Two virtual charter schools and the district overseeing them have to pay back millions of dollars in state funding, after the Indiana State Board of Education voted to get money back from the schools at its meeting Wednesday.

Indiana Virtual Pathways Academy, Indiana Virtual School, and Daleville Community Schools are on the hook to pay back about $40 million. A state audit found the two virtual charter schools reported twice as many students to the state than were actually taking courses, and the board voted to retroactively cut the virtual schools’ enrollment counts, meaning they have to pay back half the state funding they received.

State examiner Paul Joyce says once the audit is done, criminal charges could be filed if the findings support it.

“We will turn it over to the Attorney General for civil collection and involve local prosecutors or federal prosecutors for anything that was criminal,” he says.

The board’s decision means the state will withhold funding from the schools while they close down this year, and it also asks the Indiana Department of Education to closely monitor them while they shut down.

Daleville Community Schools said in a statement following the board's decision that it "is further proof that greater oversight of charter and virtual charter schools is essential."

Daleville Community Schools is in the midst of figuring out how much it owes to the virtual schools in authorizer fees given the schools' inflated enrollment and after a miscalculation came to light during conversations about closing the two virtual schools earlier this year – a part of the process the district says did not need the state's intervention.