The Indiana State Board of Education today decided not to sanction two charter schools with repeated F grades after a debate over how to evaluate progress at charter schools that serve mostly struggling students.

Following the Indiana Department of Education’s recommendation, the board chose not to exercise options such as closing the Options Charter School in Noblesville and Hoosier Virtual Academy, an online school, or punishing their sponsor, Ball State University, by cutting the fee it receives for overseeing them.

The department’s evaluators found “good things were happening” at the schools despite the F grades, state Superintendent Glenda Ritz said.

But the decision to forgo sanctions only came after a long debate that ended with two board members still objecting. Board member Gordon Hendry voted against taking no action on both schools. Board member Tony Walker voted no on Hoosier Academy only.

“There should be some measure taken if Ball State wants to continue these two schools,” Hendry said.

The schools argued that their students are so different that they should qualify for an exemption from accountability. Both serve large groups of students in special education and who come to them far behind grade level, Ball State’s charter school director Bob Marra said. Both also must manage many students who transfer in and out of their schools.

For example, Marra said, both take on students who have been expelled from their home school districts, have struggled in traditional schools or have had serious illnesses.

“These schools are not your typical charter schools,” board member David Freitas said. “These schools are dealing with different populations. These are students who have not been successful in a traditional school. Many of these students, if they were not in one of these two charter schools, would be in our prison system.”

Instead of taking action against them, Freitas suggested giving the schools a one-year reprieve and asking Indiana Department of Education officials to explore whether an alternative accountability criteria could be created for schools with large numbers of unusually challenged students.

Board member Andrea Neal said the A-to-F accountability system based largely on test scores that Indiana uses does not fit the two schools.

“The F’s mean nothing as applied to these schools,” Neal said.

Hoosier Academy, a K-12 online school, has been rated an F for four straight years. About 46 percent of its students passed both English and math on ISTEP last year. The state average was 74 percent. The school’s passing rate has fallen in three of the past four years and is down 17 percentage points from 2010.

Options Charter School, serving grades 9 to 12, has been rated an F for five straight years. About 30 percent of its students passed state end-of-course exams required for graduation in English and algebra. That was its highest passing rate in four years. The state average was 78 percent.

Rather than take action against the schools, Hendry recommended an option in state law to sanction Ball State by cutting its management fee to 2 percent of each school’s state aid from 3 percent.

But Marra said some of that fee is spent to pay for services for the schools, such as covering the cost of practice tests to prepare for state exams and for state-required audits.

Instead the board voted to follow Freitas’ plan. It took no action against the schools but required them to be re-evaluated next year, possibly with the alternative criteria the education department will consider establishing.