State cuts off funding to Indiana Virtual School and sister school. But will Indiana get its money back?

In attempt to recover state money that two virtual charter schools received for allegedly non-existent students, Indiana has cut off public dollars to Indiana Virtual School and Indiana Virtual Pathways Academy, according to letters sent Friday by the state education department.

But with the threat of the schools’ closures looming, the state might not be able to get all its money back.

Indiana is withholding funds from the two virtual charter schools until it recovers more than $47 million from the two schools combined, the letters said. An investigation revealed this week that school officials kept students on their rolls who were inactive or had moved out of state. In one case, Indiana Virtual School received public funding for two years for a student who had died.

The state pays schools for every student they educate, so the higher the enrollment, the more state dollars a school can take in.

With Indiana Virtual School scheduled to close in September, under pressure from its oversight agency, cutting off the funding stream now won’t enable the state to recoup the $21.7 million that the state allegedly overpaid the school.

Indiana Virtual Pathways Academy is supposed to remain open for another year. If it enrolls enough students, the state on paper could recoup $25.6 million owed it.

Budget projections estimated Indiana Virtual Pathways Academy would receive about $35 million in state funding next year for more than 6,000 students. It could absorb some of Indiana Virtual School’s students, but school officials have said the number of active students at the two virtual charter schools combined is closer to about 2,500.

Still, stopping public payments could force both schools to close immediately, as Superintendent Percy Clark warned the state in a formal July 5 response to the findings of a state examiner’s investigation.

If that happens, the state could have to turn to a local prosecutor or the state attorney general to seek repayment.

School officials did not immediately return a request for comment late Friday.