INDIANAPOLIS – “How did we miss this?”
That was the question on everyone's minds during Wednesday's State Board of Education meeting discussing two virtual charter schools that vastly inflated enrollment numbers and took millions in undeserved state funding.
Also, a deceased student was found on the rolls, according to a state audit, as were other students who had been removed years before.
Board Chairman B.J. Watts asked the question as members seemed perplexed by the depth of the problems. This was despite stories going back several years from news publication Chalkbeat Indiana about staggering enrollment growth and a limited number of teachers at the schools.
Tim Schultz, general counsel for the board, said it has little authority over virtual charter schools, putting responsibility largely on the authorizer of the Indiana Virtual School and Indiana Virtual Pathways Academy.
That is Daleville Community Schools in Delaware County, where Superintendent Paul Garrison blamed gaps in the law and the charter agreement with the operator.
“This isn't one of my proudest moments,” Garrison said.
Daleville recently reached an agreement with the two schools after allegations emerged that the charter network had enrolled thousands of inactive students.
Under the deal, the Indiana Virtual School will close at the end of September and Indiana Virtual Pathways Academy will close at the end of the 2019-20 school year.
No one from the operator – the Indiana Virtual Education Foundation – attended the meeting.
According to Chalkbeat Indiana, the schools enrolled more than 7,000 students between them at the start of this past school year.
Schultz recommended the state board retroactively reduce enrollment by 50% over a three-year period following a State Board of Accounts report that found the schools inflated enrollment to twice its size. And even the students who were real rarely were enrolled in classes or graduated.
From 2016 to 2018, the schools' course data shows that 4,535 students didn't receive any credits for completing classes.
Overall, the schools received $80 million during that time. The board also approved a recommendation to seek recovery of up to $40 million because of the alleged fraud.
Schultz said the only thing the department can do is suspend any new payments to the schools to start to make up the lost money.
A state board memo said the schools have already received more than half of the projected $34.7 million they were scheduled to receive for the 2018-19 school year.
“Therefore, the (enrollment) adjustment will result in future payments to the charter schools being suspended until the excess tuition funds from the three school years are recovered,” the memo said.
Indiana's attorney general can also seek the return of money through a civil action. And a local prosecutor could open a criminal probe leading to restitution.
State Examiner Paul Joyce was asked whether the actions reached potential criminal activity, and he said yes.
It is common practice for the State Board of Accounts to forward state audits that find malfeasance to local police.
Joyce said no sole person is responsible, saying “it's always easier to look behind” and find problems than to spot them in the moment.