what's next?

Policymakers agree virtual schools should get more teachers and less money. Will they make it happen?

PHOTO: Shaina Cavazos
A view outside of Indiana Virtual School's office, located in an office park at the northern edge of Marion County.

After Chalkbeat revealed widespread low-performance and unusual spending at Indiana Virtual School, there were no immediate plans to change how the fast-growing but relatively little-known online charter school operates.

Rep. Bob Behning, the House Education Committee chairman who is one of Indiana’s most influential education lawmakers, has not commented after repeated requests for an interview.

Senate Democrats have no education priorities specified for the upcoming year.

And Senate Republicans and House Democrats haven’t yet released their 2018 plans. Sen. Dennis Kruse, the Republican chairman of the Senate Education Committee, said he largely thought Indiana’s charter laws were fine, although he was open to tweaking aspects of the law — such as whether authorizers of failing charter schools should be allowed to open additional schools.

But national and even local charter school advocates — including those who could affect public policy — agree changes need to be made at Indiana Virtual School and online charters more broadly across the state. Some were blunt in their assessment of the school, which since 2011 has enrolled thousands of students and failed to graduate most of them. It also has a barebones teaching force, low test scores, and two F grades from the state.

“The whole thing is a mess,” said Tony Walker, a pro-charter school Democrat on the Indiana State Board of Education.

Read: As students signed up, online school hired barely any teachers — but founder’s company charged it millions

And the school’s problems aren’t limited to academics. Walker also called out the school’s lenient attendance policy, lack of real-time teaching and choice not to provide computers to students.

“Them not having an online platform that permits them to have live courses should be a deal-breaker … You should never have an online school that exists without that,” he said. “You should never have an online school that’s chartered that does not provide the means to access the school to its students. If you’re not giving your students laptops, then you shouldn’t exist.”

What’s more, Thomas Stoughton, Indiana Virtual’s founder, previously headed a for-profit company that charged millions of dollars in management fees and rent to the school while he was school board president. Stoughton is also leading the school’s growth — a second Indiana school opened this year, and plans for Michigan and Texas schools are in the works.

Although Indiana’s legislative session won’t begin until January — and it’s looking like a year where education won’t be center stage — Democrat and Republican lawmakers indicated interest in making changes to laws governing virtual schools, but nothing more.

Doing nothing just isn’t acceptable, said Rep. Terri Austin, a Democrat from Anderson and a former educator.

“Surely given the statistics the General Assembly has an obligation to take a look what’s happening,” she said.

Walker said Indiana Virtual School’s student-teacher ratio jumped out at him. At the end of last school year, Indiana Virtual had one teacher for every 222 students.

Now, Indiana Virtual and the new Indiana Virtual Pathways Academy enroll about 6,332 students, served by 40 teachers, which makes the student-to-teacher ratio 158-to-1. The national average for online charter schools is 30-to-1, according to the National Education Policy Center.

“There’s absolutely no justification or reason that I can think of to permit a school to have a 221-1 faculty-student ratio,” Walker said. “That’s just ridiculous … There needs to be substantially more of the funds appropriated in the direction of instruction than I think this school has.”

Rep. Scott Pelath, the long-time leader of the House Democrats who stepped down from that role last week, was also surprised by the student-teacher ratio, even more surprised than he was by the tens of millions of dollars the state has set aside to fund the schools.

“That struck me as just outrageous, and I would think the public would think it was outrageous,” Pelath said. “Particularly when virtual schools are used as a substitute in places where you maybe have a lot more at-risk kids that need more attention, not less.”

Indeed, more than 80 percent of the students at Indiana Virtual qualify for meal assistance, but otherwise their demographics closely mirror those of the state — majority white, with relatively small populations of English-learners and students with special needs. The school says many of its students have been expelled from previous schools, and they say their students’ struggles are part of the reason graduation rates and test scores remain low.

But Karega Rausch, a former member of the Indiana Charter School Board who now works for the National Association of Charter School Authorizers, said online charter schools as a whole shouldn’t use student characteristics as an excuse. The group even has an entire set of online school-specific policies states should adopt in light of their poor performance.

“Just having lots of low-income kids is not a justifiable reason to not teach them well,” Rausch said. “Just having a lot of kids that may be mobile is not an excuse for not teaching them well. Traditional public schools and charter schools are finding ways of serving those kids at high levels.”

While traditional schools should serve as a model for instruction, Indiana’s school funding formula creates problems in a virtual environment. For schools like Indiana Virtual that have few barriers to entry and inconsistent attendance reporting practices, it can be hard to know if students who are enrolled are actually being educated. Yet schools get more money for every student they enroll.

Kruse and Walker, as well as national advocates, said they would support a funding model based on how much work students do, rather than whether they are on a school’s books on Count Day. New Hampshire and Florida already use this kind of system.

“There needs to be a different funding formula for these schools,” Walker said. “They should not be funded on a per-student basis like brick-and-mortar schools … it becomes a profit mill.”

An analysis from Florida Southwestern State College School of Education last year found that funding based on students finishing classes in virtual schools cost the state less money than the more traditional per-student model. Walker called on lawmakers to consider this change and put it into law “sooner rather than later.”

Pelath said based on what he’s learned about online schools, he doesn’t see them as a good substitute for traditional education. (Former state Superintendent Glenda Ritz agrees.)

“The oversight and accountability is not anywhere close to what we would have in traditional education,” Pelath said. “It’s entirely reasonable that some virtual experiences can be part of the larger overall experience, but as a substitute they are just woefully inadequate.”

The first step is to stop growth immediately, he said. Virtual schools enroll about 12,000 students across the state — about 1 percent of all students — and the number has been growing each year.

As far as upcoming legislation, Pelath was less sure, and new House Democrat leadership will certainly play a role in the caucuses’ goals for next year. Pelath was optimistic change could happen, but he was also realistic about the fact that a Republican supermajority in the House can make it difficult to get Democrats’ bills through.

“I think there’s a very good chance of that,” Pelath said in regards to possible legislation on virtual schools in the upcoming session. “Whether those things come in the form of originally introduced bills, of which there’s a risk of them staying bottled up in committee, or in the form of amendments to alter legislation that is moving in the process …This is going to have to be a debate.”



action steps

Gov. Eric Holcomb says Indiana’s low-rated online charter schools need ‘immediate attention and action’

PHOTO: AP Photo/Darron Cummings, Pool
Gov. Eric Holcomb, right, responds to a question during a debate for Indiana Governor.

On Thursday, Gov. Eric Holcomb said the Indiana Virtual School’s “unsatisfactory” performance — which includes two years of F grades, low ISTEP scores and high student-teacher ratio — requires policymakers to get involved.

In October, Chalkbeat reported that Indiana Virtual School, one of the state’s largest online charter schools, had received more than $20 million from the state while graduating about 61 students. And between at least 2011 and 2015, a for-profit company headed by Indiana Virtual’s founder, Thomas Stoughton, charged the school millions of dollars in management services and rent.

Read: As students signed up, online school hired barely any teachers — but founder’s company charged it millions

“The state shouldn’t allow schools that have that poor of performance to continue,” Holcomb told Chalkbeat in a one-on-one interview. “I look forward over this next year, with the state board of education, to help put in place measures that hold schools accountable for poor performance. Poor performance would be putting it lightly.”

Holcomb is not alone in calling for Indiana to address the poor academic track records of statewide online charter schools, even though Indiana has long embraced charter schools and school choice.

Former state schools chief Glenda Ritz said virtual schools aren’t a sufficient alternative to traditional schools. State board member Tony Walker said he was shocked by Indiana Virtual’s low number of teachers, while The Mind Trust’s David Harris thinks the state should place a renewed focus on the quality of authorizers, the groups that oversee charters in Indiana. Indiana Virtual is one of the few schools in the state to be overseen by a public school district, Daleville Schools, a small rural district near Muncie.

Also on Thursday, the Indiana State Teachers Association called for a moratorium on virtual charter school growth as well as a funding formula fix based on academic progress, not enrollment. ISTA also asked more broadly for more scrutiny of charter school finances and for the state education department to “approve and monitor a plan to prevent financial and enrollment fraud, waste and abuse.”

Indiana Virtual and its sister school that opened this year, Indiana Virtual Pathways Academy, together enroll 6,332 students. Across the state, more than 12,000 students are enrolled in online charters, most of which earned F grades this year. Two other major online charters, Hoosier Academies and Indiana Connections Academy, also opened new schools in the past year or so.

Holcomb said he understands it can take authorizers time to make changes to address poor academics in the schools they oversee, but children only have so many years to spare.

At this point, Holcomb said he doesn’t see a need just yet for legislation addressing online schools, although he wouldn’t rule it out. He said his team has communicated with the state board that this area needs “immediate attention and action.” It’s not yet clear what measures they want to introduce, or how much authority the state board has to change charter school rules, but he indicated authorizing could be on the list.

Read: Indiana online charter schools need more oversight. These 3 changes could help.

“This next year we’ll be looking at all these issues to say how can we best give students options that fit their needs while at the same time (give) parents and taxpayers confidence that these options are worthy,” Holcomb said. “I think the state board, in this instance, can right the ship.”

 

policy talk

Indiana online charter schools need more oversight. These 3 changes could help.

PHOTO: Shaina Cavazos
Daleville Public Schools, a small district located near Muncie, now oversees two statewide online charter schools.

The best way to fix a troubled charter school isn’t to go after the school, lawmakers and policymakers say — start with the authorizer.

A Chalkbeat investigation revealed that the school district charged with overseeing Indiana Virtual School has taken a hands-off approach that seems to meet the low expectations for authorizers in Indiana’s charter law, but the approach isn’t paying off when it comes to meeting the needs of the school’s students.

Special Report: As students signed up, online school hired barely any teachers — but founder’s company charged it millions

In the Hoosier state, authorizers — which can include universities, mayors, or school districts — can only be punished for their school’s bad academic performance, not other kinds of missteps. Even then, there’s no guarantee that a school would close or that an authorizer would be stripped of its privileges to oversee schools. Many states have grappled with how to approve the best authorizers who will operate good schools, and even though Indiana’s policy has been held up as a national model, it has gaps.

“You have authorizers that aren’t behaving appropriately, whether it be malicious or not,” said James Betley, executive director of the Indiana Charter School Board, one of the state’s charter authorizers. “Currently, consequences only come in when a school performs badly because our laws don’t contemplate legal violations.”

Control has been at the crux the debate — how much should an authorizer get involved in the daily affairs of charter schools, and how much should the state intervene if an authorizer veers off course? In an atmosphere where free market politics encourage experimentation, authorizers are given broad reign.

But in Indiana, authorizers are often paid by the schools they oversee, and there’s not much incentive to close them. David Harris, founder and CEO of The Mind Trust, said authorizers not only shouldn’t get authorizing fees from schools, but they also need to be heavily screened upfront to make sure they can do the work — especially if they are going to authorize virtual schools, which tend to have poor track records for student learning.

“The authorizer needs to assess whether it has the capacity to effectively oversee a school,” Harris said. “And if they can’t make the case that they do that well, then they shouldn’t authorize the school in the first place.”

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Oversight of Indiana Virtual School by the small Daleville Community School District has been fairly hands-off by the district’s own admission, and the district was on-track to earn at least $750,000 in fees last year. Over its six-year lifespan, the F-rated school has enrolled thousands of students but failed to graduate most of them or hire more than several dozen teachers. But it continues to bring in millions of state dollars. Daleville this summer began piloting a new evaluation tool that it thinks can help improve Indiana Virtual.

Since 2011, a for-profit company headed by Indiana Virtual’s founder, Thomas Stoughton, has charged the school millions of dollars in management services and rent, an agreement Daleville said it was unaware of. Stoughton has also led the school’s growth. In September, he opened a second statewide virtual school, also chartered by Daleville.

The variety of issues at Indiana Virtual School underscore a wider need to re-examine how the state holds charter school authorizers accountable for their schools.

“There’s a need to have virtual and online platforms available for certain students,” said state board member Tony Walker. “That being said, there are some problems I think with our model that I think are highlighted by this situation … there was a failure of the authorizer to keep proper monitoring and accountability.”

Ultimately, as Indiana lawmakers prepare to begin the 2018 legislative session in January, they can change the law, but it’s hard to say if they will. And though the State Board of Education has the authority to change education policy, it’s unclear how they could affect existing laws or policy around authorizing. At the very least, someone should be paying attention, said Mike Petrilli, executive director of the Fordham Foundation, a conservative think tank that supports access to charter schools.

“There’s no doubt that many of these online schools are disasters,” Petrilli said. “We have now seen in many states both terrible outcomes, but also financial scandals. And so there’s no doubt that policymakers have to figure out a better approach to regulating these entities.”

There are a number of steps Indiana could take to close gaps that allow chronically underperforming schools or subpar authorizers to continue. Here are some options:

Re-evaluate current authorizers to make sure they are up to the state’s standards.

In addition to other authorizing changes made in 2011 and 2013, Indiana created stricter requirements to weed out unfit authorizers in 2015. The move was widely praised — that year and in 2016, the state’s policies earned a top ranking from the National Association of Charter School Authorizers.

But when the law changed, existing authorizers, including Daleville, were grandfathered in and didn’t have to go through the new, more rigorous screening through the Indiana State Board of Education. School districts that applied were automatically approved and didn’t need to complete the rest of the screening.

There’s no definitive consensus about what good authorizing looks like, partially because charter advocates have long lobbied for fewer restrictions. So although Indiana requires that all nine of its authorizers adopt best practices, such as those developed by the National Association of Charter School Authorizers, state charter law lays out no way to enforce it. (Compared to the association’s general guidelines, those on virtual charter schools are much more stringent.)

State Board spokesman Josh Gillespie said only the Nineveh-Hensley-Jackson United school district has applied to be an authorizer since the rule change, a 1,828-student district about 30 miles south of Indianapolis. The district doesn’t appear to charter any schools at this time.

If the state wanted to send a message that it valued high quality authorizers, it could walk back the grandfathering provision.

Stop allowing authorizers to get paid by the schools they oversee.

Under current law, charter authorizers can collect up 3 percent of a school’s state funding as payment for monitoring.

Authorizers should have the ability to get financial support for their work, sources told Chalkbeat, but that support shouldn’t come from schools themselves. Tony Walker, a member of the Indiana State Board of Education representing Northwest Indiana, said he worries about the fees in particular when it comes to school district authorizers that might already be struggling financially compared to larger state organizations and universities.

“There are inherent conflicts that arise when (a district) is getting chartering fees from the school and they desperately need the money,” Walker said. “I don’t think they have the same resources that Ball State and the (Indiana Charter School Board) have in terms of monitoring and providing support.”

One alternative is that the state could budget to support all authorizers directly. If the money isn’t tied to school enrollment, it could help reduce the incentive to accrue students beyond what a school can actually support.

“The fee is a bad idea,” Harris said. “It creates an incentive to charter schools that shouldn’t be chartered because the authorizer generates revenue from that.”

Keep authorizers and virtual charter operators from opening additional schools or enrolling students if current ones have been consistently low-performing.

Restricting how virtual schools gain students and replicate could make sense even in a state that has long supported online education.

Currently, public charter schools need four years of F grades before the state board can cap enrollment, reduce authorizer fees or close the school.

But there’s already precedent set in Indiana law for how this system could improve to address troubled schools more quickly and automatically. Lawmakers could take a cue from the state’s voucher program.

If a private school gets a D or F grade from the state for two consecutive years, it is no longer eligible to receive vouchers for new students. Last year the law was tweaked to allow schools to appeal that decision, but the state board can still deny such a request.

Indiana Virtual School, Hoosier Academies and Indiana Connections Academy — all statewide, full-time online charter schools with consecutive years of F grades — have quietly opened new schools within the past year or so.

Sen. Dennis Kruse, chairman of the Senate Education Committee, said it doesn’t make sense to allow low-performing schools to open new schools.

“I think virtual schools should succeed or not be opened,” Kruse said. “So if they can’t get their act together, I think they ought to decide to just close down their schools … If they’re failing with what they’re doing now, why should we allow them to open up more failing schools?”