indemnifying-Party does so take over and assume control, such Indemnifying Party will not settle such claim without the written consent of the Indemnified Party. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party seeking indemnification hereunder will have the right to defend against such Claim, provided that such Indemnified Party will not settle such Claim without the written consent of the Indemnifying Party. In any event, any Indemnified Party seeking indemnification hereunder and the Indemnifying Party will cooperate in the defense of any claim subject to this Section 17. 18. INSURANCE COVERAGE. 18.1. Liability Coverage. Within thirty (30) days after the Effective Date of this Agreement, each Party will initiate and will maintain for the Term of this Agreement, including any extensions of the Term, and for a period of two (2) years after the expiration or termination of this Agreement, comprehensive general liability insurance, including product liability, {00036289.DOCJ 22 contractual liability (applicable to the indemnification obligations of the Parties set forth in Section 17, and advertising injury insurance, with reputable and financially secure insurance carriers for not less than $5,000,000 (combined single limit for bodily injury and property damage per occurrence and in the aggregate). Each Party's insurance (excluding D&O and E&O insurance) will include the other party and its Affiliates, trustees, directors, officers, employees, contractors and agents as additional insureds. Such insurance will be written to cover claims incurred, discovered, manifested, or made during or after the Term. 182. Evidence of Insurance. Each Party will furnish a certificate of insurance evidencing such coverage within thirty (30) days after the Effective Date of this Agreement. Thereafter, each Party will provide thirty (30) days' advance written notice to the other f any cancellation or material adverse change to such insurance. 183. Workers' Compensation Insurance. Both Parties will initiate and maintain workers' compensation insurance for its respective employees working at the School or for the Program, as required by Applicable Law. 18.4. Cooperation. Each Party will comply with any information or reporting requirements required by the other Party's insurers), to the extent reasonably practicable. 19. REPRESENTATIONS AND WARRANTIES. 19.1. Representations and Warranties of K12. K12 hereby represents and warrants to the School: 19.1.1. Organization and Good Standing. K12 is a company duly organized, validly existing, and in good standing under the laws of the State of Delaware and is a wholly owned subsidiary of K12 Inc. 19.12. Power and Authority; Authorization: Binding and Enforceable Agreement. K12 has full limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized and executed by K12 and constitutes the valid and legally binding obligation of K12, enforceable against K12 in accordance with its terms, except as such enforceability may be limited by bankruptcy, . insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general applicability relating to or affecting creditors' rights and by general principles of equity 19.1.3. Professional Services. K12 warrants that the Services will be performed in an professional and workmanlike manner in accordance with commercially reasonable industty standards and HQCS standards to the extent possible, and deliverables, if any, will materially comply with the agreed upon functional specification set forth in the applicable Exhibit A, if used in a manner consistent with the conditions for which it was designed.The foregoing warranties are in lieu of all other warranties, express, implied, statutory or otherwise, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND K12 AND ITS AFFILIATES MAKE NO GUARANTEES - AS TO THE RESULTS OR ACHIEVEMENTS OF THE STUDENTS. Without limiting the foregoing, K12 makes no guarantees and will not be liable for non accessibility of the K12 website, end- user connection speed or connectivity problems regardless of the reason. - 19.1.4. Non Conformities. The foregoing warranties will not apply to defects {00036289.DOC}23 or non-conformities: (a) resulting from software, hardware or interfacing not supplied by K.12, its Affiliates or authorized contractors; (b) resulting from inadequate or improper maintenance, modification or usage by the School, its employees or students; or (c) where there has been improper site preparation or site environment maintenance by the School, its employees or students. In addition, the foregoing warranty will not apply to requirements not expressly included in this Agreement. . . 19.2 Representations and Warranties of the School The School hereby represents and warrants to K12: 192.1. Organization and Good Standing. The School is a non-profit corporation duly organized, validly existing, and in good standing under the laws of Georgia. 1922. Power and Authority; Authorization; Binding and Enforceable Agreement. The School represents that, no later than the Effective Date, it is legally authorized to contract with a private entity for the provision of the products and services provided for in this Agreement and that, as of such date, the School will have the authority necessary to operate as a Commission charter school under Applicable Law. The Agreement has been duly authorized and executed by the School and constitutes the valid and legally binding obligation of the School 19.2.3. Provision of Authority to KI 2. The School has provided and will provide K12 with all authority and power necessary and proper for K12 to undertake its responsibilities, duties, and obligations provided for in this Agreement. 192.4. Effectiveness and Enforceability of the Charter. The School has provided K12 a true and complete copy of the Charter and will promptly provide K12 any amendments to the Charter that may take effect during the Term. 192.5. Certain Provisions of the Charter. The Charter will, when approved, authorize the School to operate and receive the federal and state education funds identified in this Agreement, as well as other revenues, and otherwise vests the School with all powers necessary and desirable to carry out the Program and other activities contemplated in this Agreement. 19.2.6 Renewal and Maintenance of the Charter. The School will use best efforts to renew the Charter upon its expiration and to maintain it while it is in force. . 19.3 Mutual Representations and Warranties. 19.3.1. Each Party warrants to the other that there are currently no pending actions, claims, suits, or proceedings, to its knowledge, threatened against it, which if adversely determined, would have a material adverse effect on its ability to perform its obligations under this Agreement. 19.3.2. Each Party represents that its execution, delivery and performance of this Agreement will not, to its knowledge, constitute or cause it to breach or commit default under any other agreement, or other instrument to which it is a party or by which it or any of its assets is bound. {00036289.DOC}24 20. OFFICIAL NOTICES. All notices and other communications required by the terms of this Agreement will be in writing and sent to the Parties hereto at the addresses set forth below (and such addresses may be changed upon proper notice to such addressees). Notice may be given by: (i) certified or registered mail, postage prepaid, return receipt requested, (ii) reputable overnight earner, postage prepaid, (iii) facsimile (with confirmation of transmission by sender's facsimile machine), or (iv) personal delivery (with written receipt confirming such delivery). Notice will be deemed to have been given (i) two days after mailing as described in clauses (i) and (ii) of the foregoing sentence, (ii) on the date of personal delivery or (iii) on the date of transmission of a facsimile if on a business day during normal business hours (or, if not, the next succeeding business day). Electronic mail does not constitute official notice under this Agreement. The addresses of the Parties are: For K12: EVP of School Management & Services K12 Inc. 2300 Corporate Park Drive, Suite 200 Herndon, Virginia 20171 Fax: (703)483-7330 With Copy To: General Counsel K12 Inc. 2300 Corporate Park Drive, Suite 200 Herndon, Virginia 20171 Fax: (703) 483-7496 For School: GCA Board Chair Ryan Mahoney Vice President of Public Policy Georgia Chamber of Commerce 270 Peachtree Street NW, Suite 2200 Atlanta, Georgia 30303-1240 (404) 223-2489 . rmahoncv:a;acham bcr.com With Copy To: Alexa R. Ross ROBBINS ROSS ALLOY BELINFANTE LITTLEFIELD LLC 999 Peachtree Street NE Suite 1120 Atlanta GA 30309 Fax: 404.856.3250 aross@robbinsfirm.com {00036289.DOC}25 - - 21. NON SOLICITATION/NON HIRING - 21.1. Non-Solicitation/Non Hiring. Each Party agrees that during the Term of this Agreement and for a period ending twelve (12) months after the expiration or termination of this Agreement for any reason, unless mutually agreed to by the Parties in writing, it will not directly solicit, recruit for employment, offer employment to, offer subcontracting opportunities to, or otherwise employ or use the services of any consultant or employee of the other Party or Affiliates if that consultant or employee or former consultant or employee has been assigned to or worked under this Agreement. 21.2 Unpermitted Solicitation/Hiring Remedies. In the event of such unpermitted solicitation or hiring, as described immediately above, by a Party of such consultant or employee , in contravention of the clause immediately above, the other Party, at its option, may file for injunction or other equitable relief in any court of its choosing, notwithstanding the provisions of Section 22.2, but neither Party consents to jurisdiction in any court that otherwise - would not have subject matter jurisdiction over the dispute and personal jurisdiction over the driegfhetntdoaonbtjse)cot rotrodaenfeynvdeonnuegrnooutnodthseorfwjuisreispdrioctpieornaannddc/oornvveennuieenatn,danfodrnuemithneornP-caorntyvewnaieivness. its The Parties agree that any violation of the clause immediately above would result in loss which cannot be reasonably or adequately compensated in damages in an action at law, and that a breach would cause great and irreparable injury and damage. The Party seeking injunctive or other equitable relief will not be required to post a bond. 21.3. Solicitation Exceptions. For the avoidance of doubt, newspaper, periodical or Internet-based listings of employment opportunities by a Party shall not be considered direct or indirect solicitation of an employee of the other Party; however, such Party shall continue to be precluded from engaging or otherwise using a Party's employee, former employee or consultant as provided for herein. 22. DISPUTE RESOLUTION, VENUE AND GOVERNING LAW. 22.1. Dispute Resolution Procedure. The Parties agree that they will attempt in good faith to settle any and all disputes arising in connection with this Agreement amicably in the ordinary course of business. If a dispute is not resolved in the ordinary course of business the aggrieved Party will submit its dispute in writing to the account manager or other manageriallevel employee of the other Party. If the dispute is not resolved after thirty (30) calendar days from the receipt of such written notice, then the Parties will escalate the matter to the EVP of School Management and Services for K12. If the dispute is not resolved after fourteen (14) business days after that, then the Parties will escalate the effort to resolve to the chairperson of the School s governing board and the CEO for K12 who will have five business days to resolve the matter. The dispute resolution procedures described herein will be deemed complete upon the earlier to occur of the following: (i) the Parties mutually agree in writing to discontinue the dispute resolution procedures; and (ii) the relevant dispute is not resolved within the time periods provided under herein. 22. 2 Mediation and Arbitration. If the Parties are unable to resolve the dispute pursuant to the Section immediately above, they will attempt in good faith to settle any and all disputes through a process of mediation in the metro Atlanta, Georgia area under the supervision of a mutually agreed upon mediator. In the event that mediation fails to settle such a dispute, the {00036289.DOC}26 Parties hereby agree to proceed to final and binding arbitration in Fulton County, Georgia, pursuant to the then existing rules of the American Arbitration Association. Except as may be required by law, neither a Party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both Parties. Judgment upon the award rendered may be entered by the federal or state courts located in the Northern District of Georgia. Each Party will bear its own costs and expenses associated with the dispute resolution procedures set forth in this Section 22.2, except that the Parties will share equally any fees payable to a professional mediator and/or arbitrator. The cost will be treated as a Program Expense and Program Revenues will be the sole source of funds from which the School will pay its portion. 22.3 Injunctive Relief. Notwithstanding the foregoing dispute resolution procedures, the School acknowledges that in the event it breaches any provision contained in the Section entitled "Intellectual Property Rights", K12 may suffer irreparable harm in which the full extent of damages may be impossible to ascertain and monetary damages may not be an adequate remedy. As such, in its sole discretion, K12 may seek immediate judicial relief as available in law or equity, and the initiation of any judicial proceeding will suspend the dispute resolution procedures set forth above. K12 will be entitled to enforce this Agreement by an injunction or other equitable relief without the necessity of posting bond or security, in addition to its right to seek monetary damages or any other remedy. The decision by K12 not to seek judicial relief during the above described dispute resolution procedures, will not create any inference regarding the presence or absence of irreparable harm. 22.4 Jurisdiction and Venue. In the event any dispute is not resolved or resolvable by the procedures set forth in Section 22.2, each Party: (a) irrevocably and unconditionally consents and submits to the jurisdiction of the Superior Court of Fulton County, Georgia and federal courts located in the Northern District of Georgia for purposes of any action, suit or proceeding arising out of or relating to this Agreement and irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of or relating to this agreement in such courts and agrees not to plead or claim forum non conveniens; (b) agrees that service of any process, summons, notice or document by U.S. registered mail to the address set forth above for each Party will be effective service of process for any such action, suit or proceeding brought against such Party; 22.5 Governing Law. Georgia law will govern this Agreement, its construction, and the determination of any rights, duties, and remedies of the Parties arising out of or relating to this Agreement. .23 MISCELLANEOUS. 23.1. Coordination: Exercise of Approval or Consent Rights. 23.1.1. Coordination and Consultation. The Parties will coordinate the performance of their respective activities hereunder and will establish such procedures as they will mutually agree to be effective for achieving the purposes of this Agreement and allowing each of them to perform its obligations and exercise its rights under this Agreement. Without limiting the generality of the foregoing, K12's legal counsel and the School's legal counsel will consult from time to time with respect to the requirements of Applicable Law, the Charter, and the School's and the Authorizer s policies as they relate to the Program's operations. 23.1.2. Approval or Consent Rights. In performing services and its other { 00036289.DOCJ 27 obligations under this Agreement, or in exercising its rights under this Agreement, including granting or withholding any consents or approvals or making any requests of the other Party, each Party must act reasonably (including as to the timing of its actions) except to the extent that this Agreement provides that it may act as it determines "in its sole judgment" or "its sole discretion," or words to that effect, in the applicable provision. Whenever it is provided in this Agreement that the Parties will or may agree as to a certain matter, each Party will have the right to agree or disagree in its sole discretion following good faith discussions. 23.2. Force Majeure. Notwithstanding any other sections of this Agreement, no Party will be liable for any delay in performance or inability to perform (except for payments due hereunder) due to acts of God or due to war, riot, terrorism, civil war, embargo, fire, flood, explosion, sabotage, accident, labor strike, Internet outage or other acts beyond its reasonable control and unrelated to its fault or negligence. 23.3. Entire Agreement. This Agreement including its attachments hereto constitutes the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all previous and contemporaneous oral and written negotiations, commitments, agreements, warranties, representations and understandings. This Agreement will not be altered, amended, modified, or supplemented except in a written document executed by the Parties. 23.4. Counterparts, Facsimile Transmissions. This Agreement may be executed in counterparts, each of which will be deemed an original, but both of which will constitute one and the same instrument. Each Party may rely on facsimile signature pages as if such facsimile pages were originals. 23.5. License Audit. In the event that K12 has reasonable cause to believe that the School has used the Educational Products in excess of the license rights granted herein, K12 may, - Upon forty five (45) days written notice, K12 may audit the Program's use of the Educational Products and the School agrees to cooperate and provide reasonable assistance with such audit. The School agrees to pay within thirty (30) days of written notification any fees applicable to the School's use of the Educational Products in excess of the license rights granted herein from the Program Revenues or, K12 may revoke the related technical support and license(s). 23.6. Amendment. This Agreement will not be altered, amended, modified, or supplemented except in a written document executed by the Parties. 23.7. Waiver. No waiver of any provision of this Agreement will be effective unless in writing, nor will such waiver constitute a waiver of any other provision of this Agreement, nor will such waiver constitute a continuing waiver unless otherwise expressly stated. 23.8. Interpretation. The Parties hereto acknowledge and agree that the terms and provisions of this Agreement, will be construed fairly as to all Parties hereto and not in favor of or against a Party, regardless of which Party was generally responsible for the preparation of this Agreement. The provisions of this Agreement are intended to be consistent with Charter. Should an unforeseen situation arise in which the controlling provisions(s) of this Agreement prove ambiguous or unclear, the parties will interpret and apply the controlling provision(s) in a manner consistent with the Charter. 23.9. . Severability In the event any term, provision or restriction is held to be illegal, invalid or unenforceable in any respect, such finding will in no way affect the legality, validity or enforceability of all other provisions of this Agreement. (00036289.DOC}28 - 23.11. Successors and Assigns. This Agreement will be binding upon, and inure to the benefit of, the Parties and their respective successors and permitted assigns. No Third-Party Rights. This Agreement is made for the sole benefit of the School and K12 and their respective successors and permitted assigns. Except as set forth in Sections 14 and 17 and except for each Affiliate of K12, which will be a third party beneficiary of this Agreement, nothing in this Agreement will create or be deemed to create a relationship between the Parties to this Agreement, or any of them, and any third person, including a relationship in the nature of a - third party beneficiary or fiduciary. 23.12. Survival of Termination. All representations, warranties, and indemnities expressly made in this Agreement will survive termination of this Agreement. 23.13. Headings and Captions. The headings and captions appearing in this Agreement have been included only for convenience and will not affect or be taken into account in the interpretation of this Agreement. IN WITNESS WHEREOF the Parties have entered into this Agreement as of the date set forth below. For and on behalf of For and on behalf of GeoigiaCyberAcademy Inc. K12 Virtual Schools LLC Signed: Signed: Name: Name: Position: Position: Date: Date: {00036289.DOC}29 EXHIBIT A Products and Services I. Educational Products, Pupil Recruiting and Product Related Services; During the Term, K12 and its Affiliates will provide or cause to be provided to the School, its Students and its personnel the following Educational Products and related services in accordance with the fees published on the Product Price List provided to the Board: 1. Online School: For each school year during the Term, K12 will provide a license for and access to: (i) K12 Curriculum and associated learning management system for grades K through 12, in each case in Language Arts, Math, Science and History in addition to electives per the K12 course catalogue; and (ii) any third party curriculum which K12 generally offers its Schools, in each case for such courses required by Applicable Law. 2. Instructional Tools. Such instructional tools and supplies, including without limitation textbooks and multi-media teaching tools, as K12 determines in its discretion to be necessary to deliver the Educational Program. 3. Product Related Services. Pupil Recruitment and related services are included in the cost of the curriculum and materials in the product Price List: a. Additional Instructional Support. K12 will make available the necessary instructional support and teachers as mutually agreed upon in accordance with the Product Price List as the Program may require for the Educational Products and related offerings. b. Pupil Recruitment. Recruitment of students in K12 s discretion, including creation, design and preparation of recruitment materials and advertisements; assist with demand creation for the Program and its information sessions and other events via mail, e-mail, newspapers, magazines, journals, radio, television, community forums, town hall meetings, and other forms of communication and outreach on School s behalf; develop community outreach strategy and connect with local organizations. Design School recruitment materials, letterhead, business cards, and logos to create school identity. Develop, design, publish, and maintain the Program s interactive website. c. Family Services. Plan and arrange school orientation sessions; represent the Program at conferences and other events. Field and respond to incoming calls, letters, - faxes, and e mails about the Program, its curriculum, the application/enrollment process, instructional materials, etc. Conduct focus groups, surveys, interviews, observation sessions, and/or user testing on the learning management system to obtain feedback on how to improve the Program and curriculum, as appropriate. Create feedback buttons on lessons so that Students, their parents, and teachers may submit comments and suggestions; respond to suggestions and implement improvements where K12 deems them to be valuable. Conduct exit interviews with those Program students and their parents who withdraw in order to learn more about how to improve the Program for students. Create and distribute a parent manual and/or student handbook which includes {00036289.DOCJ 30 a starting kit for logging onto the learning management system. Assist with the design and implementation of parent orientation sessions. d. Balanced Budget Provision. In consideration for the opportunity to provide School with the services and products set forth in this Agreement, the Parties agree that the Program will not end a Fiscal Year in a Negative Net Asset Position in accordance with Section 4 of the Agreement. e. Computers for Full Time Students (see Section 4.12.7) For Full Time Students (unless otherwise agreed to in writing by the Parties), such computers, monitors, software and other hardware as K12 determines in its discretion to be necessary to deliver the Program unless such students opt out of such offering. Computers may be provided upon request to Full Time Students who qualify for a Free and Reduced Lunch under the National School Lunch Program (limited to one per student, consistent with approved School policies. Computers and printers shall be returned to K12 upon a Student s withdrawal or upon expiration or termination of this Agreement. If computers are not returned the School will be charged at the then replacement value of such equipment. f. High School Services: As requested and as available, K12 can offers the following for High School students: i. Social Networking - Access to a monitored, private, virtual social community for students, parents and teachers to communicate and connect. Students benefit from exchanging ideas and information with students around the world using the K12 program and gaining a sense of connectedness within the boundaries of a contained but global community. Each K12 sponsored school will also have its own sub-community to generate school pride as well as provide its own content and clubs, a school calendar, announcements, and information on upcoming activities and outings. ii. Counseling Tools - Web-based counseling tool(s) to support college, career planning and exploration. Specifically the tool(s) may include: - 1. Counselor's Office - Web based system allows college and career counselors to collect and organize detailed information about students' post secondary plans; 2. Course Manager - Fully automated system to help students choose the courses they'll need to achieve their post-secondary goals; - 3. Family Connection - Provides students and families access to age/grade appropriate resources for course, college, and career planning. Counselors - can build multi year course plans, conduct targeted college searches, research scholarships, etc.; 4. Career Planner - Integrated so students and parents can see how career decisions relate to course and college planning activities, and counselors can guide and track student progress. {00036289.DOC}31 4. Support Services a. Teacher Effectiveness and Training (two percent ( 2%) of Program Revenues). Develop new teacher training and ongoing professional development for teachers, including Virtual National Teacher Training (VNTT), the initial training offered by the K12 Teacher Effectiveness Division to all teachers new to teaching at a virtual program using the K12 program. Develop and maintain the K12 Teacher Handbook, a resource guide with more than 200 pages of relevant information for teachers. Host the Teacher Support Website, an online community where teachers can interact with the K12 Teacher Effectiveness Division and other teachers from across the country to share resources and expertise. Host the Teacher Help Desk, a drop-in resource for teachers to receive real-time assistance from the K12 Teacher Effectiveness Division, open via phone, Elluminate drop-in, and email to teachers forty hours each week. Host ongoing teacher professional development sessions throughout the school year for new and returning teachers on topics related to teacher effectiveness in a virtual environment. Develop and deliver Online Synchronous Instructor training, which certifies teachers as effective instructors using Elluminate, the virtual classroom tool used by K12 Virtual Academies for real-time virtual instruction with students. b. Enrollment and Admissions (two percent ( 2%) of Program Revenues). Implementation of the Program s admissions policy, including management of the application and enrollment process; creation, design and publication of Program's applications and enrollment packages; and communicating with potential students and their families and assisting families through the enrollment process; conduct random lottery if required. c. Customer Care (two percent ( 2%) of Program Revenues). K12 will provide or cause to be provided to the School the design, implementation and maintenance of a customer care program to include training school staff, parents, learning coaches, and students as appropriate and necessary on technology systems, providing telephone and other support for the program, administration in troubleshooting system errors, and telephone support for students and supporting teachers and school care associates in answering technology-related questions. K12 will provide school care and support services on the learning management system, computer and software issues. d. . Compliance Reporting (one percent ( 1%) of Program Revenues) During the Term, K12 will provide or cause to be provided to the School, a compliance program with respect to Applicable Laws. K12 will generate reports on pupil academic performance, attendance and progress as may be required by Applicable Laws. K12 will assist the School with audits related to attendance and other topics involving compliance issues. II. Technology Platform and Support Services: During the Term, K12 and its Affiliates will provide or cause to be provided to School the technology services (the Technology Platform and Support Services ) described below. K12 will provide the Technology Platform and Support Services at School's Facility (defined below) and from K12's offices, as deemed necessary and in K12's discretion. - 1. 24-7 monitoring of production services, i.e., SAMS and the on line learning management system; 2. Monitor and analyze system data, to fix production issues as they may arise; 3. Generate reports on pupil academic performance, attendance and progress; 4. Seek and secure competitive pricing and centralized purchase discounts for computers, monitors, printers, software and other peripherals for the Charter School; {00036289.DOCJ 32 5. Train school staff, and parents and students, as deemed appropriate and necessary, on technology systems; 6. Develop, design, publish, and maintain the Program s interactive website; 7. Install and maintain the Program's computer network; 8. Generate reports e.g., omnibus report, demographic reports, etc.; 9. Develop community tools on die school's website and K12 platform (including password protected threaded discussion and message boards, moderation functionality, directories, etc.); 10. Determine hardware configurations (including software and operating systems) for the school's technology needs; 11. Provide onsite and telephone support for the Program administration in troubleshooting system errors, and telephone support for students; 12. Propose for the School adoption policies and procedures regarding the responsible use of computer equipment and other school property; 13. Support teachers and School care associates in answering technology-related questions from students, parents, teachers, and administrators; 14. Install software to generate master image of computer configurations for teachers, administrators, and students in order to standardize the user experience and lower costs and turn-around time for implementation and troubleshooting; 15. Ensure electronic security of student records (through the use of encryption, firewalls, etc.); 16. Provide a Web-filtering device to ensure that students do not have access to inappropriate materials on the Internet; 17. Prepare for, supervise, and implement all system roll-overs at the end of each academic year; 18. Assist with local, state, and federal reporting requirements; 19. Assist the school for audits related to attendance and other subjects; 20. Design and implement inventory management systems with the school's distribution and hardware vendors, as well as reclamation programs, as needed; 21. Support and design the Program's accounting system; 22. Provide online enrollment, registration and placement services; 23. Provide school email accounts for school employees; 24. Provide School care and technology support services on the learning management system, computer and software issues; 25. Oversee changes to the Program website to maintain quality assurance and make sure that there are not version control problems; 26. Coordinate security, creative, and content issues pertaining to the website; 27. Coordinate Web hosting contracts and relationships with vendors across the State as needed; 28. Handle troubleshooting issues for the school's website and send issues to the appropriate person or division for resolution; and 29. Additional Technology Services in K12's discretion and any other services as agreed to in writing by the Parties from time to time. III. Management Services: During the Term, K12 and its Affiliates will provide or cause to be provided to School the management services (the Management Services ) set forth below. K12 will provide the Management Services at School's Facility and from K12's offices in Herndon, Virginia and elsewhere, as deemed necessary in K12's discretion. 1. Educational Program Consulting. Propose educational goals, curriculum, methods of pupil assessment, admissions policy, student recruitment policy, school calendar, school day schedule, and age and grade range of pupils to be enrolled in the Program. K12 s recommendations for the Program will be consistent with Applicable Law and the Charter. 2. Personnel Assistance. Assistance with the supervision of all personnel providing Educational Products and Support Services, Technology Platform and Support Services, and Management Services. {00036289.DOC}33 Management of all Program employees including recruiting; hiring recommendations; reference, certification and background checks (excluding performing payroll functions or securing of payroll services; negotiation, securing and management of health, retirement and other benefits which will be the School s responsibility). Work with School to develop human resources policies, bonus plans, and strategic plans for staffing, development, and growth. Provide teacher performance evaluation models to School and advise School on effective ways to measure teacher performance in a virtual setting. 3. Facility Management. Identify location of School's Facility, assist with negotiation of lease and leasehold improvements and help manage Facility. The performance of K12's Educational Support and Administrative Services will be based out of this Facility, with support from K12's corporate location in Virginia and or other locations as necessary. The Facility will also serve as the principal office for all of School's personnel assigned to the Program. - - 4. Business Administration. Administration of all business aspects and day to day management of the Program. These services will include: a. Consultation, and services as liaison for School with the Sponsor, and other governmental offices and agencies; b. Consultation and advice regarding special education programs, processes, support services and reimbursements; c. Consistent with other provisions of the Agreement, provide school administrative staff as appropriate; d. Work with School's counsel, if any, on legal matters affecting the Program; e. Preparation of forms, operations manuals, handbooks, guides, and policies and procedures as necessary or required by the Charter or Sponsor; f. Consultation with respect to, and monitoring and oversight of, state reporting systems; g. Assist School in identifying and applying for grants and other funding opportunities; h. Assist with the administration of federal entitlement programs (e.g., Title I, I.D.E.A.); i. Arrange contracts with school districts, education services centers, and professional service providers for special education, testing and other support services on School's behalf; j. Establish and implement policies and procedures to maintain proper internal controls; and k. Provision of such other administrative and consulting services as agreed in writing by the Parties from time to time. {00036289.DOCJ 34 5. Budgeting and Financial Reporting. a. Preparation of a proposed annual budget for the Program, including projected revenues, expenses and capital expenditures. The Parties agree that the last budget approved by School and agreed to by K12 prior to the effective date of this Agreement will serve as the approved annual budget of the Program for the first Fiscal Year. The proposed budget for subsequent years will be submitted by K12 to School on or before May 15th preceding the start of the applicable school year covered by such proposed budget. On or about October 31 of each school year during the Term, K12 will submit to School any proposed modifications to the annual budget for that school year to take into account the actual student enrollment for such school year and other changes in key assumptions. K12 will also submit to School from time to time any other proposed modifications to the annual budget as K12 will deem to be necessary or desirable, to be acted upon by School consistent with Applicable Law and this Agreement. b. As practical and as possible, provide to School on a periodic basis, detailed statements of all revenues received, from whatever source by the Program, and detailed statements of all direct expenditures for services rendered to the Program. c. Provide to School all financial reports required under Applicable Law and by the Sponsor. d. Subject to any confidentiality obligations imposed on K12 by third parties, provide to School such other information either required by the Sponsor to be made available to School or the Sponsor requested by School, in each case within a reasonable time following such written request therefore, and in all cases consistent with Applicable Law. e. To the extent applicable, assist in the preparation of required non-profit filings, including form 990 tax returns. Notwithstanding the foregoing, K12 will not be - responsible for filing School s form 1023, but will work with School's counsel and/or accountant to prepare the application for tax exempt status, as necessary. 6. Financial Management. a. In accordance with School's expenditure authorization policy, K12 will, within commercially reasonable periods of time or as required by any agreement governing same, make payment for all Program Expenses, out of the Program funds managed by K12. b. As required by Applicable Law, all Program Revenues and other funds belonging to the School will be maintained in an accounts) belonging to the School, over which the chair of the School's governing board (or the board member designated by the chair) will have sole authority to approve expenditure, transfer, and all other uses of such funds. The School will designate one or more representatives of K12 who will have signature authority over the account(s) by providing K12 and the financial institution holding the account(s) with a writing signed by the chair of the School's governing board that identifies the K12 representative(s) by name and title. . The School will immediately transfer to such account(s) all funds received by the Program from any source, including {00036289.DOC}35 but not limited to per pupil payments or reimbursements received from the local school district, state, federal and/or any other source, as well as any and all contributions received by the Program. c. Perform necessary planning, forecasting, accounting and reporting functions as appropriate. d. Assist and coordinate in any third-party audit(s) of the Program. 7. Maintenance of Financial and Student Records. a. K12 will maintain and keep the records and books of the Program at the Facility. K12 may maintain electronic or paper copies of records and provide other services elsewhere, unless prohibited by Applicable Law. The School recognizes and agrees that for purposes of the Family Educational Rights and Privacy Act and the State open records act, K12 has a legitimate educational interest for purposes of School disclosing to K12 the Program student s educational records. b. K12 will maintain accurate financial records pertaining to the operation of the Program and will retain all such records for a period of seven (7) years (or longer if required by Applicable Law) from the close of the Fiscal Year to which such books, accounts, and records relate. c. K12 will maintain accurate student records pertaining to students enrolled in the Program in the manner required by Applicable Law, and retain such records on behalf of School at the Facility until this Agreement is terminated, at which time such records will be retained by and become the sole responsibility of School. d. Ensure accessibility of Program records to School, its independent auditor and the State for completion of audits required by Applicable Law. The Parties understand that all financial, educational and other records, regardless of source of origin, are the property of School. The Parties agree to maintain, retain, disclose, and withhold Program records as may be required and in the manner required by Applicable Law. 8. Student Discipline. Provide necessary information and cooperate with School on the handling of all student disciplinary matters, including without limitation attendance and truancy matters. K12 will recommend policy and procedures for School adoption consistent with Applicable Law. 9. Annual Reports to Sponsor. Assist School with the creation, design, and arrangement for publication and dissemination of an annual report regarding the Program 10. Sponsor Policies and Charter Renewal. Assist School in complying with all applicable Sponsor policies as reasonably interpreted to apply to the Program. Assist School with drafting the Programs Charter renewal application, including working with School to develop any necessary budgetary and curriculum information. Present and defend School s Charter renewal application before the Sponsor/Agency. {00036289.DOC}36 11. . Instructional Property Management Prepare and submit to School proposed polici< and procedures regarding the responsible use of computer equipment and other instructional - property. Arrange for the distribution and re shipment or return (as necessary) of computers, printers and instructional materials for families, administrators, and teachers. 12. Public and Governmental Relations. Conduct public and governmental relations on the behalf of the Program with the community, the media and relevant governmental offices and agencies, including drafting and distribution of Program press releases. 13. Additional Administrative Services. Any other services as agreed to in writing by the Parties from time to time. {00036289.DOC}37 k9 EXHIBIT B K12 Proprietary Marks k k ' K12 Unleash the xPotential The xPotential A+nywhere Learning System nyWIiene li!;iriiiiii| Sysicm k unleash powerspeak V l EARNING HI middlebur-y interactive languages' C insight {00036289.DOC}38 - DocuSign Envelope ID: 540852F3-84A0-411A 8C4D-9F2CC389CD2E SECOND AMENDMENT TO EDUCATIONAL PRODUCTS AND SERVICES AGREEMENT BETWEEN GEORGIA CYBER ACADEMY INC. AND K12 VIRTUAL SCHOOLS, L.L.C. The Educational Agreement ), by Products and and between Services Agreement made and entered into the Georgia Cyber Academy Inc. ( GCA") as of July l , 2014, ( 2014 and K12 Virtual Schools L.L.C. (" K12") (each of GCA and K12 are a " Party and, collectively are the " Parties" ), is hereby amended as follows, effective on September 29, 2016. 1. Section 1.10 is amended to read as follows as of the effective date of the 2014 Agreement: 1.10 Net Assets means the difference between total assets and liabilities of the . Program at the end of a given Fiscal Year. For the sake of clarity, and consistent with the definitions in Sections 1.6, 1.6.1, 1.62, 1.11 1 and 1.11.2, Net Assets does not include any long term obligations or liabilities that are required to be set forth in accounting and financial reporting pursuant to GASB 68. Excluding from Net Assets the long term obligations and liabilities required to be set forth in accounting and financial reporting will not result in or cause an increase in balanced budget credits under pursuant to GASB this Agreement. 68 2. All other provisions of the 2014 Agreement shall remain in full force and effect. . Agreed to on behalf of K12 Virtual Schools L L.C.: Agreed to on behalf of Georgia Cyber Academy Inc. By: * Mm*, [LL>M.UU ijTocii *ceu> Print Name: Al1son Cleve1and By: Print Name: MAivCS Title: Date: n/9/2016 Title: Date. {00052678. DOCX} Third Amendment to Educational Products and Services Agreement The following Amendment is mutually agreed upon pursuant to Section 23.6 of the Educational Products and Services Agreement ( Agreement ) executed on April 11. 2014 by and between Georgia Cyber Academy Inc. (" School" ) and K12 Virtual Schools LLC (" K 12" ). A new section will be added to the Agreement, which reads as follows: " Section 8.2.1 Executive Director. The School may employ an Executive Director and the Board will determine the Executive Director s responsibilities, consistent with this Agreement. In filling a vacancy in the position of Executive Director, the Board will notify K 12 when the Board has identified an eligible candidate as finalist and provide K12 with at least one week to interview the candidate and provide feedback and an indication of whether K12 supports the hiring of the candidate. The process for selecting an Executive Director is intended to be accomplished in good faith and through collaboration by both parties, but the parties recognize that the Board has sole authority to determine whether to hire an eligible candidate as Executive Director. To avoid any confusion, when a candidate for Executive Director is not eligible to be employed due to Section 21 of this Agreement, the Board may request a waiver from K.12, and K 12 may, in its sole discretion, determine whether to grant said waiver in that instance, without constituting a continuing waiver or a waiver beyond the specific waiver articulated in writing and signed by both parties in that instance, In those instances where the Board has requested said waiver. K 12 will not automatically get the opportunity to interview the candidate, but can ask the Board for such an opportunity. IN WITNESS WHEREOF the School and K12 mutually agree to this Amendment as of the date set forth below. For and on behalf For and on behalf Georgia Cyber Academy Inc. Signature Name Printed Title Date K12 Virtual Schools LLC f\0 II C . . 0 i) A IAS n J Signature C \ A Xjt\)