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Districts’ only link to cyber charters: Money

Each one pays its own per-pupil charter rate, but oversight of the online schools is solely Pennsylvania’s responsibility.

An early learner studies at home in Philadelphia.
Photo by Melanie Bavaria

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

Only a small percentage of U.S. children attend school completely online, but the population that online schools serve has increased dramatically over the last few years and it is projected to continue to climb. In some states, the online charter school industry has seen exponential growth in recent years.

Nationally, about 200 cyber charter schools serve 200,000 students, according to a series of reports published in October by the Center for Research on Education Outcomes, Mathematica Policy Research, and the Center for Reinventing Public Education.

As the state with the second-highest cyber charter enrollment, Pennsylvania has 17 percent of the national cyber charter school population, or 35,000 students.

Dismal academic records

However, most of Pennsylvania’s cyber schools have shown consistently dismal academic records. According to the state’s School Performance Profile website, only three — 21st Century, PA Cyber, and PA Virtual — had an SPP score above 60. The state considers 60 and below to be substandard.

None scored higher than 70, which is the state’s minimum goal for all schools, and some scored in the 30s.

A national report on graduation-rate trends in both virtual and brick-and-mortar high schools showed that although overall rates are increasing, 87 percent of virtual schools nationwide have an adjusted cohort graduation rate of below 67 percent, the federal cutoff point for a “low graduation rate high school.”

In fact, the average graduation rate for virtual schools is 40 percent.

Although these schools represent only 1 percent of high schools, they represent a disproportionate 7 percent of low graduation rate schools.

In Pennsylvania, 11 of the 14 cyber charter schools are low graduation rate schools.

Proponents of cyber charters, particularly at the high school level, argue that the schools take many students who have become disengaged or frustrated with traditional brick-and-mortar schools.

“We work with kids who are truant,” said John Spencer, principal of ACT Academy, a small cyber charter based in Philadelphia that enrolls about 100 students, most from disadvantaged backgrounds. “A lot have not been successful at brick-and-mortar classrooms, and they are coming to ACT to find success and to find a educational institution that can help them.”

Joseph Roy, superintendent of the Bethlehem Area School District and an outspoken critic of charter schools, argues that although “there is something” to that argument, the same logic could be used for many urban school districts.

“We are an urban school district with large percentages of our students coming from poverty-stricken areas, and we don’t use that as an excuse [for poor performance]. Why can they?” said Roy. “Our students are similar, so if you break it down, it is comparing apples to apples.”

Statewide oversight

But cyber charters are not under the jurisdiction of any local district. Because they can accept students from all over the state, they are overseen by the Pennsylvania Department of Education. One enrolls nearly 10,000 students, making it larger than most school districts.

Even though districts have no control over the cybers, they are required to pay the per-pupil price to the cyber school for students residing in their district.

Cyber charters receive the same per-pupil amount from districts as brick-and-mortar charters, making them no less expensive for the districts.

And because school districts throughout the state have different per-pupil costs, the cyber schools can get anywhere from $6,000 to almost $20,000 from a student’s local school district, although all the students have the same educational program.

A few cybers were created in conjunction with school district consortiums called intermediate units, but they are smaller and serve a fraction of the total number of students in cyber charters.

Who manages the schools?

The larger cyber charters, which enroll thousands of students, are set up as nonprofits but are often managed by for-profit companies, which provide the curriculum and management services at a high price tag.

According to Agora Cyber Charter School’s 2013 filing with the Internal Revenue Service, the school paid $69,569,376 that year to K12 Management Inc., a national for-profit company that has ties to many cyber charters around the country. Agora is the second largest cyber charter school in Pennsylvania, enrolling about 8,000 students.

Since 2013, Agora has become “self-managed,” according to spokesperson JoAnn Gigliotti, meaning that the company no longer operates the school. “We do, however, continue to use their curriculum, so our relationship continues with K12,” she said.

K12’s corporate office is in Virginia, so the cash-strapped districts’ budget money has been going to out-of-state for-profit companies. And K12 is not the only management company with ties to Pennsylvania’s cyber charters.

Commonwealth Connections Academy, a Pennsylvania cyber charter, is managed by a subsidiary of Connections Education LLC, a national for-profit education management company based in Baltimore. Commonwealth Connections Academy announced earlier this year that it was changing its name to reflect that the school “will no longer rely exclusively on an out-of-state, national educational management company, Connections Education, for the majority of its services to meet student needs.”

School districts pay

Roy, whose district has about 240 students enrolled in cybers, argued that his concerns about charter school funding and oversight are “magnified” in the cyber model. This is simply money leaving the district “with zero control over the oversight” that could be used to improve local public schools, he said.

In order to combat the flow of money out of districts and into cyber charters, some districts, Bethlehem included, have launched their own cyber schools for parents and students who want access to online-only education. According to Roy, the district cyber school in Bethlehem runs at about half the cost per student of the district’s traditional schools.

In her 2013 article “Keep Following the Money: Financial Accountability and Governance of Cyber Charter Schools” for The Urban Lawyer, Temple University law professor Susan DeJarnatt argued that giving the same per-pupil funding to both cyber and brick-and-mortar charters is the biggest fundamental funding flaw of Pennsylvania’s charter system.

First, she wrote, cybers do not have the high costs of maintaining buildings, and second, they generally have higher student-teacher ratios, given an overwhelming reliance on parents to facilitate their children’s learning. Fewer teachers per student should translate to decreased costs, she noted.

Alternative models

State officials in the administrations of both former Gov. Tom Corbett, a Republican, and current Gov. Tom Wolf, a Democrat, have expressed concern over the funding model. Other states have experimented with different ways to fund cyber charters.

One option, DeJarnatt argued, is to have the state pay a flat per-pupil rate. This takes the burden off the school districts while giving the state (and the only source of oversight) a monetary incentive to regulate the schools. When Wolf argued for this model last year, he faced massive opposition from cyber charter operators (with large lobbying budgets), as well as parents, advocates and state legislators.

Cyber charter proponents contend that they have other high costs to bear and that reducing their funding to one relatively low per-pupil rate would force the schools to pull resources that could affect academic outcomes.

Other states are experimenting with different funding and oversight models, including “completion rate” funding that pays cybers based on how many students actually complete the program. This is demonstrated in varying ways in different states, including passing state tests, accumulating enough course credits, and demonstrating mastery of subject matter.

But reforming the cyber charter law has gained little traction in Harrisburg.

Sen. Lloyd Smucker (R-Lancaster), chair of the Education Committee, did not respond to interview requests regarding cyber charter funding and regulation.

Despite all the controversy, however, there is a consensus that cyber schools are not inherently negative. In fact, many educators and researchers say, the technological innovation that has enabled online-only schools to exist has potential to bring better educational options to many students who need an alternative to brick-and-mortar schools.

Some states have also committed to studying the cyber charter industry to gain insight into trends that work and those that don’t to better inform their policy decisions. According to the Center for Reinventing Public Education report, “These states have created a mix of strong central online programs, commissioned comprehensive studies, developed detailed contracts with online charter operators, or put in place other unique and proactive provisions for online charter schools.”

Pennsylvania has not followed suit.

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