Indiana can proceed with its effort to recover $154 million from two defunct virtual charter schools and their leaders and business partners, a judge has ruled.
Judge Michael A. Casati rejected requests from school officials that he dismiss state lawsuits aimed at recovering the funds. His decisions were filed Monday in Hamilton Superior Court.
Attorney General Todd Rokita, representing the state, filed suit in July 2021 against Indiana Virtual School, Indiana Virtual Pathways Academy and several of their officers and business partners, alleging they misappropriated state funds. The lawsuit followed a State Board of Accounts investigation that found officials inflated enrollment figures and made improper payments to companies run by themselves and by associates.
It’s been a year since the State Board of Accounts released a detailed report alleging that tens of millions of dollars in “public funds were misappropriated” by two virtual charter schools. We’re still waiting to see if anyone will do anything.
Copies of the report were sent to the offices of local and federal prosecutors and the Indiana attorney general; but none are disclosing how they will respond. An official with the Marion County prosecutor’s office suggested the matter fell under federal jurisdiction. At the office of the U.S. attorney for the South District of Indiana, spokesperson Steven Whitaker provided a no-comment comment:
Recent news stories disclosed that virtual charter schools have been a bad deal for Indiana taxpayers. A new study suggests the schools may have been an even worse deal for students.
The study, slated for publication in the journal Educational Researcher, finds that Hoosier students who switched from public schools to virtual charter schools experienced significant academic setbacks.
“We see substantial, persistent drops in math and English language arts achievement,” said study co-author Joe Waddington, an assistant professor of education policy at the University of Kentucky.
The Indiana State Board of Education has ruled that the authorization of Indiana Agriculture and Technology School may violate state law, calling into question the future of the charter school with a novel approach that blends online learning and visits to a working farm.
In a notice of violation, the board tells the school’s authorizer, Nineveh-Hensley-Jackson United School Corp., that it isn’t permitted to authorize a virtual charter school that operates beyond the district’s boundaries. It calls for the school district to respond to the notice by March 10.
“It is imperative that NHJ address this matter in a timely manner, as failure to do so may result in the revocation of NHJ’s authorizer status,” the notice says.
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” — Upton Sinclair
We’ve known something fishy was going on with virtual charter schools since 2017, when a Chalkbeat Indiana investigation exposed shady business practices and lousy test scores and graduation rates at Indiana Virtual School and its sister school, Indiana Virtual Pathways Academy.
A blockbuster report this week from the State Board of Accounts shows just how bad it was – and it was worse than we’d imagined. The report charged that the schools overbilled the state by $68 million by vastly inflating the number of students who were enrolled in and attending classes online.
It also found schools made $85.7 million in questionable payments to vendors in which school officials or family members had an interest. Much of the taxpayer money that the schools received, the report shows, went to a network of for-profit businesses tied to school founder Thomas Stoughton and his associates.
State Rep. Jeff Ellington wants to change the law so people who donate to political campaigns no longer need to reveal their addresses. This is a truly bad idea. Indiana should be collecting and disclosing more, not less, information about the people who finance elections.
Ellington, a Bloomington Republican, is all worked up about the idea that people could “target” individuals who have donated to certain candidates. He’s mimicking the right-wing outrage machine, which has spun into overdrive since Texas Congressman Juaquin Castro tweeted the names of 44 residents in his district who contributed the maximum allowed to President Donald Trump.
Ellington told the Bloomington Herald-Times that the tweet “will likely get someone hurt.”
News flash: Castro didn’t disclose the identity of the donors. The Federal Election Commission did, just as it has disclosed campaign finance information for decades. Anyone could look it up and share it.
Is Indiana finally getting serious about cracking down on abuses by virtual charter schools? It sure looks like it, but we’ll have a better idea after Wednesday’s meeting of the State Board of Education.
The board will decide whether to try to recover tens of millions of dollars that two of the schools – Indiana Virtual School and Indiana Virtual Pathways Academy – received for students who were enrolled but apparently didn’t take classes or earn credits.
State officials estimate the schools inflated their enrollment figures and were awarded more than twice the appropriate funding in the past three years. The estimate comes from the head of the State Board of Accounts, which is auditing the schools’ books after they fell years behind in filing financial reports.
A 2015-16 audit report for Indiana Virtual School was released last week, and it shows the school continued to pay millions of dollars to for-profit companies run by the school’s founder and his son.
Chalkbeat Indiana laid out the details of this arrangements in an investigation published in October 2017. The online charter school, while organized as a nonprofit entity, paid management, administrative and technology fees to AlphaCom Inc., a business run by school founder Thomas Stoughton.
It also paid A Simple Reminder, a business run by Stoughton’s son, for IT and marketing services. Thomas Stoughton, the AlphaCom head, also served as chairman of the Indiana Virtual School board.
In 2015-16, according to the audit report, the school was charged:
- $6,156,179 by AlphaCom.
- $1,255,000 by A Simple Reminder.
It should be a no-brainer for Indiana lawmakers to rein in abuses by low-performing virtual charter schools. But there are few sure things in the General Assembly.
As Chalkbeat Indiana reported, virtual charter schools have spent heavily in recent years to lobby legislators. They have also contributed generously to political campaigns. They will be heard.
Regulation is needed because virtual charter schools, which provide all or most of their instruction online, have some of the worst academic performance in the state. Most have consistently received Fs in the state’s school grading system, and their test scores and graduation rates tend to be low.
A Chalkbeat investigation found questionable business practices at one such school, Indiana Virtual School. Its more recently opened sister school, Indiana Virtual Pathways Academy, had a 2018 graduation rate of 2.2 percent. Yet it didn’t receive a school grade because too few of its tenth-graders took required tests – even though, with over 6,000 students, it is the largest school in the state.
The State Board of Education’s committee on virtual charter schools will have its first meeting today. It has a formidable task – figuring out how to bring effective oversight to the online schools that have become the fastest-growing education sector in Indiana.
“I think there’s just a real concern about accountability,” said Gordon Hendry, the state board member who will chair the committee. “Virtual charter schools should be accountable for their performance. We spend tens of millions of dollars on them, so we want to make sure the state of Indiana, as well as the parents and students, are getting the very best education possible.”
So far, they don’t seem to be. All four virtual schools that were in operation in 2016-17 received F’s in the state’s school grading system. Test scores and graduation rates were uniformly low, even though virtual schools generally serve less disadvantaged populations than public schools. Critics have referred to the sector as the Wild West for its anything-goes ethos. Continue reading