As they ask for more money, two Indiana virtual schools say they are all but closed

As two scandal-plagued virtual charter schools face losing their charters, their attorney appeared before an authorizing board Monday night and described the schools as effectively closed: Students have been told to wrap up their work this week. Teachers haven’t been paid. School bank accounts have been shuttered.

Federal investigators have been looking into enrollment discrepancies and how Indiana Virtual School and Indiana Virtual Pathways Academy spent tens of millions in public dollars, the schools’ attorney, Mary Jane Lapointe, confirmed to the board.

But despite painting a picture of schools that are all but shut down, she asked the oversight agency, Daleville Community Schools, for money to finish closing the schools — or even to keep them open, saying the schools’ problems could “go away eventually.” Lapointe also disputed the state auditors’ recent findings that the schools had over-reported enrollment and taken in $47 million more in state funding than they should have.

Monday night’s meeting was the two virtual schools’ chance to defend themselves as the Daleville school board considers for a second time revoking their charters — a largely symbolic move, since the schools have already agreed to close and appear to be shutting themselves down even earlier than mandated.

Lapointe said she didn’t know how many students were still enrolled in the two troubled schools.

Daleville has been bearing down on the two virtual charter schools since February, when the small rural district outside of Muncie revealed data showing the schools had been enrolling thousands of students who never logged in or signed up for classes. The schools came to an agreement with Daleville to wind down their operations, and the state cut off funding.

If the schools close, Lapointe said, they will still need money to pay staff members to help students transfer elsewhere.

According to Lapointe, AlphaCom Inc., which had been under contract to manage the schools, claimed “there were no overpayments — in fact, that there were no miscalculations, none. And that in fact, there were always more students enrolled than they were getting paid for.”

The confusion, she said, “lies in the difference between virtual and brick-and-mortar schools.”

The virtual schools have been subjects of Chalkbeat stories for years, with a 2017 investigation revealing ties between the schools’ founder, Thomas Stoughton, and companies hired by the schools, including AlphaCom.

Reached by phone Monday night, the attorney listed for AlphaCom told Chalkbeat he had stopped representing the company and believed the business was no longer in existence. In more than 300 pages of documents the schools sent to the Daleville school board, the index notes AlphaCom’s “successor” as a company called American Pathways Academy, which appears to share an address with the former AlphaCom.

The documents also included a subpoena for school officials to testify in front of a grand jury earlier this month and provide information on student enrollment, school contracts, and payments made to vendors. Daleville board members said the papers, including another stack that Lapointe handed to them at the meeting, contained information that they had been seeking for months.

“When you refuse to provide information that is in your charter that you are to provide, it definitely makes you suspicious,” Vickie Rees, a board member, said. “Why would you have not come forward with that early on?”

When Daleville board members criticized the virtual schools’ superintendent, Percy Clark, apparently the only remaining staff member, and members of the schools’ board of directors for not showing up to defend the schools, Lapointe said Clark was “at his wits end,” and volunteer board members seemed “not willing to do much more.”

During the meeting, Daleville board members asked why the schools had run out of money, to which Lapointe responded, “I don’t know.”

Even though the Daleville school board is scheduled to meet again next Monday to make a final decision, revoking the charters may not have a practical effect. Indiana Virtual School had already been scheduled to close Sept. 17, and students had been referred to its sister school. Indiana Virtual Pathways Academy is slated to close at the end of the school year, though classes are apparently winding down this week.