School Choice & Charters

A Group of Virtual Charters Comes Under Fire in Utah Following State Audit

By Danielle Wilson — March 14, 2014 5 min read
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This post originally appeared in the Digital Education blog.

A state audit has raised questions about a group of charter schools’ oversight of students enrolled in online education programs managed by two Utah companies, saying the schools deferred too much responsibility to the contractors.

According to the Salt Lake Tribune, at least eight charter schools have been warned that their licenses may be revoked if they don’t make improvements in teacher and curriculum verification, tracking of students, and oversight of contracts. All of these were identified as problem areas in a stinging state audit of publicly funded online and distance education providers in the state released by the Utah State Office of Education.

Virtual and “brick-and-mortar” charter schools around the state were outsourcing students’ online education to private companies. In turn, these companies would recruit students, and manage their curriculum, course schedules, and mastery of state assessments. State auditors estimate the schools were handing over more than 50 percent of their unrestricted per-student taxpayer funding to the private companies.

The Salt Lake Tribune reports that Harmony Educational Services and My Tech High Inc. have accessed an estimated $10.5 million in state money to recruit and manage the education of online students.

Both companies have contracts with their respective charter schools to receive either a set fee per recruited student or a percentage of the funding designated by the state per student, according to the audit. The companies collect fees for providing courses and curricula for the students. A Harmony contract was found to charge an additional student and mentoring fee ranging from $750 to $1,250, based on grade level.

The audit says that online and distance education programs that partnered with Harmony and My Tech consistently could not provide detailed documentation on the students they served, which raised questions about the legitimacy of their enrollment numbers. An estimated 2,550 students had their instruction managed by the two companies, many of them former home-schooled children.

The 52-page audit also found that after the companies recruited the students, the charter schools those students officially attended gave very little attention to the management of their education after enrolling them as public school students. The schools, the audit says, did a poor job tracking the students’ academic performance, attendance, and progress toward graduation. State Sen. Deidre Henderson, a Republican, referred to these children as “ghost students” in the article.

The audit noted that many students were enrolled in only a few courses for the year and others were not enrolled in required classes for their grade level, yet their official schools of enrollment received funding as if they were full-time students, and this funding was then dispersed to contractors. This has created more concern among lawmakers because charter school operators depend heavily on maintaining student enrollment to receive state funding.

“I believe these two companies took advantage of that,” Tim Beagley, the chairman of the Utah State Charter School Board, told the newspaper. Beagley said when charter schools build for more students than they enroll it puts them in a “pretty desperate situation.”

The two companies were also found in the audit to offer enrollment incentives to students, including computers and digital devices through a technology allowance or reimbursement. Low-income students who go through My Tech can receive subsidies for Internet services. Both Harmony and My Tech gave students a $300 technology allowance. Students who return the next school year through the My Tech program are eligible to receive an additional $400. The audit did not find any laws prohibiting the incentives, but recommended a review of those practices.

That recommendation from the audit did not satisfy some state lawmakers, who questioned whether taxpayer funds should be used to provide students with incentives. My Tech High is an online-only education program that provides traditional curriculum with an emphasis on technology and entrepreneurship. It currently has a partnership with three public charter schools in Utah.

In a telephone interview with Education Week, My Tech High Founder Matthew Bowman said his schools’ practices were sound and that it focused on providing education customized to meet the individual needs of students. He said his company also works to meet the needs of charter schools by helping them recruit students.

“Every one of our students check in weekly with a certified teacher and have to take required assessments; I have no idea why anyone would call these students ‘ghosts’,” said Bowman.

The state audit cited a number of other shortcomings in the practices of charters and the two companies, including:

  • Lack of verification of teacher licensure and whether educators passed background checks;
  • Classes not meeting Utah’s state standards;
  • Schools not following state truancy and compulsory-education laws;
  • One school and its contractor are getting state money for teaching home-school courses that did not qualify for state funding;
  • Some charters providing online classes without approval; and
  • Several schools not following competitive-bidding guidelines.

The audit urges the state to adopt new policies that provide greater oversight of distance and online education providers. David Thomas, the vice chairman of the Utah State Board of Education, told the Tribune that the audit was “a good wake-up call” for the state as it enters a “brave new world of online programs and distance learning.”

In response to the findings, Bowman told Education Week he has provided the state audit team with “pages of inaccuracies and omissions” he saw in the audit, and added that he “looks forward to any additional guidance” a review from the board may provide.

According to the Salt Lake Tribune, schools like the eSchool in Provo, Utah, a K-12 virtual charter school, have already started making changes recommended by the audit. The school has done the research to confirm that Harmony and My Tech teachers have Utah licenses and have passed background checks.( See this recent Education Week article about other states making charter school policy changes.)

This audit was conducted based on the 2012-13 and 2013-14 school years. According to the newspaper, 15 of Utah’s 90 charter schools and 23 of the state’s 41 school districts have online or distance-learning programs.

A version of this news article first appeared in the Charters & Choice blog.