Indiana state investigators said two virtual charter schools took up to $40 million in public money based on highly exaggerated enrollments — and now officials want the money back.
A student who died in 2016 appeared on an enrollment list a year later, according to the State Board of Accounts audit led by State Examiner Paul Joyce. The review also determined that a majority of students at both schools were not in any class for at least half of 2017 and that a number of students who left the school were not removed from enrollment records.
Percy Clark Jr., superintendent of Indiana Virtual School and Indiana Virtual Pathways Academy, said in a July 5 letter to the State Board of Education that the findings were inaccurate and challenged the method investigators used to reach their conclusions, saying investigators did not look at enough student records.
Joyce said in an affidavit: “I believe that it is reasonable to conclude that the schools reported at least two times as many students as they should have based on their student engagement policies and applicable statutory standards.”
And he told the State Board of Education at its Wednesday meeting that such actions could be considered criminal, according to the Indianapolis Star.
“How did we miss this?” State Board of Education Chairman B.J. Watts asked during the meeting, the Associated Press reported.
The investigators’ findings mark the latest controversy surrounding charter schools and virtual schools, some of which are charters, including the ones in Indiana. About 6 percent of American schoolchildren attend charter schools, which operate in most states and are publicly funded but privately operated. California has the most charters and the most charter school students.
In May, San Diego officials indicted 11 people in what they described as a charter scam that defrauded California of more than $50 million in education funds. The indictment detailed a scheme in which an Australian man and his business partner in Southern California allegedly opened 19 charter schools and took the public funding the schools received and instead used it for real estate and other ventures.
The virtual school sector has had its own unique problems. Though virtual education has been seen as the wave of the future in education, the online school revolution has not come close to fulfilling its promise.
Some virtual schools have been engulfed in scandal. In 2016, California Virtual Academies (CAVA), which operated nine online charter schools under different names, paid a settlement of more than $168 million over alleged violations of California laws involving false claims, false advertising and unfair competition. Ohio’s Electronic Classroom of Tomorrow, a cyberschool, collapsed and closed abruptly last year, with the state ordering it to repay about $80 million.
A recent report, Virtual Schools in the U.S. 2019, published by the National Education Policy Center at the University of Colorado at Boulder, looked at the available research — which isn’t much — on virtual charter schools. Looking at schools that had state performance rates, the report found that fewer than 50 percent of virtual charters and schools that blend online education with classroom learning were rated as having acceptable performance. It said:
Many argue that online curriculum can be tailored to individual students more effectively than curriculum in traditional classrooms, giving it the potential to promote greater student achievement than can be realized in traditional brick-and-mortar schools. These claims are not supported by the research evidence; nonetheless, the promise of lower costs — primarily for instructional personnel and facilities — continues to make virtual schools financially appealing to both policymakers and for-profit providers.
A 2017 investigation by Chalkbeat revealed how Indiana Virtual School sent millions of dollars in state money to companies linked to the school’s founder, Thomas Stoughton, and his son.
Based on the audit in Indiana, the State Board of Education voted to revise downward — by half — the enrollment levels, which are used to determine how much money the state provides to the school. As a result, the state overpaid the schools by about $40 million, and officials want to find a way to get that money back from the schools and the Daleville, Ind., school system.
The district, which authorized the schools to open and was supposed to provide oversight, agreed in June to close the Indiana Virtual School by Sept. 30 and to have Indiana Virtual Pathways Academy stop accepting new students in September.
Daleville Superintendent Paul Garrison said in a Feb. 25 letter to the Daleville school board that he was recommending the charter of Indiana Virtual School be revoked because it failed to provide an adequate education to some students, did not follow laws about serving students who have disabilities and did not comply with state testing and teacher testing protocols.
The Associated Press quoted Garrison as saying at the Wednesday meeting, “This isn’t one of my proudest moments.”