By Wade Rawlins

RALEIGH, N.C., June 29 (Reuters) - A judge said on Friday that a private company cannot open the first online charter school in North Carolina this fall unless it has the approval of a state agency.

Wake County Superior Court Judge Abraham Penn Jones ruled that the State Board of Education has final authority to evaluate and approve applications for charter schools, including cyber schools. He said an administrative law judge had overstepped his authority by approving the school.

During the past decade, online learning for students from kindergarten through high school has evolved from a novelty into a growing phenomenon driven by a handful of large for-profit companies such as K12, according to the National Education Policy Center. Online charter schools receive public school funding, allowing entrepreneurs to turn education into a government financed for-profit enterprise.

North Carolina Learns Inc, a company funded by K12 Inc , a for-profit education company, received preliminary approval in January from the Cabarrus County School Board to open the North Carolina Virtual Academy, the state's first online charter school.

The company then applied to the State Board of Education for final approval of the charter. But the Board did not respond to the application, saying it would not consider any online charter schools applications for 2012-13.

The company sued the state and an administrative law judge granted approval of the application.

The state of North Carolina appealed the decision and the judge's ruling on Friday was on that appeal.

Some 89 school boards in the state passed resolutions opposing the online charter school.

Virtual schools already exist in at least 27 states. Students study at home and use computers to interact with teachers who may be hundreds or thousands of miles away. Online virtual schools represent the fastest-growing alternative to traditional K-12 education in the United States, according to the National Education Policy Center. But professional educators remain skeptical of full-time online education for young students.

Cyber schools remain relatively unregulated and concerns have arisen about the quality of education, teacher certification and student performance. A 2011 study by Stanford University found that students in online charter schools in Pennsylvania performed significantly worse in reading and math than their peers in traditional public schools. The National Education Policy Center said there is no research evidence that full-time virtual school for K-12 students is an adequate replacement for traditional face-to-face learning.

The court decision did not set any deadline for reviewing the online charter school.

Fletcher Hartsell, an attorney for N.C. Learns Inc, said the North Carolina Virtual Academy had received inquiries of interest from about 1,000 families, representing 1,700 students.

He said the board of directors of N.C. Learns would have to decide the next move. "There is always the possibility of an appeal," Hartsell said.

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