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WASHINGTON, DC – U.S. Senator Sherrod Brown (D-OH) joined Senator Patty Murray (D-WA) today in writing to the U.S. Government Accountability Office (GAO) to urge the Comptroller General to examine policies and practices related to student experiences and outcomes at full-time virtual charter elementary and secondary schools. The Senators’ call comes on the heels of a new Center for American Progress report that shows K12 Inc., the nation’s largest for-profit virtual school operator, spent over $15 million on compensation for the top five executives in fiscal year 2016 while students continued to perform significantly worse than students receiving in-person instruction in traditional public schools.

The Senators said there is little accountability and transparency when it comes to for-profit and virtual charter schools, leading to scandals like that of Electronic Classrooms of Tomorrow (ECOT) in Ohio. ECOT defrauded families and taxpayers by manipulating attendance numbers, as well as years of poor student outcomes and low graduation rates, before state and local regulators acted. 

“Research on virtual charter schools shows that students attending such schools perform much worse than their peers receiving in-person instruction in traditional, brick-and-mortar public schools,” the Senators wrote in their letter to GAO. “In order to better understand the reforms needed to ensure student success with the growth of virtual charter schools, we request that GAO study the student experience at these schools.”

According to the report, Ohio has the second highest percentage of students served by a virtual school, using 2013-14 school year data (2.2%). Some of the key findings in the report include:

• While students attending virtual charter schools continue to perform significantly worse than students attending traditional public schools, K12 Inc. – the nation’s largest operator of virtual charter schools – spent over $38 million on advertising in Fiscal Year 2018 and $15 million on compensation for the top five executives in fiscal year 2016.

• K12 Inc. operates the Ohio Virtual Academy, which received nearly $74 million in public funding in FY 2016 despite the fact that its schools had lower graduation rates than Columbus City Schools and Ohio Public Schools on average. K12 Inc. must repay $1.6 million in funding for its enrollment discrepancies for school year 2016-2017.

• Similarly, ECOT had significant differences between the students it claimed it enrolled and those that it could document participation through login data. For the 2015-2016 school year, ECOT could only account for just over 40 percent of its students – only 6,300 of its 15,300 total enrollment. In 2016-2017, ECOT could only account for just over 80 percent of its total student enrollment. ECOT is being held liable to repay nearly $80 million for over counting its enrollment – $60 million for the 2015-2016 school year and $19 million for 2016-2017.

Brown said it is concerning that Ohio is still turning a blind eye to the practices undertaken by online for-profit schools, which harm students and bilk taxpayers. In fact, many of the same students harmed by ECOT’s abrupt closure have turned to the Ohio Virtual Academy, whose parent company, K12 Inc., has a record of prioritizing executive profits over student outcomes.

Brown has long led efforts to increase transparency and oversight of Ohio’s charter schools and has worked to hold ECOT accountable and to help Ohio school districts who have been hurt by ECOT’s actions. ECOT closed in January following findings of mismanagement, which included inflated enrollment numbers. Since 2000, ECOT received more than $130 million in federal funding.

Following the ECOT scandal in January, Brown asked the Ohio Department of Education and State Board of Education for specific steps Ohio could take to ensure ECOT students would be able to transition to new schools. He also wrote to the Department of Education (DOE) Inspector General Kathleen Tighe calling for a prompt investigation into ECOT and the for-profit charter school industry. Brown’s letter followed the Ohio State Auditor Dave Yost’s release of an audit finding that ECOT withheld critical student data to secure more state and federal funding, which Yost referred to Tighe and DOE.

In August, Brown introduced legislation to ensure any federal funds recovered from ECOT were returned to the school districts that lost them to ECOT in the first place. Brown’s bill, the Putting Students First Act, would require any federal funds the U.S. government might recover from ECOT or other bad actors who misuse education funds be returned to Ohio’s students instead of the U.S. Treasury’s general fund.

A copy of the Senators’ letter to GAO can be found below and HERE:

The Honorable Gene Dodaro

Comptroller General

U.S. Government Accountability Office

441 G Street, N.W.

Washington, D.C. 20548

Dear Mr. Dodaro:

We write to ask that the Government Accountability Office (GAO) examine policies and practices related to student experiences, supports, and outcomes at full-time virtual charter elementary and secondary schools. 

Virtual charter schools enroll a small but growing percentage of elementary and secondary school students nationwide. In the 2016-17 school year, there were 429 virtual schools in 27 states, enrolling just under 300,000 students.  Seventy-six percent of those students were enrolled in fully virtual, charter schools – many of which are growing exponentially. For instance, GOAL Academy in Colorado, a full-time virtual charter school, only served 170 students in 2009, but in 2017, it served 3,764 students.  

Research on virtual charter schools shows that students attending such schools perform much worse than their peers receiving in-person instruction in traditional, brick-and-mortar public schools.  A 2015 CREDO study reported that students in virtual charter schools experience 180 fewer days – a full school year – of learning in math and 72 fewer days learning in reading compared to peers at traditional public schools.   In addition, the student to teacher ratio can be astronomically higher in many of these schools. For example, the average ratio is 45 students to 1 teacher in virtual charter schools – compared to the national average ratio of 16-to-1 in traditional public schools – but some virtual charter schools report ratios of closer to 275 to 1. 

Despite these negative outcomes, most states distribute funding to virtual charter schools as they would to brick-and-mortar schools. And yet, there is limited information on how operators allocate those public dollars to educate students and manage company operations. This is especially problematic as the majority of virtual charter schools are either explicitly operated by or connected to for-profit companies that have perverse incentives to minimize the cost of instruction and student supports in order to boost their bottom line.  

Accountability models, funding formulas, and attendance policies were created for brick-and-mortar schools, and yet, state funding and accountability policies have not kept pace with the growth of virtual charter schools. States and districts have yet to identify models that will effectively measure student participation and attendance rates in online schools. As a result, it is difficult to determine how many students these schools are serving and how much funding they should receive. For example, in Ohio, Electronic Classrooms of Tomorrow (ECOT) concealed attendance numbers as well as student participation and graduation rates for years before the state and local regulators acted.  Moreover, there is almost no research on whether virtual charter schools meet student needs, especially for students who require specific accommodations, including English learners and students with disabilities.

In addition to concerns about accountability, virtual charter schools also lack transparency. A recent report by the Center for American Progress found that K12 Inc., the largest for-profit virtual school operator, spent over $20 million on compensation for the top six executives in fiscal year 2017.  Moreover, the company spent almost $37 million on advertising.   Unfortunately, similar data is not available for other for-profit, virtual charter school operators since K12 Inc. is the only publicly traded company with available records specific to these schools. This lack of transparency makes it impossible to know how virtual charter schools and their affiliated management companies spend public dollars.

In order to better understand the reforms needed to ensure student success with the growth of virtual charter schools, we request that GAO study the student experience at these schools. Specifically, we ask that GAO:

• Examine how virtual charter schools recruit students, compensate recruiters and enrollment advisors, target particular student groups, and discuss the education program with families to determine if the school is a good fit for students’ needs and circumstances.

• Identify if there is a relationship between the rate of growth of particular virtual charter schools and their academic performance.

• Analyze if there is a relationship between the rate of growth of a particular virtual charter school with recruiting tactics, recruiter compensation, and advertising. 

• Examine the cost structure of virtual charter schools and how such structure may or may not take into account or incentivize stronger student outcomes. Examine students’ access to live teachers and other support staff, such as school counselors. 

• Examine the vendor relationships between charter school authorizers, virtual charter schools, and their management companies and whether there is a trend of conflicts of interest between vendors and charter school leadership or oversight bodies.

• Examine student outcomes at virtual charter schools, including outcomes for subgroups of students including major racial and ethnic groups, English learners, students with disabilities, and low-income students.

• Examine the additional supports and accommodations available to English language learners, students with disabilities, and students who are significantly behind grade-level.

• Examine the academic rigor of courses, including the criteria used to gain course credit, required assignments, and the level of academic performance required for a passing grade and graduation.

• Compare the processes and methods that virtual charter schools use to measure attendance and participation with the amount of time students spend performing course work. 

• Identify the amount of federal, state, and local funding virtual charter schools receive.

Thank you for your attention to this important issue.

Sincerely,

Senator Sherrod Brown

Senator Patty Murray

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