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Online Charter Schools Tested by Setbacks and Self-Inflicted Blows

New questions about the quality of online charter schools' operations are threatening to stifle the sector's growth.
image: Pa Cyber Student
A student at PA Cyber worked on her laptop at her home in Lancaster county, Pennsylvania in 2012.AP File

Online charter schools have soared in popularity in recent years, based on a deceptively simple promise: delivering quality instruction — anytime and anywhere — to any student with an Internet connection.

But new questions about the quality of that education, and how the schools operate, are threatening to stifle that growth.

Supporters of traditional public school systems say the online schools lack accountability and are too dependent on for-profit school managers. High-profile scandals have added to the perception.

image: Pa Cyber Student
A student at PA Cyber worked on her laptop at her home in Lancaster county, Pennsylvania in 2012.AP File

The criticism has sharpened since an October 2015 study of 200 online charter schools that serve approximately 200,000 students in 26 states. It found that charter students who received instruction exclusively via the Internet achieved "significantly weaker academic performance” in math and reading, suffered from larger class sizes and received far less attention from teachers than those in traditional schools.

The study — funded by the pro-charter Walton Family Foundation and comprised of three separate reports by Stanford’s Center for Research on Education Outcomes (CREDO), the Center for Reinventing Public Education (CRPE) at the University of Washington and Mathematica, a private policy research company — found the education deficit was "exacerbated by high student-teacher ratios and minimal student-teacher contact time."

CRPE Director Robin Lake said the results came as little surprise to anyone who had followed student testing in individual states that hosted online charter schools.

“I think the general reaction was that it was the evidence people needed to confirm what they already knew,” she said.

Nonetheless, the study added fuel to the debate over charters' impact on the traditional public school system.

“It should certainly give parents, taxpayers and policymakers pause before there’s a rush to further increase quantity over quality,” said Kim Anderson, director of advocacy at the National Education Association, which represents more than 3 million public school and college employees.

Officials of the Walton foundation, the charitable arm of the Wal-Mart founding family and the biggest private funder of charter schools, said in an op-ed published in January that the study would prompt them to “ask new, more rigorous questions of online charter operators” when reviewing grant proposals.

But Marc Sternberg, the foundation’s director of education giving, told NBC News that the findings didn't mean the nonprofit was turning its back on online education. “We are looking out on the horizon and see huge possibilities for how technology can be integrated into instruction that is good for students, parents and schools,” he said.

Charter operators said the study's methodology was flawed and failed to take into account that the online schools often served students who faced serious challenges at brick-and-mortar schools — bullying, medical problems, work demands and frequent transfers.

“When a student is struggling in school, in many cases the only alternative is an online school,” said Jeff Kwitowski, a spokesman for K12 Inc., the largest for-profit company managing U.S. online charter schools. “They are always transfer students — they come in from somewhere else and many of them are academically behind. The online schools ... are punished in their graduation rate because those students are on their rolls.”

“I don’t think the establishment has figured out how to track these kinds of students"

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.