Charter schools are publicly funded schools that are operated outside publicly overseen school districts, sometimes by for-profit companies. Charter advocates say these schools offer choices to families that want alternatives to troubled neighborhood schools. But charter schools have become increasingly controversial in recent years, with critics saying that in many places, they take money from district schools that educate the vast majority of American children and do not on average have better student outcomes than traditional public schools.

Charter schools experienced a jump in enrollment during the coronavirus pandemic, but as this post shows, much of that jump was in virtual charter schools, which have long been the worst-performing schools in the charter sector. This past spring, the U.S. Government Accountability Office released a concerning report about virtual charters.

This post provides new data on the rise in virtual charter enrollment and digs into the GAO report. Part of the piece is technical, which is important to explain how the findings were reached.

The following was written by Carol Burris, an award-winning New York school principal who is now executive director of the Network for Public Education, a nonprofit advocacy organization that opposes charter schools. Burris has written extensively about charter schools and other school reform efforts for more than a decade on The Answer Sheet.

By Carol Burris

Last October, this post examined state 2020-21 enrollment data indicating that large numbers of students had during the coronavirus pandemic moved to virtual charter schools, which are notorious for being the lowest performing schools in the charter sector. Researchers and advocacy organizations, including the National Alliance for Public Charter Schools, had previously been highly critical of virtual charters.

The final numbers are now in from the Common Core of Data, and the findings are confirmed. During the 2020-2021 school year, an additional 175,260 students enrolled in virtual charters, bringing the total enrollment in virtual charters to 483,871. Even more important, that shift accounted for over 70 percent of the increase in charter school enrollment between the 2019-2020 and 2020-2021 school years, an increase that was heralded as a victory by school-choice advocates.

Will these students remain at home learning over the internet, or will they return to brick-and-mortar schools? That remains unknown. What we do know is that families are being aggressively courted by for-profit charter operators that include national chains like Stride K12 (formerly K12 Inc.) and Pearson’s Connections Academy as well as smaller for-profit organizations that are marketing their own online charter schools.

Background

The Common Core of Data (CCD) is the U.S. Department of Education’s database on public elementary and secondary education. As described by the U.S. Department of Education, the CCD is “a comprehensive, annual, national database of all public and charter elementary and secondary schools and school districts.”

The database includes a table generator that allows the public to create tables of information on topics of interest, including school types, enrollment, and demographics. We used that generator to compare the growth in online school enrollment between 2019-2020 with 2020-2021 enrollment.

Four choices describe a school’s virtual school status. A Full Virtual school delivers all instruction over the internet. A Face Virtual school delivers instruction virtually but provides the opportunity for some in-person meetings among students or with teachers. A Supplemental Virtual school offers some virtual courses, but online learning is not the primary means of delivering instruction. The fourth possibility is Not Virtual, meaning that all instruction is provided within a brick-and-mortar school.

For our analysis, we included the first two categories of schools — Full Virtual and Face Virtual. These were the two types included in the March 2022 report on virtual charters by the Government Accountability Office (GAO).

For the 2019-2020 school year, the CCD identified 349 charter schools as being Full or Face Virtual. There were four coding errors leaving a total of 345 schools. Enrollment in those schools ranged from 0 to 12,693. The total enrollment in virtual charter schools that school year was 308,611 students, representing 9 percent of the total 3,432,494 students enrolled in charter schools that year.

Using CCD data, we followed the same procedures for the following year, 2020-2021. California, Utah, Texas and Illinois did not provide their schools’ virtual status. Therefore, we used the California Department of Education’s database to identify exclusively (full) and primarily (face) virtual schools in that state. We then used the 2019-2020 CCD database to identify the rest of the schools in the other three states. If the school was open and still virtual, it was added.

The CCD identified 3,681,958 students as being enrolled in charter schools in 2020-2021, which indicated that student enrollment in virtual charters had jumped from 9 percent to more than 13 percent of charter school enrollment.

The number of virtual charters increased from 345 schools to 384 — a modest increase. But the capacity of virtual schools, especially for-profit-run virtual schools, to expand without facility concerns allowed the massive enrollment surge to be absorbed with only a modest increase in the number of schools.

Charters operated by the for-profit online giant Stride K12 increased from 72,474 students in 2019-2020 to 110,767 in 2020-2021. Its strongest competitor, Pearson’s Connections Academy, experienced even stronger proportional growth, from 53,673 to 85,749.

Overall, the for-profit-run charter sector enrolled more than 50 percent of all students registered in virtual charters during both years.

Why is this a problem?

Those who believe in market-based schooling see the expansion of low-cost virtual schools as a victory. Others who believe in high-quality schools view the expansion of virtual charters as a cause for serious concern.

In March 2022, the GAO issued a blistering report on virtual charter schools. The analysis showed that virtual charter students lagged behind their peers in brick-and-mortar charter schools, and even further behind students in brick-and-mortar public schools in publicly overseen districts.

When the GAO reviewed student proficiency in math and reading, they found “the national average math proficiency rate for virtual charter schools was 25 percentage points lower than the rate for brick-and-mortar traditional schools” and “the average reading proficiency rate for virtual charter schools was 9 percentage points lower than brick-and-mortar traditional schools.”

 

From the report: “The participation rate for virtual school students on state tests is substantially lower than for students in brick-and-mortar traditional schools and brick-and-mortar charter schools according to our analysis of EDFacts data.”

The concerns of the GAO extended beyond academics to criminality. They reported that states have varied methods for accepting daily student attendance figures from virtual charters, leaving those figures vulnerable to manipulation and fraud. Their investigators found that some schools relied on students only logging into a portal or a program, regardless of how long they stayed. While some virtual charters took daily attendance, others took attendance only weekly or even monthly.

Attendance inflation and manipulation occur because enrollment data determines how much money virtual charter operators will get from our state and federal tax dollars. Such manipulation can significantly enhance end-of-year profits. Fraud, costing taxpayers hundreds of millions of dollars, from enrollment schemes involving virtual schools has occurred with alarming frequency.

Notable cases include the A3 charter school network, EPIC charter schools, California Virtual Academy (CAVA), and Ohio’s Electronic Classroom of Tomorrow (ECOT).

Eleven people were indicted in the elaborate A3 charter scheme, which bilked California taxpayers out of $50 million. Perpetrators were accused of falsely and dually enrolling students in their charter schools, without the knowledge or consent of parents, to collect state payments.

After a decade of investigation, David Chaney, Ben Harris and Josh Brock of Epic charters were arrested in June of 2022 for cheating Oklahoma taxpayers out of tens of millions of dollars. The trio had regularly enrolled “ghost students,” including students enrolled in home schools and private schools, created fake invoices, used school credit cards for personal items, and dipped deep into “learning funds” accounts to make political contributions to stall and obstruct the auditing of the school. During the 2020-2021 school year, this corrupt online chain, which has shed its management company and is now on probation, enrolled over 60,000 students.

Although CAVA has made its settlement to the taxpayers of California in compensation for sloppy attendance and deceptive practices, ECOT still owes the state of Ohio $117 million.

The allure of virtual schools

For those not interested in engaging in fraud, virtual charter schools are still a source of enormous profit, which is why for-profits operate over half of the sector. The GAO provides insight into why this is so. According to the report, “The student-teacher ratio across virtual charter schools was about 75 percent higher than for brick-and-mortar traditional public schools, according to 2017-2018 CRDC data.” The GAO also found that while district public schools spent $13,646 per student on instructional staff in 2017-2018 (50 percent of all of their income), virtual charters spent only $8,295 per student (25 percent of all of their income).

This allows virtual charters to dedicate excess resources to attracting new students in addition to bottom-line profit. The GAO described the marketing operations of virtual charter schools as follows:

Officials in one state said the bulk of virtual charter school advertising tends to be seasonal. Schools launch multimillion dollar campaigns throughout the summer, including on television and billboards throughout the state, to encourage enrollment for the fall. Officials from one virtual charter school in Pennsylvania said they broadcast television ads on specific networks that appeal to parents and air the commercials in the mornings when parents might be struggling to get their children ready to go to school and in the evenings after children are in bed.

Perhaps the most disturbing marketing tactic is providing families financial incentives for enrolling their children in the virtual charter or for recommending other children to the school.

In 2016, I met Anaheim High School District Superintendent Michael Matsuda. Matsuda showed me a flier from Epic Charter schools, which was expanding from Oklahoma to his state of California at the time. It advertised that new enrollees would receive $1,500 for a “personal learning fund,” along with free laptops, iPads, and internet service. According to the Woodward News, Epic was also handing out free concert tickets, vacations and other prizes for referrals of students to the school at a time when its four-year graduation rate was only 28 percent.

Such practices are not isolated to Epic. The GAO found that 31 percent of virtual charter schools’ websites “specify that stipends are available to enrolled families, which can be used to pay for extracurricular activities, among other purchases.” For cash-strapped families, this can provide a powerful incentive.

Conclusion

Although it is easy to blame the sharp increase in virtual charter enrollment on the pandemic, as the GAO notes, virtual charters have been the fastest growing sector of charter schools for years. Whether that enrollment trend will dip now that families feel it is safe for their children to return to in-person learning remains to be seen. Our preliminary research shows a drop in charter school enrollment during the 2021-2022 school year, but until the final NCES numbers are released, we will not know the final count — either overall or in virtual schools.

Now, small for-profit chains are opening virtual charters, with many of these schools coming online this year. The big brick-and-mortar for-profit chains, including Academica and Leona, have also opened virtual charters. Other for-profit-run charters are providing full virtual options as part of brick-and-mortar schools. Those enrollment numbers are hidden in school reports and, therefore, not included in our totals.

There may be a continued demand for virtual schools, which the market-based charter movement promotes and expands. However, studies beyond the GAO have demonstrated that online schooling is a flawed option for most students, with kids often returning to district schools far behind academically. Virtual schooling is the poster child for the failings of school choice. It is time that the public demand guardrails and extensive reform.