GALLUP, NM – In 2020, as the Covid pandemic raged, the school district here thought it had found the perfect solution to help provide online education to its mostly Native American students when it hired a for-profit educational company called Stride Inc.
Stride, a 25-year-old company also known as K12 Inc., is an industry leader in virtual education, serving more than 220,000 students in 31 states last year. He promised Gallup-McKinley County Schools (GMCS) that he would provide teachers, laptops and internet hotspots for students who enrolled, in exchange for about $8,000 per student. The virtual school, New Mexico Destinations Career Academy, enrolled approximately 1,000 students in the 2020-21 school year, a number that would quadruple over time.
Five years later, the district terminated its contract with Stride, a publicly traded corporation, accusing it of prioritizing profits at the expense of students. In interviews, court filings and government complaints, the district alleges that Stride reported inflated student attendance counts to boost revenue, neglected special education students and violated state law on student-teacher ratios. Graduation rates and math, reading and science scores among online students declined, some dramatically, according to district data, while in-person rates improved or stayed the same.
In a complaint filed with the state Department of Public Education in May, obtained by NBC News through a public records request, a key Stride employee alleged that top executives had known for at least two years that dozens of teachers were not complying with student ratio laws.
Mike Hyatt, Gallup-McKinley superintendent, harshly criticized the company. “It was our students who took advantage,” he said. “They are the ones who, whether they know it or not, were harmed by this. And it makes me sick inside that a company did this under our watch.”
Stride, a $6 billion company whose revenue has doubled in the past five years, is fighting back, with five lawsuits this year against the district still pending. He alleges that the district violated his contract with the company, along with laws governing open school board meetings, and refused to pay him during the last academic year.
His attorney also filed a conflict of interest complaint in April against Hyatt, prompting a state review of his educator license. Hyatt had applied for a job at Stride in December and was rejected in February. He said there is no connection between the allegations and his rejection of the job and that the lawsuits are an attempt to distract from Stride’s problems.
A lawsuit the district filed against Stride in late August cites the whistleblower, who said that on an April 8 Zoom call about the allegations, Peter Stewart, senior vice president of school development, said Stride should “attack publicly first.”
The state Department of Public Education declined to comment on the whistleblower’s complaint, the allegations against Stride or the ongoing investigation into Hyatt’s license. Stewart did not respond to a request for comment.
Stride declined to address the whistleblower’s complaint. In response to questions, he defended his actions. “The situation with GMCS is very unusual and we believe the district’s actions have left us no choice but to seek a legal resolution to protect our students, staff and contractual obligations,” he said in a statement. “Stride is committed to fair and equitable business practices with our partner districts and we deny the allegations made by GMCS.”
