Audit: Virtual school paid millions to founder’s company

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.

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Legislators dealing with virtual charter schools

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.

Indiana Statehouse

Indiana Statehouse

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.

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Panel to take on virtual charter schools

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