Operators of two Indiana charter schools spent nearly $86 million in tax dollars at businesses in which they had ties. The money came from state tuition support for students who, in some cases, were never enrolled in the schools.
This is the school choice Indiana lawmakers celebrate – a breathtaking violation of the public trust.
A special report by the State Board of Accounts was released last week, based on an investigation of Indiana Virtual School and Indiana Virtual Pathways Academy. Chalkbeat, an online education news service, first reported in 2017 that one of the online schools collected nearly $10 million in 2015-16 while graduating only 5.7% of its seniors – the lowest graduation rate in the state. Chalkbeat revealed a web of business interests between school founder Thomas Stoughton and AlphaCom, a for-profit company he operated while charging the school millions for management services and rent for offices in a suburban Indianapolis office park.
State auditors found public funds misappropriated through “malfeasance, misfeasance, and/or nonfeasance.” The complexity of the scam required a diagram to lay out ties among Stoughton, other charter officials and 14 private companies that shared in ill-gotten school funds – almost $69 million.
Chalkbeat's reporting found discrepancies in enrollment now confirmed by the state. In more than 4,700 examples, children reported as enrolled completed no courses. Another 3,811 were flagged with just one or more course completions. The ghost enrollees included individuals who died or moved out of state, students withdrawn for lack of participation and some who did nothing beyond requesting information on the school. Counted as enrollees, they drew thousands of dollars each in state support that was, in turn, funneled to connected vendors. In the 2017-18 school year alone, the audit identified $15.5 million in overpaid tuition support.
Asked about the State Board of Account's report, House Speaker Brian Bosma defended the virtual school program and pointed to Daleville Community Schools, the tiny public school district that granted its name as authorizer of the charter schools, and the Department of Education, overseen by Indiana schools chief Jennifer McCormick. The Republican state superintendent, whose office was eliminated by the legislature effective next year, has been outspoken in calling for greater accountability for schools of choice.
Blaming the Department of Education for the abuses of charter school operators is like blaming the BMV for the actions of a drunk driver. Responsibility for lax regulations and oversight for both charter schools and voucher schools falls squarely on Bosma and the GOP supermajority. In cozying up to the deep-pocketed school-choice community, they ignored glaring examples of corruption here and elsewhere. It was almost 11 years ago when The Journal Gazette first reported on the suspicious real estate deals surrounding two Imagine Inc. charter schools in Fort Wayne – schools that eventually shut down with $3.6 million in outstanding state loans.
Charter school scandals are so common that the Network for Public Education began collecting them on a website and tagging them on Twitter: #AnotherDayAnotherCharterScandal.
“There is a crisis of charter corruption in the United States and sadly the powerful charter lobby stops every attempt to enact reform,” said Carol Burris, executive director of the organization. “In 2019 alone the Network for Public Education identified four major virtual charter scandals, including Indiana's two schools. A California virtual scandal cost that state's taxpayers over $50 million. Virtual charter schools have a pattern of 'cooking the books' when it comes to attendance and enrollment, and have the worst outcomes when it comes to student achievement.”
None of that appears to matter to Bosma and other legislators, who have been rewarded for their support of school choice by generous campaign contributions. Companies and individuals connected to the two virtual schools gave more than $100,000 to legislators and to Gov. Eric Holcomb. Bosma collected $10,000 and his GOP caucus campaign committee collected another $10,000. Sen. Travis Holdman, R-Markle, not only received $3,000 in campaign cash from vendors tied to the virtual charters, but his business consulting firm was awarded a contract by the virtual schools, as The Journal Gazette's Niki Kelly reported Tuesday. The contract amount is unavailable – the two charters are closed.
It now lies with state and federal law enforcement to attempt to claw back the $68.9 million carelessly entrusted to Indiana Virtual School and Indiana Virtual Pathways Academy. State officials made a poor school choice, indeed. Voters must remember on Election Day.