Virtual Charter Schools Say Allegations Of Enrollment Inflation Are False

DALEVILLE -- The attorney for two virtual charter schools alleged to inflate student enrollment and received millions of dollars in overpayments from the state, says new evidence will prove the schools did nothing wrong.

The claim came Monday during a meeting of the Daleville Community School Board, the oversight body of the charter schools. Board members seemed taken aback by the claim and demanded to know why an attempt to counter the allegations was happening now, months after the school district raised concerns.

The state is working to recover more than $40 million after an audit found the Indiana Virtual School and Indiana Virtual Pathways Academy exaggerated enrollment for three years. Daleville, a small district northeast of Indianapolis, who authorized the schools' creation, began the process to close both.

But Mary Jane Lapointe, the virtual schools' attorney, told Daleville officials they jumped the gun on charter revocation. She says new documents created by the schools' enrollment vendor gives more data and context.

"There were no overpayments. In fact, there were no miscalculations. None," Lapointe told the board. "In fact, there were always more students enrolled then they were getting paid for."

But Daleville School Board members say they've been in discussions with the schools for months.

Following concerns over enrollment inflation and lack of information from the virtual schools, Daleville began the revocation process in February that could lead to the closure of the schools. Afterward, the schools proposed a voluntary shutdown: September 2019 for Indiana Virtual School and June 2020 for Indiana Virtual Pathways Academy

But Daleville says leaders of the virtual charter schools did not follow through on their mutual agreement. The district then began the revocation process.

Asked why new data was coming a week before the board votes to close both schools, Lapointe says she doesn’t know.

"I got it today. But I was unaware, last time that I saw you, of any defenses they had to these allegations. And their defenses sound very credible to me," she says.

Lapointe handed over a few pages of new documents to the board. Without much explanation, she said Daleville officials used a "brick and mortar" analysis on the enrollment data and do not understand how virtual schools operate.

The documents, she said, were created by AlphaCom. That's the company Indiana Virtual School hired for software and management, administrative, and other tech services. A 2017 Chalkbeat investigation found the Indiana Virtual School paid the company millions of dollars while it was run by the 'schools’ founder Thomas Stoughton. Soughton has since sold his interest in AlphaCom.

One document lists the number of students enrolled and withdrawn for each month of the 2018-18 school year at both schools. Since the number of students enrolled is higher, the document claims “it's proof the state's claim that ‘funds were misappropriated’ are wrong.”

Lapointe said the documents were a good defense.

"More could be provided to substantiate this stuff," she says. "I am giving you what I got."

The AlphaCom documents also claim Daleville measured the data using a "semester time frame" instead of the "365 day calendar with rolling enrollment model used by the Virtual Schools." Additionally, the report says Daleville used the attendance report to "compile their data on completion and credits earned."

Daleville Superintendent Paul Garrison says he'll review the new data but felt that Lapointe did not offer any understandable explanation during the meeting.

"But I'll reiterate. Our information came directly from state reports that the two virtual schools turned into the Department of Education," he says.

During the meeting, Lapointe said the Indiana Virtual School and Indiana Virtual Pathways Academy received a subpoena for evidence from a U.S. Attorney's office. Both schools are still under investigation by state auditors and no longer receive state funding. The state is currently auditing the schools' finances.

The Indiana Virtual School is slated to close at the end of September, and the Indiana Virtual Pathways Academy is slated to close at the end of the 2019-2020 school year. But the Daleville Board meets next Monday to determine if both schools will close by the end of September.

If the board believes they were wrong, and the allegations "just go away," Lapointe says it would be "extremely unlikely" for the schools to recover. Teachers have not been paid, and only the schools' superintendent Percy Clark remains working. Clark did not attend Monday's meeting.

"We'd have to get immediate funding to get everybody back on board," Lapointe says. "In order to do that, we'd have to do it yesterday. We'd have to really jump on it."

Lapointe told the Daleville Board it might have to provide funding to rehire virtual school staff to generate student transcripts. Without a transcript, students would be unable to enroll in a new school properly.

Kip Corn, a board member, asked where all the state money the schools received for tuition support is. Together, the schools had $80 million in public funding from 2016 to 2018.

"I don't know," LaPointe says, "If they have operational funds they are sitting on, they are not offering them to us."

Any students still enrolled in the two schools were told to complete all course work by the end of the day Tuesday.

Contact WFYI education reporter Eric Weddle at eweddle@wfyi.org or call (317) 614-0470. Follow on Twitter: @ericweddle.