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E-Charter Founder Charged Failing School Millions, Investigation Finds

Yet another instance of online charter mismanagement has come to light.

This week, Chalkbeat published an investigation into the finances and quality of instruction at the Indiana Virtual School, one of the largest high schools in the state with just under 5,000 students.

The charter only graduated 61 of its 900 seniors this past school year and received an F rating for the second year in a row. The school's founder, a businessman with no prior experience in K-12 education, had charged the school millions of dollars in management fees and rent through his for-profit company, Chalkbeat reported.

Like other online charters in the state, Indiana Virtual School receives funding from the state on a per-pupil basis. But while the two other largest online schools in Indiana spent about two-thirds of their funding on instruction, Indiana Virtual spent only 10 percent. The vast majority of their spending—almost 90 percent—went to support services, which Chalkbeat described as a "catch-all category," and could include a wide variety of unspecified legal and administrative services.  

With very little money spent on teachers and staff, the student-teacher ration was 222:1. Students had no live interaction with teachers and were expected to work through coursework alone, motivating and pacing themselves. The school doesn't keep records on participation—their 100 percent attendance rate measures whether students have signed up for courses, not whether students actually did the work.

The school isn't facing consequences. In fact, they're expanding, planning to open another school in Indiana and two more in Michigan and Texas.

Most of the students slated to enroll in the new in-state charter are former students of Indiana Virtual. This move hints at a pattern: Last year, Education Week reported on another Indiana online charter, Hoosier Academies Virtual School, facing state-mandated closure. Hoosier Academies also split into two schools, directing the students who were most behind academically into the new charter. With only the highest-performers left, the state schools chief said, the original school's grade might rise and prevent closure.

State education officials told Chalkbeat that they didn't have the power to intervene with Indiana Virtual—they are only mandated to take action once the school has four F grades in a row. Until then, it's up to the brick-and-mortar school district that manages the charter to monitor the virtual school. But the small, rural district that authorizes Indiana Virtual doesn't have much of an incentive to punish the charter—they receive part of the e-school's funding from the state.

Many of the problems plaguing Indiana Virtual School are endemic to the cyber-charter industry.

Earlier this month, the Ohio education department found that nine e-schools had overstated their enrollment numbers, leading the department to attempt to recover disputed per-pupil funds. The largest online school in the state is now threatening mid-year closure, saying the state's efforts will have a "fatal impact" on their operations. 

In Education Week's own investigation into cyber charters, published last year, reporters Ben Herold and Arianna Prothero documented the tensions that grow from for-profit management and how the online educational model doesn't work for most students. Read the full report here.  


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