Indiana online schools

Indiana lawmakers aren’t cracking down on virtual charter schools despite calls for change

PHOTO: Shaina Cavazos
A Hoosier Academy Virtual teacher keeps track of answers during a math review game.

Indiana lawmakers have killed three attempts to tighten the state’s charter school authorizing laws, even after Gov. Eric Holcomb called for improved accountability of troubled online charter schools.

A Chalkbeat investigation of Indiana Virtual School last year revealed how state law doesn’t go far enough to hold operators and authorizers of online charter schools accountable. The probe found that Indiana Virtual posted dismal academic results, hired few teachers, and had spending and business practices that raised ethical questions.

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

But with proposals to tighten regulations facing pushback from influential education advocates, Republican lawmakers — many of whom benefit from online schools’ lobbying and campaign contributions — say there’s little interest in making changes.

“I’m surprised myself,” said Sen. Dennis Kruse, the Republican Senate Education Committee chairman who authored one of the charter school bills. “People from all different walks of life had concerns about different parts of the bill. Nobody came to me and said, ‘This is a great bill, go ahead and proceed with the bill.’”

Still, Holcomb is taking other steps to strengthen virtual charter school policy. With the Indiana State Board of Education, Holcomb’s team has been collecting information on best practices in virtual schools across the country.

PJ McGrew, the governor’s education policy director, said he hopes to have a plan to revise virtual school policies for the state board to consider in the spring. It could take about a year for the board to change that policy if they decide to move forward.

Lawmakers’ hesitation isn’t really surprising: Indiana has made sweeping changes to expand school choice, and Republican leaders have seldom supported laws that would restrict choice — even when issues are raised.

Rep. Bob Behning, the chairman of the influential House Education Committee who has long advocated for charter schools and new school models, said he doesn’t want to “jump into something, making a judgment, without knowing what the answers are.”

He also pointed out that it isn’t always clear how the state should hold schools accountable in practice because education law can be difficult to enforce: “There is no education police.”

“I definitely see there are some alarms that we need to be focused on and alerted to,” Behning said. “But there are similar alarms in traditional public schools going off all over the place as well. That’s the place I think we do struggle with. At what point in time is it appropriate for us to intervene?”

None of the bills proposed by lawmakers this year dealt directly with virtual schools, applying instead to charter schools as a whole. And none of them received any hearings.

Kruse’s proposal, Senate Bill 350, would have effectively prevented struggling online charter schools — or any charter school — from easily replicating. It would have stopped an authorizer from offering a new charter to an existing organizer unless its current students are achieving academically.

Three of Indiana’s largest online charter schools, including Indiana Virtual School, have recently opened second schools, which could help them stay in business if their first schools get shut down after years of poor performance

Two other proposals from Democrats, Senate Bills 315 and 406, went much further in dictating the results charter schools must show to enroll new students and open new schools.

Sen. Mark Stoops, a Bloomington Democrat who proposed Senate Bill 315, said for his caucus, examining whether charter schools need more regulation and oversight has been a recurring priority.

“It isn’t a difficult question,” he said. “It just needs to be done.”

But lawmakers would be up against the charter school movement’s money and influence.

Indiana lawmakers, including Behning and Kruse, have seen campaign contributions from online education companies. K12 Inc., one of the largest online education providers in the country, has given more than $90,000 to Indiana Republican races since 2006, according to the state campaign contribution database. Connections, another large national provider, has given more than $20,000.

Those online providers, who operate five online charter schools in Indiana, also have spent tens of thousands of dollars each year for the last decade lobbying lawmakers.

Indiana Virtual School has also recently started lobbying lawmakers in Indiana. Tom Stoughton, the founder of Indiana Virtual School, was listed as a registered lobbyist for the school in January, even as school officials say he has distanced himself from the school. Stoughton’s involvement with the school’s for-profit management company has raised ethical questions.

In the first filing period for 2017, Indiana Virtual School spent almost $12,000 on lobbying, according to data from the Indiana Lobby Registration Commission. In 2016, IVS spent a little more than $13,300.

Prominent charter school advocates can wield influence outside of lobbying, too. They have said they fear more prescriptive laws could hem in successful schools and authorizers, even though they have agreed that virtual schools, specifically, need more attention and oversight.

“Specific rules written to restrict the decisions of authorizers will not transform bad authorizers into high-quality authorizers,” David Harris, CEO of The Mind Trust, told Chalkbeat in January.

The National Association for Charter School Authorizers recommends that states consider virtual-specific policies, such as completion-based funding, making enrollment more selective, or even making them a different kind of non-charter school so enrollment and governance can be more controlled.

Indiana falls short when it comes to virtual school regulation, according to the association’s most recent report, even as the state is praised for having the strongest charter school laws in the nation. For the third year in a row, the group ranked Indiana No. 1.

Mike Petrilli, executive director of the Fordham Foundation, a conservative think tank that supports access to charter schools, has spoken in favor of making virtual schools a separate school type.

“We’ve got to turn this on its head,” Petrilli said. “It would be hard to do it within the general charter school rules which say you’ve got to take everybody … What we have learned is the charter school model and online learning are not a good fit for each other.”

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.