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The Journal Gazette

  • Garrison

Friday, November 03, 2017 1:00 am


Virtual reality: Online school enriches owner, but few students

Accountability was the buzzword when Indiana school-choice proponents pushed for taxpayer-funded options to traditional public schools. But their interest in accountability has faded now that the state offers man options – particularly in oversight of the fast-growing sector of online education.

An investigation of Indiana Virtual School by Chalkbeat, a nonprofit news service focused on education issues, finds the Indianapolis-based online school collected nearly $10 million from the state in 2015-16 while graduating only 5.7 percent of its seniors – the lowest graduation rate in Indiana. Chalkbeat's Shaina Cavazos found a web of business interests between school founder Thomas Stoughton and AlphaCom, a for-profit company he operated while charging the school $6 million for “management services” and rent for its offices in a suburban Indianapolis office park.

As millions flowed to Stoughton's AlphaCom, little appeared to flow to the virtual school itself. Cavazos reported Indiana Virtual School spent 89 percent of its $9.7 million in state funding on “support services,” which can include administrative and legal services. Instructional costs seemed to have been kept low by hiring few teachers – only 21 teachers for 4,682 students. That's a ratio of one teacher for every 222 students. By comparison, Southwest Allen County Schools has a teacher-to-student ratio of one to 17, the national average. The teacher-to-student ratio for online schools overall is one to 30.

Nor does Indiana Virtual School appear to direct much state funding for equipment. Unlike many online schools, IVS does not provide a home computer for student use. 

The school did spend $500,000 in 2015 on a contract for technology and website design, according to Cavazos. The contract went to A Simple Reminder Inc., a company owned by Stoughton's son.

Chalkbeat notes that nonprofit leaders are prohibited by federal tax regulations from benefiting individually from their organizations. State charter school law requires potential conflicts to be reported, but contract documents provided to the news organization failed to disclose any possible conflicts, and an attorney for the school told Cavazos that contracts between IVS and AlphaCom – both headed by Thomas Stoughton – have been lost. A 2013 audit noted the entities had “a common board member.”

Another beneficiary of state funding is the public school district that serves as authorizer for Indiana Virtual School, Daleville Community Schools. For 3 percent of Indiana Virtual School's state funding, it serves the same role as Ball State University, Grace College, the Indiana State Charter Board and a handful of other organizations in granting a charter and – ostensibly – overseeing a school's operation. But Daleville Superintendent Paul Garrison told Cavazos there was little he could do to address the school's poor performance.

“I can't say, 'Do this!' And you have to do it,” Garrison told Chalkbeat. “You've got a death sentence you can use and nothing else.”

Pulling the school's charter would cost Garrison's district its share of the online school's state funding. That amounted to less than $300,000 in 2015, but the district stood to collect about $750,000 for a 2016-17 enrollment of 2,947 students.

Whatever supervision and assistance Daleville Schools has offered seems to have done little to improve performance. In addition to its abysmal graduation rate, the online school posted a 10th-grade ISTEP+ passing rate of 8 percent. Only one in five of the school's students in grades 6-8 passed the statewide exam.

In spite of its record, Indiana Virtual School is expanding. The Indiana Virtual Pathways Academy, operated out of the same Indianapolis offices, opened this fall for students in grades 9-12. Enrollment for the two schools is 6,332, according to Chalkbeat.

Now it's Indiana taxpayers who should demand accountability. Legislators passed the original charter school law and amended it to allow Indiana Virtual School and other online schools to open, presumably because the competition would make traditional public schools more accountable. Shouldn't fiscal and academic accountability also be required of the school-choice options the General Assembly created?