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Online Charter Schools Tested by Setbacks and Self-Inflicted Blows

by Mike Brunker
NBC News
February 22, 2016

But some in the charter industry acknowledge that such arguments are wearing thin.

Nina Rees, president and CEO of the National Alliance for Public Charter Schools, said online charters need to do more to document the progress that students are making.

“It’s difficult for the charter school community as a whole to accept some of these excuses,” she told NBC News. “Until the online community steps forward and demonstrates how they are raising the standards over time … it’s difficult to defend.”

Steven Guttentag, president and co-founder of Connections Education, the second biggest manager of online charter schools and a division of Pearson, the world’s largest education company, said it was virtually impossible under current state reporting systems to capture students’ educational outcomes.

“I don’t think the establishment has figured out how to track these kinds of students,” said Guttentag.

To illustrate what it considered the national study’s shortcomings, Connections shared performance data for the 2012-2013 school year for the 26 virtual schools it manages. The figures, which covered approximately 65,000 full-time equivalent students and included some online public schools, showed that students who stuck with the program beyond the first year improved steadily. After three years, for example, 75 percent tested at proficient or better levels for reading, versus 67 percent of first-year students. Math scores were lower — 59 percent proficiency after three years — but nonetheless showed similar improvement.

In addition, students who attended the online schools for all four years of high school had an 84 percent graduation rate — higher than the 82 percent achieved by U.S. high schools as a whole, according to the data.

John Watson, president of the Evergreen Education Group consultancy and an expert on digital learning, agreed that state systems to track educational outcomes were deficient. Those concerns, he said, were addressed in the Elementary and Secondary Education Act (ESEA) reauthorization passed by Congress and signed by President Barack Obama in December.

“The passage of ESEA has brought front and center the idea that accountability systems under states were not working terribly well,” he said. “It is allowing districts to figure out new systems for particularly problematic situations such as ‘blended’ schools (that combine both online and in-person instruction), online schools and alternative schools.”

Critics also say states need to subject online charter schools to more stringent financial-reporting requirements, citing recent scandals. They include:

• David Hansen, an Ohio Education Department official who violated state law by omitting failing grades for online charter schools from a key state evaluation. News reports said the omissions benefited both the authorizing agencies of the low-performing schools, which derived substantial revenue from their operation, and for-profit management companies, including some linked to political donors to Ohio Republicans, including Gov. John Kasich. Hansen’s wife, Beth, is managing Kasich’s presidential campaign.
• A federal grand jury indictment of the founder of the Pennsylvania Cyber Charter School, one of the nation’s biggest online charter schools, on charges that he used a web of shell companies to siphon off at least $1 million in tax dollars for his personal use. Nick Trombetta, who ran the school better known as Pa Cyber prior to his retirement in 2012, is scheduled to face trial in June on charges of mail fraud, bribery, tax conspiracy and filing false tax returns.

An April 2015 report by the Center for Popular Democracy, a left-leaning advocacy organization, and the Alliance to Reclaim Our Schools, a coalition that includes the nation’s two largest teachers unions, alleged that charter schools are susceptible to fraud, waste and abuse and mismanagement and have suffered at least $203 million in losses as a result.

Kyle Serrette, the Center for Popular Democracy’s director of education justice campaigns, said few states require regulators to check the books of charter schools and instead rely on outside auditors. Those auditors are concerned that the figures add up and are not looking for fraud, he said.

But Jeanne Allen, founder and president emeritus of the Center for Education Reform, a pro-charter school group, says many of the incidents documented in the report were relatively minor bookkeeping lapses that anti-charter school forces have trumped up to embarrass operators.

“There are only a handful of incidents where there was actual fraud,” she said.

Another issue raised by critics is the involvement of for-profit players like K12 Inc. and Connections Education. That presents an inherent conflict of interest, they say, since the companies are charged with maximizing return at the same time they are supposed to be providing a quality education for students.

Greg Richmond, president of the National Association of Charter School Authorizers, an independent group that represents legal entities empowered to create charter schools, said the for-profit companies often aren’t forthcoming with financial information.

“That practice of shielding financial activity from public scrutiny does enable individuals to engage in fraud or to set up self-dealing arrangements,” Richmond said.

Guttentag conceded that some online charters have tried to game the system. But he said his group, Connections Education, is committed to transparency.

“I can’t tell you there aren’t any bad actors out there, but that’s not how most of the schools operate and certainly not how we operate,” Guttentag said.

K12 Inc.’s Kwitowski also said instances of fraud were rare and that the publicly traded company reports any concerns to state authorities.

“Governance for us is extraordinarily important,” he said.

Guttentag, who cofounded Connections Education in 2002, said dealing with such concerns comes with the territory when you’re trying to create a new educational model.

“The promise of charters was really about the promise of innovation, and in any industry where you have innovation and disruption, it’s going to be messy and it’s going to attract criticism,” he said.