No to Local Control: DPI Should Authorize and Regulate Virtual Charter Schools

Matt DeFour wrote an interesting article in the State Journal last week about McFarland’s virtual charter school, known as the Wisconsin Virtual Academy or WIVA.  I have written some critical words about the school in the past.

The virtual school is operated by K12 Inc., a national charter school operator headquartered in Herndon, Virginia.  K12 had revenues in 2011 of about half a billion dollars and paid its CEO about $5 million for his efforts. The New York Times ran a long investigatory piece on K12 last December.  (The New York Times reporter actually spoke to me about my prior blog posts on K12 while she was researching the article but I apparently had nothing newsworthy to say.)

K12 organized a Wisconsin non-profit entity, Four Lakes Education, Inc, which in 2009 entered into a five-year contract with the McFarland School District for a non-instrumentality virtual charter school.

WIVA opened its virtual doors for the 2009-10 school year with 468 students.  The school grew to 819 students last year and enrolled 1,058 students this year.  According to the State Journal article, applications for next year are up 50% and so the school is likely to have more than 1500 students for 2012-13.  Next year K12 will be responsible for educating more than 40% of all students enrolled in McFarland schools, regardless of whether K12’s leaders could find McFarland on a map. 

K12’s arrangement with McFarland is designed to take advantage of Wisconsin’s open enrollment rules.  Under the open enrollment law, a student living in one school district can enroll in a neighboring school district instead.  The school district the student is leaving is required, in effect, to pay the school district the student is entering an amount established annually by the state.  For 2011-12, that amount is $6,867.

Under K12’s deal with McFarland, these open enrollment transfer payments go to K12.  K12 pays McFarland $300,000 per year, plus 3% of the open enrollment transfer payments received for each student beyond the first 800 enrolled in the school, which works out to a bit more than $200 per student in excess of 800.

The rest of the state funding goes to Four Lakes and K12.  This is the leading example of privatization of public education in Wisconsin outside of Milwaukee.  WIVA received more than $7 million in state aid this school year, which is more than most school districts in the state receive. (WIVA should be in line for about $10 million next year – state aid apparently only goes down for those schools that have, you know, actual schools.)  K12 looks to have a pretty good thing going, since this year out of that $7 million, WIVA appears to be spending less than $1 million on salaries and next to nothing on benefits for its approximately 30 FTE teachers.

Last fall, I attended a talk at the Urban League given by Greg Richmond, of the National Association of Charter School Authorizers.  One point Richmond was adamant on was that charter school authorizers should establish clear performance standards for new charters and should not hesitate to revoke the charters of the schools that fall short of their requirements.

The contract between McFarland and K12 does include performance standards.  The school is required to meet No Child Left Behind’s Adequate Yearly Progress (AYP) Measures.  There is also a requirement that the performance of the students in the charter school must enable McFarland to maintain or improve its ranking on WKCE scores as compared to other school districts in Dane County.

The State Journal article reported that WIVA’s state test scores are not meeting the contractual benchmarks.  It’s in the area of high school graduation rates that the school seems to fall most dramatically short.  The charter contract requires the school to have a graduation rate of at least 80% or “show growth” over the prior school year.  In 2009-10, the school had a four-year graduation rate of 37.5% and that figure fell even further last year to a dismal 30.4%.

But don’t hold your breath waiting for the school’s charter to get yanked.  The agreement between McFarland and K12 is drafted in such a way that the school could not be compelled to close, no matter how poor its performance, at any time before the end of the fourth year of the five-year contract.

More significant is the quote from the McFarland superintendent in the State Journal article: “There’s not been pressure to discontinue the relationship from any source.”

To me, this is the nub of the issue.  The arrangement with K12 has obvious benefits for McFarland.  This year, K12 will pay it about $350,000 for serving as host district for the charter school.  The amount will be closer to $450,000 next year.  The charter school is almost entirely distinct from the rest of McFarland’s schools.  With a handful of exceptions, the families served by the charter school do not live in McFarland.  In fact, the contract between K12 and McFarland specifies that unless the school district decides to the contrary, “pupils enrolled in the Charter School shall not be eligible to participate in any extracurricular or cocurricular activities of any kind sponsored or offered by the District.”

Under these circumstances, what incentive does McFarland have to exercise vigilant oversight authority over the K12 school and actually revoke its charter if its performance falls short of the contractual standards?

I know how the issue would appear to me if I were on the McFarland school board and I were considering whether to revoke the school’s charter or decline to renew it on the basis of the school’s abysmal graduation rates.

On the one hand, continuation of the arrangement and hence of the income stream from K12 would mean that the district could spend at least $150 more per student on the education of the kids who actually live in McFarland, which is a not insignificant sum.  On the other hand, revocation of the charter would mean that K12 would shop around for some other relatively small school district in the state that would be willing to host the virtual school, cash K12’s checks and provide even less oversight.  K12 wouldn’t miss a beat and nothing would be accomplished.  On top of this, as the McFarland superintendent pointed out, no one’s complaining.  I suspect that I wouldn’t be leading the charge to revoke the charter and kiss away that very handy K12 money.

This situation reminds me of the State’s settlement with the tobacco companies about ten years ago.  I worked at the state Department of Justice at the time and was tangentially involved in the settlement.  The tobacco companies agreed to pay the settling states large sums of money on an annual basis that were keyed to their sales performance.  The settlement terms turned out to be functionally equivalent to a sales tax on the settling tobacco companies.  The settling states quickly became quite attached to the settlement income stream and so were transformed from regulators to partners with the tobacco companies.

It just doesn’t work for a regulator to have a significant financial stake in the success of an entity that it’s regulating, whether it’s a tobacco company or a virtual charter school.  While I’m all for local control, virtual charter schools like WIVA that are marketed on a statewide basis should be authorized and regulated by DPI rather than by local school boards.

I’m not happy about the approximately $170,000 that the Madison School District has to pay to McFarland and hence to K12 for the 25 MMSD students enrolled in the virtual charter school.  But I might feel slightly better about it if I felt that some professionals at DPI were keeping a close eye on the virtual school rather than local school board members who are no more qualified than I am to supervise effectively this kind of statewide educational enterprise.

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8 Responses to No to Local Control: DPI Should Authorize and Regulate Virtual Charter Schools

  1. One thing that isn’t mentioned here: why are MMSD families leaving MMSD schools for Wisconsin Virtual Academy? The survey Dan Nerad conducted a few years ago showed that the top 2 reasons people leave MMSD are safety/behavior, and lack of adequate TAG programming. Until these 2 very large problems are rectified, families will continue to go elsewhere, whether to WIVA, private schools, home schools, or move to the burbs.

  2. Mad4Madison says:

    I will also echo the comment above. Ed, are you not curious as to why WIVA will have over 1,500 (projected students) even with scores that seem to be so poor? Why would I want to send my children to WIVA with scores like that? Yet that is exactly what a large number of parents and families are deciding. Which begs a question – from the persective of these parents, how bad must their district(s) be that makes WIVA look good?

    As for the loss of the $170,000 – I must assume that you feel just as bad about losing kids to McFarland itself or Verona and those amounts are larger than $170,000. Didn’t Dr. Nerad lobby to have the Open Enrollment changed to encompass some form of limits / income criteria? I continue to be a supporter of MMSD looking long and hard in the mirror and ask why families are leaving, than to reduce parental options. Going after the rules of Open Enrollment seems like trying to put up walls to keep people in and not figuring out what is wrong.

    I myself am asking what 25 families thought of MMSD to believe that WIVA was a better choice. Now that is a question!

  3. mmsmom says:

    I would not ask why they leave, but how they perform once they are enrolled. Longitudinal data on virtual school performance indicates mediocre results for most students. Before buying into an idea, one needs to take a look at the track record of the “silver bullet”. Thank you Ed for taking a stand on this gross misappropriation of taxpayer dollars. Virtual schools remove face to face contact and student supervision from the equation, while assuming that the students enrolled will be self directed and self motivated.

    • Mad4Madison says:

      mmsmom –

      I agree with your view of the “silver bullet.” But you are also making my point – what if parents don’t see it as a silver bullet, but rather a “less bad” bullet? You may find that parents are not thinking virtual schools are the “end all / be all” answer, just a better answer than their home district. In my opinion, to ignore asking those questions is a mistake.

  4. Just want to reiterate:

    The top 2 reasons people leave MMSD are safety/behavior, and lack of adequate TAG programming.

  5. Thanks for the comments. I have a few points in response.

    First, while there is no doubt that concern about the availability of TAG programming prompted some Madison families to send their children to non-MMSD schools, this was not the second-most-common reason offered for families’ decisions to open enroll out of the Madison school district.

    Last February, the School Board received an update on open enrollment. (You can find a link to the materials here: https://boeweb.madison.k12.wi.us/files/boe/2-27-12_agd_hyperlinked.pdf). The cover memo summarized responses to the 2009 survey of open enrollment leavers:

    “In 2008-09, MMSD conducted a survey of Open Enrollment leavers. Results of this survey were presented to the Board on July 20, 2009. . . .

    “The survey showed that about a third (34%) of the reasons are based on environmental concerns. These were defined as safety, drugs and negative peer pressure.

    “Personal preference made up about a third (31%) of the decisions to leave. These reasons included child’s choice, moved – continue at non-resident district, and attend with friends.

    “Proximity to other districts’ schools accounts for about a quarter (24%) of the reasons for attending another district. These included closer to home, closer to work, and closer to daycare. It is easy to see a clustering of leavers in several elementary attendance areas along borders with other districts.

    “About a quarter (22%) were related to curricular, after school or virtual programs.

    “Responses could cite more than one reason, which allows for a total greater than 100%.”

    Second, while there was discussion a couple of years ago about the school district supporting some other school districts that were trying to impose some restrictions on the open enrollment rules, we ultimately did not join in that effort. Neither the School Board nor (as far as I know) Dan Nerad lobbied to impose restrictions on open enrollment leavers. Since that time, of course, the open enrollment rules have become more lenient rather than more restrictive.

    As to why families choose virtual school options like WIVA, my guess is that these families have a lot in common with home schoolers, since virtual schools require active parental involvement as essentially unpaid virtual school staff. Our survey of the parents of home schoolers revealed that many of them have some pretty fundamental disagreements with the overall framework of values that tend to inform the approach to education in our schools. I think it would be quite a challenge to persuade many of these families that our schools are the best choice for their children. There are other families that choose virtual schools for other reasons as well, of course.

    Finally, I think there may be a tendency to over-generalize regarding the decisions of open enrollment leavers (despite my own generalizations in the previous paragraph). For families considering open enrolling out of the district, I think that the decision tends to come down to a choice between a particular Madison school and a particular school in a neighboring district. Geography plays a big role. We primarily lose students from a relative handful of schools on the edge of the district where a school in a neighboring district might not be appreciably more inconvenient for the family considering the move. Most of our schools see only a few open enrollment leavers.

    Rather than think of the issue only as a district-wide one, I’d like to see our efforts directed more on the individual school level and focused on those specific schools experiencing a lot of open enrollment losses. It could be useful to get the school principal and parents who are happy with the education their children are receiving at these schools to work together on strategies to address the concerns of those neighborhood families who are choosing other educational options for their kids.

  6. Choo Shoo says:

    I enrolled my children in WIVA this year. It is our first attempt at virtual schooling. I enrolled because we had moved to a very small district and my autistic son was abused by his principal. The school broke every special ed law on the books. They falsified records and bragged that they could. The superintendent was as bad as the rest of them. They were filthy and foul. They constantly spoke of religion and mocked children who were not the same religion as them. Teachers even spoke of religion in this public school. The teachers sent home a sign up sheet for a local church for the kids to play basketball. This was the worst 1 1/2 years I have ever had in my life. My children were treated horribly. THAT is why we left a brick and mortar. We have now moved to a new town however my confidence in B&M is shaken. It is my job as a parent to protect my childern and I had failed them in Westfield WI. I will now take full responsibility for their education and WIVA has allowed that. My personal take on this so far is that the curriculum is far more demanding than anything I have seen at any school my children attended. It is very rigorus. We spend most of our free time on school work. Perhaps the poor numbers are a reflection of this school having a higher standard? I was told that they are what the state expects, but that other schools will many times not teach the requirements anyways, making for an easier year. This is NOT an easy out route. If my children fail, then I have failed them. Not the school. There is a LOT of support from the teachers. If they see you having a tech issue in the class connect, they call you at home right away. They are right on top of your child’s grades. There is a lot of communication. This first year will be hard, but I see this as being the best choice I could have made for my kids. I can be home with them, have some flexibility, and know they are safe and learning. Just my perspective on why MY family chose this route. I saw it as the ONLY route.

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