Let’s talk about Indiana’s virtual schools. The topic's complicated because the way we fund schools is complex, but I'm going to try to keep it as simple and straightforward as possible.
A quick read to get started
This page is going to build off this linked-to bang-up article written by Casey Smith and published by the Indiana Capital Chronicle. I’d suggest taking several minutes to read it before continuing.
A quick & dirty look at school funding in Indiana
Indiana’s school funding formula is a bit complicated, but the very simplified version is:
Schools get foundation funding per enrolled student. That $/student amount is currently planned to be $6,482 next school year.
Schools also get complexity funding per enrolled student. They’re assigned a complexity index based on the percentage of students on SNAP or TANF, or in a foster home. That $/student amount is currently planned to be $3,940 multiplied by a school’s complexity index.
Foundation and complexity funding are added together to get base student funding.
In the past, schools only received 85% of #1 above (foundation funding) for virtual students, but the Indiana House is currently trying to bump that to 100%.
There’s more, but for now that’s enough to get us started.
Let’s look at those Stride numbers
While the Capital Chronicle article is great, I believe it’s slightly off and that Stride stands to gain more than reported.
Sticking to base funding, based on projections provided by the Indiana House, here’s what the referenced public/charter Stride schools would get for virtual students based on the old 85% figure:
And here’s what they’ll get if the legislature goes to 100%.
So rather than $9 million, that’s actually a $10,933,514 gift they’ll be getting from our legislature without actually having to do anything additional to justify or earn it.
Looking at it another way, according to their 2022 annual disclosures, Stride’s tax rate last year was 27.26%. Assuming the same rate this year, our legislature would be adding $7,953,363 to their net income.
Put another way, if the rest of Stride’s business remained exactly the same, our legislature would be increasing their net income by 7.42%.
That seems pretty generous. I mean, I have no idea how much they pay House Speaker Huston for his consulting services, but I would guess it’s a lot less than ~$11 million, so they’ll probably be pretty happy if our legislators change the state’s approach.
Not to mention, the actual amount is almost certainly more than $11 million. First, base funding accounts for the majority of what schools get, but the final figures are always higher. We’ll touch on that in a bit.
Also, while Stride’s website only lists the public/charter schools mentioned in the Capital Chronicle article, I did notice that the website for Muncie’s Virtual Academy mentions that it too partners with Stride. That school has fewer virtual students, so a change from 85% to 100% only would shift their base funding from $973,348 to $1,103,636. Or only an additional $130,288.
But speaking of other virtual schools…
Let's zoom out a bit
The Stride schools mentioned in the Capital Chronicle article account for 11,245 virtual students on next year’s estimates, but the House says there will be a total of 24,943 virtual students in public/charter schools. They also provide a summary with complexity indexes for 1) traditional public schools, 2) brick-and-mortar charter schools and 3) virtual charter schools, so it’s pretty easy to run the numbers and come up with this.
So the House pushing to shift from 85% to 100% is actually giving virtual schools an extra $24,252,079. But because the summary uses aggregate complexity indexes, the actual amounts we’d spend are more than what’s listed.
Out of curiosity and to get a sense of scope, I went through the House’s current estimate and made a table of every corporation that 1) had more than 20 virtual students and 2) had a virtual school in the list of schools on its website. Pulling expected 23-24 virtual enrollment and complexity indexes for all of those corporations yielded the following.
Note that that’s 1,685 students short of the total estimate for the state, as there are a lot of corporations with smaller numbers of virtual students. If we add those students in at a modestly realistic complexity index of .2, we end up at $161,818,412 at the old 85% figure and $186,070,491 at the House-proposed 100% figure.
However we look at it, we’re giving virtual schools a lot of cash. But why would the House want to give them an extra $25 million? Maybe it’s a reward for great performance?
Virtual schools have lousy performance
At least by ILEARN standards, virtual schools don’t fare well. If you’re unfamiliar, ILEARN is Indiana’s standardized test for grades 3-8 and tends to be the most commonly referenced metric to gauge school performance. It measures English language arts and math skills, resulting in a score that’s the percentage of students deemed proficient for their grade level.
In Indiana, statewide math and English proficiency was 30.2% in 2022. That number sounds worse than it is because of multiple changes to testing standards over the past decade, but it’s certainly not good. Virtual schools are considerably worse.
Below are the 2022 results for every virtual school that reported them.
So, combined, virtual schools achieve a proficiency of 9.1%, less than a third of the state average. If we jump back to the original discussion of the Stride schools mentioned in the Capital Chronicle article, they’re collectively at 5.4%.
Note: You may have noticed that 7,870 ILEARN tests administered is quite a bit lower than the expected statewide virtual enrollment for next school year. This is due to a combination of:
Virtual enrollment grew this year and is expected to grow again next year.
ILEARN data for virtual learners isn’t reported separately for corporations that have them, but haven’t formally established a separate school entity for them.
ILEARN is only grades 3-8, while there are virtual students in K-12.
Other state funding
At the outset, I mentioned how foundation and complexity funding account for most of the money provided to schools by the state. That’s absolutely the case, but there’s still a sizable chunk on top of that. There’s cash doled out for special ed, career & technical education, honors performance and more. Each of those has its own formula and, for corporations with a mix of virtual and in-school students, I think it’d be about impossible to determine from available data how much is going to virtual students. But to provide a sense of the scope of additional money potentially going to virtual schools, I put together the following table.
Those percentages show how much of each corporation’s funding comes from the combination of foundation and complexity. The weighted average is 85.8%. If you multiply that out, it can be boiled down to this simplified way of thinking about it: for every $100 one of these school corporations gets in base (foundation + complexity) funding, on average, it gets another $16.58 in other funds.
Tying it again back to Stride, we’re not really talking about whether the House gives them $75.5 million or $86.4 million next year. It’s likely closer to $89.8 million or $100.7 million.
For as much as we’ve talked about the House’s desire to give virtual schools more money, I think most Hoosiers’ question would be…
Why in the hell do virtual schools already get so much?
Granted, we don’t have data on teacher-to-student ratios, but it’s hard to imagine them being higher than in physical schools.
From their websites, we know that at least some virtual schools are fully asynchronous for at least some grades. Meaning, those students don’t have ‘live’ classes with their teachers and are just doing unsupervised, self-paced work during their typical school day. But we don’t have numbers on how many are fully asynchronous vs how many have live, virtual classrooms.
But we do know that virtual schools don’t have buildings. They don’t have busses. They don’t provide meals. They don’t have safety officers. They can get by on far fewer staff and provide far fewer services. Their incremental cost to add another student has to be astronomically low. Yet, we’re already paying them 85% of foundation funding, 100% of complexity funding and a good chunk on top of that.
Speaking of complexity funding, does anyone really believe that should be at 100% for virtual schools? The point of complexity funding is to provide schools with extra resources to assist with students who are facing extra challenges. It’s easy to envision ways that a physical school might make use of that money to help kids via extra teachers, counselors, tutoring, etc. I guess our legislators just trust that for-profit virtual schools need the same amount of money and will spend it to help kids rather than add it to their bottom line? That’s a lot of trust, especially considering the results we see coming out of these schools.
COVID as a cash grab
There's one more thing I have to address. In the Capital Chronicle article, House Speaker Huston claims virtual learning during the pandemic caused lawmakers to ‘see the light’ on funding virtual schools at 100%. He says this is because our traditional schools would’ve been in financial crises if they only received 85% of funding when forced to operate virtually due to COVID. This logic is so transparently terrible that it's hard not to find it personally insulting.
I know next to nothing about House Speaker Huston, but I’m pretty confident he’s smart enough to understand there’s a big difference between the costs of a physical school being forced to temporarily offer virtual instruction while maintaining all of its existing financial obligations and the costs of a wholly virtual school. I’m also pretty sure he’s smart enough to know that a unique crisis caused by a once-in-a-lifetime pandemic could be addressed with targeted legislation to help physical schools through it, as opposed to permanently changing how we fund virtual schools.
In closing
This page may seem pretty harsh on virtual schools, but it’s not that I don’t think they can serve a purpose. I just refuse to accept on faith, with no evidence, the extremely counterintuitive claim that the costs of running them are even close to the costs of running traditional schools.
I also think that the past several years have pretty definitively demonstrated two things to us: 1) students benefit from schools being able to go virtual in the short term, whether it’s for inclement weather or a public health crisis and 2) in-person instruction provides the vast majority of kids with far superior outcomes to virtual instruction.
As I’ve researched both charter schools and now virtual schools for this site, I’m forming a stronger and stronger opinion that Indiana’s extreme approach to school choice has become an illness infecting our education system. While the concept sounds nice on the surface and initially seems pro-parent, it feels like we’ve taken it to an unhealthy extreme and are showing no signs of slowing. I may be mistaken, but the impression I’m starting to get is that a whole lot of our legislators have priorities far above ensuring all kids get a good education.
Recommended action for parents & citizens inclined to act
If you feel strongly about an issue under consideration by the Indiana General Assembly, contacting your legislators is a great starting point. You can find your legislators and their contact info here.
Personally, I think there’s zero justification for increasing virtual schools’ foundation funding from 85% to 100% and would like to see a lot more transparency on why we’re paying so much to for-profit virtual schools that seem to provide significantly less than our traditional physical schools.
And some links...
For those who’d like to do their own digging:
Indiana Department of Education data page, which includes data on enrollment, grades and testing results
Indiana Department of Education search page for specific schools/districts
Indiana House Republicans’ page for current student funding estimates by district
The current House budget draft, where you can find the referenced information on funding levels starting on page 166
And here's a page I wrote during our local 2022 school board election that describes the changes in Indiana's standardized testing over the past decade.