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.”



reviewing the rules

Hoosiers paid $1 million for a rural district to oversee online charter schools. Is it too much?

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

Daleville Public Schools, a small rural district northeast of Indianapolis, oversees more than 6,000 students statewide who learn exclusively in online charter schools — and the district received a payment of $1 million in state funds last year for doing so.

The compensation is provided to charter school authorizers under Indiana law in exchange for ensuring the schools adhere to rules and perform well academically. But critics are raising questions about the payments to Daleville, and their arguments illustrate ongoing tensions about the state’s foray into virtual education and how authorizers are regulated.

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

The two online schools overseen by Daleville, Indiana Virtual School and Indiana Virtual Pathways Academy, have shown poor academic performance and questionable financial and operational practices, leading some policymakers to question how successful Daleville has been at holding the schools accountable. Others criticize Daleville for spending some of the payments on students within the district, instead of those in the charter schools they oversee.

Whether the district should receive the funds at all is also an open question among policymakers. Indiana law doesn’t specifically say school districts that authorize charter schools can receive the funding the way university, city or state-level authorizers do — leading some to wonder whether the funding actually provides a financial incentive for authorizers to enroll more students and keep failing schools open.

“It’s hard to believe you need $1 million to effectively oversee (two schools),” said Brandon Brown, CEO of The Mind Trust and former Indianapolis charter school director. “Every single authority on authorizing would question if that’s an ethical practice.”

These issues came to a head last week at a meeting of the Indiana State Board of Education’s committee to review virtual charter schools. As online charter schools are drawing the scrutiny of state and national policymakers for their poor performance, Indiana education leaders are also increasingly concerned that school districts might not be able to provide the proper oversight for virtual charter schools that serve the entire state, particularly if they rely on revenue from monitoring them.

Indiana law says authorizers can decide whether to charge charter schools up to 3 percent of their state tuition dollars, which are based on student enrollment. Daleville charges the full 3 percent for each school.

The Indianapolis Mayor’s Office, by contrast, oversees more than 40 charter schools serving about 15,000 kids. It charges its schools 1 percent and collected a little more than $864,000 in 2017.

State law says the fees must be spent “exclusively for the purpose of fulfilling authorizing obligations.”

At last week’s hearing, Daleville Superintendent Paul Garrison said that its oversight fees pay for online course fees for Daleville’s traditional public school students. The fees have also been used to buy computers, pay salaries for district staffers involved with authorizing, and pay for an in-house charter school evaluation tool, among other expenses, he said. It was not clear from Daleville’s state financial reports exactly how the fees were broken down among those costs.

But board member and committee chairman Gordon Hendry said he was concerned that the amount of revenue Daleville was bringing in from authorizing might compromise its ability to make decisions. Indiana Virtual School has received an F grade from the state for two years in a row and in 2017 had the lowest graduation rate of any public school in the state. Indiana Virtual Pathways Academy is still too new to have received a grade, but it already enrolls almost 3,000 students, many of whom came from Indiana Virtual School.

“We’re talking about accountability and success, but you’re making $1 million a year that’s going to fund your school district,” Hendry said.

Garrison defended how the money was being spent, saying it gave Daleville students more opportunities and met the state’s criteria.

But Brown said Garrison’s explanation for how Daleville spent its fees troubled him.

“When I hear about a school district charging 3 percent, it raises red flags around how that money is being used and whether students attending the virtual charter school are subsidizing children who attend the school district,” Brown said. “That seems like a fundamental problem.”

Since last fall, state leaders and Gov. Eric Holcomb have called for action to remedy some of the known problems in virtual schools — high mobility, low academic achievement, and little regulation. The state board’s committee, formed earlier this year, aims to address some of these issues with recommendations to the full board and state lawmakers.

One way the state could change its policy is in how it structures authorizer fees.

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

Karega Rausch, vice president of research and evaluation for the National Association of Charter School Authorizers, said oversight fees should be limited to work that is needed to actually monitor a charter school. If an authorizer has other responsibilities that aren’t related to charter schools, those should be completely separate.

Rausch also previously told Chalkbeat that charter authorizing payments should be based on costs, and states should require authorizers justify the amount they need to oversee schools. One option is for the state to pay authorizers directly, distancing oversight fees from student enrollment.

That could lower the likelihood that authorizing could be seen as a profitable funding strategy.

At last week’s hearing, Hendry raised the possibility that the revenue was creating a perverse incentive to keep low-performing schools open.

“Is it really that realistic that you would consider closing the school for poor performance, for lack of growth or lack of success, if you’re receiving a pretty healthy income stream every year?” Hendry said.

Garrison said the district was prepared to make the decision to close a school, if need be, and that officials weren’t looking at charter authorizing as a “cash cow.”

“It would be a difficult decision, but what I’m going to tell you is we care about kids,” Garrison said. “We want progress, and if it looks like we can’t get progress, we can make that decision.”

The state’s two other district authorizers, Evansville and Nineveh-Hensley-Jackson, are split in how they approach fees. Evansville doesn’t collect them at all, while Nineveh-Hensley-Jackson said it plans to ask for 3 percent. The school it oversees, Indiana Agriculture and Technology School, opened at the end of July.

Read: Facing state scrutiny, Indiana charter school steps back from virtual plan

Districts who want to be involved with virtual schools do have another option that avoids the legal murkiness charter authorizing can bring: Union Township, another small rural district near Muncie, created a virtual learning program within its district in a contract with K12 Inc. that nets them 5 percent of the student funding — more than what they’d get as an authorizer.

Many Indiana school districts, feeling the effects of declining state contributions, property tax caps that limit local dollars that flow to schools, and falling enrollment, have turned to alternative funding sources in recent years.

Having an in-house virtual program means the district is responsible for running the program, not just monitoring it. But using an outside vendor for curriculum and hiring cuts down on the costs of starting from scratch.

Read: A tiny Indiana district is banking on virtual education to survive. But at what cost?

In some cases, Indiana policymakers are questioning whether school district authorizers should be paid oversight fees at all. Indiana law is silent on whether districts can collect such fees like their counterparts at the university, city, and state level.

Indiana State Board of Education member Tony Walker has spoken out against districts collecting fees, especially ones that might be facing low enrollment and declining state funds. State Sen. Mark Stoops, a Democrat from Bloomington, filed unsuccessful legislation last year that would’ve eliminated authorizer fees entirely.

Lawmakers have indicated they want to make changes to virtual school policy, though it’s still far too early to know what those might look like. During last year’s legislative session, Republican legislators called for more information on how district-based virtual programs are funded. Indiana Democrats have also been vocal about bolstering regulations for online charter schools.

Brown said education advocates can’t afford to look the other way on these issues.

“We have irrefutable proof that virtual charter schools are generally not good for kids,” he said. “And as a strong charter school advocate, I think it’s critically important that the reform community step up and make accountability for virtual charter schools a critical issue.”

Indiana online schools

As Indiana’s virtual charters struggle, some school leaders balk at more oversight

PHOTO: Manuel Breva Colmeiro/Getty Images

Indiana online charter schools told state officials Wednesday that they deserve special consideration because of the student populations they serve.

Leaders from Indiana Virtual School, Indiana Connections Academy, and Hoosier Academies, which all operate online, said that they are more likely than traditional schools to serve students who are below grade level, who frequently move, and who face other hurdles. Those challenges are reflected in the schools’ poor test scores, F grades from the state, and low graduation rates, they say.

School leaders said that state officials should reconsider how they measure virtual charter schools and add in such supports as better student data-tracking and enabling online schools to work more formally with families before they enroll their children. Indiana’s online charter schools serve students from every county in the state and allow students from grades K-12 to learn at their own pace from just about anywhere.

“We should be held accountable in more than just the academic arena,” said Percy Clark, superintendent for Indiana Virtual School and its sister school, Indiana Virtual Pathways Academy, which Chalkbeat investigated last year. “Every ill that you want to name plagues our students.”

Clark mentioned teaching students who were homeless and ones who were balancing high school coursework with the demands of raising young children.

But members of the Indiana State Board of Education’s committee on virtual charter schools kept going back to the seeming inability of these schools to serve their students. In 2017, every full-time virtual charter school received an F-grade from the state; these grades are based primarily on test scores and the high school graduation rate.

The committee met for the second time Wednesday. Its chairman, Gordon Hendry, said he walked away with a lot of unanswered questions. He wants to hear more about how the schools operate and what their data shows.

“We’re just scratching the surface,” Hendry said.

The committee grilled the groups that run and oversee Indiana’s troubled virtual charter schools for more than three hours. Few of the schools could offer specific ways to solve their academic shortcomings. And despite concerns about oversight, the schools’ authorizers — the entities that monitor charter schools in Indiana — said the state need not add any laws to further accountability.

Clark said virtual education is still in its infancy in the state. If Indiana steps in too aggressively and forces the schools to close, students will lose much-needed options.

“This is like killing a baby,” Clark said.

Hendry pointed out that Indiana has had full-time virtual learning in place for almost 10 years. Connections and Hoosier Academy schools began as pilot programs in 2009. Indiana Virtual School opened in 2011.

Clark wants the state to focus less on things like the graduation rate and test scores, and more on how many credits students come in with and the extent to which that number increases after they attend virtual schools. He pointed to his school’s data that shows many students come to them as seniors who aren’t on-track to graduate.

Mary Gifford, a senior vice president with K12 Inc., the national for-profit that manages Hoosier Academies, and Melissa Brown, executive director for Connections, focused more on support they wanted from the state. Gifford said taking the temperature on metrics like graduation rates more frequently, even every semester, would be a welcome change. Brown said she wanted to see policy changes that would ensure online schools had more time to work with families before they enroll their children.

The more families know what they are getting into, Brown said, the more they can be sure the school is a good fit for their child.

“Students are taking this lightly, and that’s a problem,” Brown said. “I don’t think they understand all that is involved with being in a virtual school.”

But neither Ball State University, which oversees Connections and Hoosier Academies, nor Daleville Public Schools, which oversees Indiana Virtual School, saw a need for the state’s charter-authorizing law to change.

“What’s currently on the books is fine,” said Bob Marra, executive director for Ball State’s office of charter schools. “The oversight is there.”

Paul Garrison, Daleville’s superintendent, said there should be consistent standards for authorizing charter schools, regardless of whether they are traditional or virtual.

The committee was formed by the state board following calls from Gov. Eric Holcomb and lawmakers to address the schools’ poor performance and insufficient oversight.

Hendry said at an earlier meeting that its goal is to make recommendations for new policies and laws that might help the schools. The committee will continue to meet through the end of the calendar year.