For years, local school districts in Indiana have run full-time, online-only programs for some of their students. There was no way to know how many students attended school virtually, and the districts collected the same amount of state funding as they would for students who sit in their physical classrooms.
All that changed last year, when the small rural school district of Union saw its enrollment triple, largely due to students joining its virtual programs — and with those new students came an expectation of millions more in state funding that officials hadn’t planned for.
That grabbed state leaders’ attention, and some are recommending that districts with students in these online-only programs shouldn’t receive the same amount of money as they do for students in brick-and-mortar schools.
The new recommendations from an Indiana State Board of Education committee would reduce funding at these online programs — aligning it with funding for virtual charter schools, which receive 90 percent of the dollars that physical schools get from the state.
As debates over virtual education have ramped up in Indiana, most of the focus has been on those virtual charter schools, controversial institutions that operate outside of traditional school districts. But online programs run by public school districts have flown under the radar with relatively little regulation — until this recent growth in enrollment attracted attention.
The new proposals, slated to be ready for lawmakers by the time they reconvene early next year, come in addition to several others also under consideration for virtual charter schools, which have become a growing issue in Indiana after a Chalkbeat investigation revealed unusual spending and instruction practices at one of the state’s then-largest virtual charter schools.
Beyond funding, the committee also proposed requiring online programs to become separate virtual schools once a certain percentage of district students attend them. The idea behind this is to make clear how many students are attending full-time, and not just taking a few courses to catch up on credits. But the proposal would also ensure online school test scores aren’t being rolled into district schools, so their students’ performance can be judged separately.
The funding proposal would potentially have the most impact on districts that have, so far, received full state funding for their online students. Administrators whose districts have virtual programs or schools seemed unsurprised by the state board’s proposal but disappointed nonetheless.
“A decrease in funding would directly impact student services,” Union Superintendent Michael Huber said in an email. “That would be true for any public school facing a reduction in funding, especially one as high as 10 percent.”
“It’s sort of a death by a thousand cuts,” said Wayne Township Superintendent Jeff Butts, whose district runs a virtual school called Achieve Virtual Education Academy. “I’m going to add it to the $4.5 million I need to cut (from the entire district) anyway … we’re just going to figure it out.”
The reason for the scaled back funding, according to more conservative spenders such as retired senator and budget architect Luke Kenley, is that online schools don’t need as much funding as schools that operate in physical buildings. But others — even virtual school critics — argue that students should receive the same level of funding no matter where they attend school.
“If I’m a taxpayer and I decide to send my kid or enroll my kid into online programming, my taxes don’t get reduced by 10 percent — why should the funding going to my kid be reduced by 10 percent?” said Michael Barbour, a researcher and professor from Touro University in California who has been critical of online schools.
The online programs give small rural districts a wider reach for recruiting new students who bring with them state funding. But some state policymakers worry that the current funding structure might offer these districts a financial incentive to expand their online programs quickly without proper staffing or support for students.
Rep. Bob Behning, House Education committee chairman, said he was puzzled that the state board had recommended capping fees for groups that oversee virtual charter schools, but hadn’t also included restrictions for what districts can charge vendors they contract with to provide online learning platforms. Typically, a district would pay an outside company 95 percent of what a student brings in from the state and keep 5 percent. That’s compared to the current 3 percent fee that charter school authorizers can collect to manage a school.
For some district-based virtual schools, a 10 percent loss would be felt, but not monumental. Decatur’s MyLearning Virtual School enrolls about 40 students from in and around the district. A funding cut could mean rethinking the district’s contract with Connections Academy, the national online provider that the school uses for its platform and curriculum, but the school itself isn’t bringing in very much money from the state to begin with.
“This is not a primary piece of our instruction as a school district,” said Decatur Township Superintendent Matt Prusiecki. “This is another tool in our toolbox in supporting students when they come to us.”
Achieve enrolls about 300 students, and a 10 percent funding cut would mean the district could lose about $180,000. But it’s a slightly different story for Union’s Indiana Digital Learning Schools, which could stand to lose nearly $2 million. Last spring, lawmakers said online school growth in the Union school district, located about 70 miles northeast of Indianapolis, could be contributing to a higher than expected enrollment in public schools, leading to a state funding shortfall. The district enrolled about 250 students a couple of years ago, but with its three online schools it is now more than 13 times that size, and qualifies for tens of millions of extra dollars from the state.
Indiana Digital Learning School director Liz Sliger wasn’t specific about what the school would have to consider cutting should the funding decrease go into effect, but she did caution policymakers about the consequences of such a move — particularly for schools that have been criticized for not hiring enough teachers, generally the largest part of a school’s budget.
“When we talk about student-teacher ratio in a broad generality, some of the things are forgotten about,” Sliger said. “You do have to work very hard to make sure you aren’t just ensuring you have a healthy student-teacher ratio, but you’re also offering a full-tiered support system for academics and social-emotional health.”
It’s not clear how lawmakers might handle the recommendation to cut district-based virtual funding. The Senate has been opposed in years past to funding virtual schools at the same level as traditional ones, so this proposal could gain ground there. Sen. Ryan Mishler, Senate Appropriations chairman, declined requests for an interview.
But House Republicans have lobbied for years to fund virtual schools as much as physical schools. However, regardless of the funding level, online programs should be treated the same as virtual charter schools, Behning said.
“If we go to 90 percent of virtual charters, it does not make sense that we would not have (district-based) virtuals in sync with virtual charters,” he said.
The recommendation that online schools split from district schools once they enroll a certain number of students is designed to show the public how online students are performing. Wayne’s Achieve Academy, which is a separate school, received a D from the state and an F under federal rules this year. Union’s online schools were not separated from the brick-and-mortar schools in time to receive grades for 2018, but its elementary school and combined junior-senior high school received Fs as their state and federal grades this year. Before the growth of online programs, they earned a C and D respectively in 2017, and a D and B respectively in 2016.
Barbour said this kind of transparency is important to understanding how online schools actually serve students — keeping the schools’ data together can mask problems.
“Having some ability to … at least report on how these programs are doing, instead of hiding their performance, I think is a very useful thing,” Barbour said. “I think districts have been getting away with that for quite some time.”
This proposal is in-line with laws that have already seen support. A law passed last year requires district-based virtual education programs to report to the state their enrollment, total district enrollment, what grades the virtual students are in, where they live, and how much of their day is spent in a virtual learning program. Indiana Department of Education officials say the report should be finalized in January.
School leaders, too, said they were not opposed to more reporting or transparency requirements.
“We feel like we are already trying to meet those bars — those are our goals too, so it’s whatever the legislature decides,” Sliger said. “We’re just going to trust them and, either way, we are going to serve the students to the best of our ability.”