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Analysis finds lax oversight of online schools, despite scathing audit and efforts by lawmakers

Five years ago, state auditors blasted the Colorado Department of Education for failing to monitor online public schools that, among other issues, improperly funneled public money to private schools and maintained licensed teacher-to-student ratios of 4 to 1,500.

In a 10-month investigation, Education News Colorado and the I-News Network filed open-records requests, analyzed data, and interviewed district, state and online education officials to examine what has happened to state oversight of online education since that 2006 audit.

What emerged was a pattern of lax oversight for online programs, decisions that favored politically-connected online schools with lobbying muscle, and a failed attempt by lawmakers to fix the system.

Informed of these findings, the former state senator who asked for the 2006 audit lamented that Colorado is back where it started in its attempts to oversee the burgeoning online public school system – which started with 13 students in 1995 and has become big business. This year, online schools in Colorado will receive $100 million in tax dollars to educate some 18,000 students from kindergarten through high school.

Part 3 in a three-part series

“When I look at the performance of these schools, and the fact that we have had nobody with expertise in online education at the helm, I fear very little, in practicality, has taken place,” said Sue Windels, the former Democratic state senator who authored a 2007 bill to hold online programs accountable. “I’m just not finding that these programs have been evaluated and asked to measure up to our standards.”

Bob Schaffer, chair of the State Board of Education, said he believes state oversight of online education has been “about right,” given limited resources. Schaffer, who heads the board’s 4-3 Republican majority, said real oversight comes from parents exercising school choice.

“The core element here that makes online different is that it is completely subject to the marketplace and a superior level of scrutiny – and that is from the parents who care about the individual child more than anyone else,” said the former U.S. congressman who now runs a Fort Collins charter school. “Their judgment cannot just be replaced by a government worker.”

After a scathing audit, an oversight tool goes unused

But parents don’t always learn about what happens behind the scenes. EdNews and I-News obtained emails, memos and data that had not been previously released publicly. Patterns and incidents revealed in those documents show how attempts to oversee online schools by lawmakers, state education officials and local school boards have failed.

For example, EdNews and I-News found that the only attempt by state officials to make use of the 2007 law to sanction poorly performing online schools was quashed after a politically-connected school complained to the state Department of Education.

The 2007 law called upon the state education department’s director of online programs to issue letters of corrective action to poor performers. In 2009, then-state online program director Pamela Ice for the first time sent such notices to four schools, including Hope Online – the controversial program that was singled out for criticism in the audit five years ago. Ice said Hope’s program was “below expectations” in 20 of the 25 areas reviewed by the state.

Three days later, Jim Christensen, then-superintendent of Douglas County schools, which authorizes the Hope Online program, fired off a letter to Ice’s boss, then-state education commissioner Dwight Jones, challenging Ice’s findings and asking that the state audit be “embargoed” from the public.

Jones agreed to withhold the audit from the public. Two weeks later, Ice informed Hope and Douglas County that Jones had ordered the March letter rescinded and no corrective plan was necessary, according to state documents. Jones did not respond to a request for comment.

Similar corrective action orders for three other online programs also were rescinded. Ice, who later resigned, declined to comment for this story. Her position was left vacant for months, then filled by a state staffer who served on the board governing Colorado’s largest online school.

Christensen, who now runs charter schools in Texas based partly on the Hope model, said the decision to rescind the 2009 letter wasn’t political.

“We had just taken over Hope and what we were asking is time to turn Hope around. The commissioner agreed,” he said. Hope moved its charter from the tiny Vilas school district in southeastern Colorado to Douglas County after the 2006 audit.

State board overrules districts’ efforts to expel Hope

This year, when two local school boards each voted against allowing Hope Online to operate learning centers in their districts, the state Board of Education overruled them.

In June, the seven elected board members voted along party lines to overturn unanimous school board decisions in Eaton, near Greeley, and in Harrison District 2, south of Colorado Springs, seeking to stop Hope operations there.

Both districts lost similar battles in 2008; this year’s fights were over Hope’s desire to renew operating agreements in their districts.

“Our community elects our board to make the proper decision,” said Eaton Schools Superintendent Randy Miller. “But in fact, we don’t have any local control. It doesn’t matter.”

Miller said he believes Hope’s political connections and lobbying dollars did matter.

Like several of the largest online school companies, Hope spends more on lobbyists to influence state lawmakers than districts with far more students. Hope, with 2,900 students, and the Foundation for Academic Innovation, which helps fund Hope, paid $7,624 monthly to the Capstone lobbying firm during the 2011 General Assembly, records show. K12 Inc., with 5,000 students in Colorado, paid $5,700 a month to lobbyists at the firm Colorado Legislative Services.

In contrast, Denver Public Schools, with more than 70,000 students, paid its lobbying firm $2,916 a month.

Hope Online was launched with support from oil and gas developer Alex Cranberg, a prominent Republican donor and vocal advocate for school choice. Cranberg, who recently gave $50,000 to Douglas County’s legal fight for school vouchers, employed Schaffer, the state board chair, to work on education projects and as a vice president of business development from 2002 to 2007.

Hope’s chairman of the board is Phil Fox, former deputy director of the Colorado Association of School Executives. C. Michael Cooke, a former Douglas County Commissioner and head of the Department of Regulatory Agencies under former Gov. Bill Owens, is chief compliance officer. One of Hope’s attorneys was Scott Gessler before he was elected Secretary of State last year.

Hope CEO Heather O’Mara, who has been with Hope since its beginning in 2005, said the school’s high-powered network “demonstrates Hope’s commitment to providing the best that we can with the resources that we have for our students and the focus on academic achievement.”

Harrison Schools Superintendent Mike Miles declined to speculate on political motives for the state board’s decision requiring his district to allow Hope’s continued operations.

“I can tell you that I don’t understand that decision,” Miles said. “Our motivation is only instructional … It’s not philosophical. Choice is OK. But we want any school that is open in our district to be effective.”

Colorado Springs District 11 even went to court after State Board members overturned its board decision to expel Hope in 2008. Then, just 22 percent of Hope students were proficient in reading and the charter was reimbursing the state nearly $3 million for miscalculating its student count. But a Denver judge said the district lacked standing to seek judicial review of the state board ruling.

Schaffer said his votes had nothing to do with politics or his relationship with Cranberg: “The districts failed to make a compelling argument that throwing those children out of school was in the best interest of the children.”

Additional state monitoring repealed for online schools

These revelations come as Colorado is at a crossroads in online education oversight. In May, state lawmakers reacting to online schools’ complaints repealed most of the extra online reporting and accountability requirements created after the 2006 audit.

Laura Johnson, 17, works on a computer at Florence High School. Johnson left the school for an online program but returned after a semester, with no credits earned. Photo Joe Mahoney/I-News
Laura Johnson, 17, works on a computer at Florence High School. Johnson left the school for an online program but returned after a semester, with no credits earned. Photo Joe Mahoney/I-News
Laura Johnson

Lawmakers folded online schools into the state’s broader school accountability system. That means any online schools falling short will have five years to fix problems before any sanctions are imposed by the state.The new law largely shifts responsibility for oversight of the online schools to local school districts – much as it was before the failed reforms of five years ago.

But Amy Anderson, the state’s new assistant commissioner of innovation and choice, said the state, by law, still has a role in online oversight and “I take it very seriously.”

“There’s going to be a lot more attention paid to this issue,” she said, “and some more changes made for the better.”

Perhaps nothing since 2006 epitomizes the potential risks of lax oversight better than the case of former online school principal Benjamin Valdez and the tiny Julesburg school district in Colorado’s northeastern corner.

In August, the ousted principal of the online Insight School of Colorado emailed a state lawmaker with a startling allegation: He said his former employer received millions of dollars in public school funding for students it then systematically dropped from its rolls before they were to take annual state exams.

Valdez alleged that Insight pressed for increased enrollment to boost state funding and to “paint a stronger financial picture” for potential buyers, then later jettisoned students who might bring down the district’s standardized test scores.

The EdNews/I-News analysis of student data shows the number of potential test-takers at Insight fell dramatically from October, when the student count determines state funding levels, to April, when state tests are given. In October 2010, Insight had 586 students enrolled in the high school grades that take the CSAP tests. But when test time rolled around in March, fewer than half that number took the exams.

Valdez sent the allegation on Aug. 9 in an email to state Sen. Nancy Spence, R-Centennial, who forwarded the email and accompanying documents to state education officials.

But no education officials have contacted Valdez to investigate his allegations that Colorado taxpayers were feeding a national for-profit online school chain at the expense of students across the state, according to Valdez and state officials.

Anderson, who started her job with the state Aug. 29, questioned whether Valdez contacted the Julesburg superintendent or its board members since they contract with Insight.

“I didn’t feel as though they would do anything,” Valdez said. “I went to the state because it’s state money.”

When school districts are in control, and profiting from it

Valdez, who now works for a technical college, said he first emailed state education officials and lawmakers in November with concerns. That first email was anonymous but he said Insight administrators found out about it and fired him, saying he had given away proprietary information because he enclosed documents from the school.

He was terminated after three months at Insight, before it changed corporate ownership twice in the past year.

Insight operates in Colorado under a 10-year contract with Julesburg, though Insight’s administrative offices are in Westminster, more than two hours away. Insight’s newest corporate owner, K12 Inc., operates in 27 states and has projected revenues of more than $500 million for fiscal 2011. A spokesperson for K12 declined comment on the contents of Valdez’s letter. Separately, she said the company had taken steps to improve the school.

The Julesburg school district has fewer than 300 students in its brick-and-mortar schools. But it has 1,500 online students, none of them from Julesburg. The district gets $10 million of its $12 million in state funding for those online students. And its contract with Insight nets it more than $500,000 annually.

“People think we got into it for the money,” said Julesburg school board president Kyle Kline. “It was never intended for the money. It was all for the kids, to try to bring more opportunities to our kids out here.”

Kline said his son is among the Julesburg students who have taken college classes free through Insight – classes such as Mandarin Chinese, anthropology and other electives not usually available in a small ranching and farming community.

Julesburg’s brick-and-mortar schools are rated among the best in the state. But since the state rates districts on the performance of all students, and Julesburg’s online enrollment is triple that of in-building students, the district rating plummeted to one of the state’s worst.

Because of Insight, Julesberg has the state’s second-highest dropout rate and its second-lowest graduation rate among all districts. Insight’s student turnover rate is among the highest in the state – between October 2008 and October 2009, the school recruited 850 new students. By June 2010, nearly two-thirds had left.

Kline said Julesburg school board members have tried to hold the school accountable, though he admits there are limits to what they can do. He dismissed Valdez, the ex-principal making allegations about Insight practices, as “disgruntled.”

“What do you want us to do, go over there and spank them?” an exasperated Kline said of Insight administrators. “The only way we can discipline them is to sever ties with them.”

Julesburg school board members have threatened at least twice to void the contract, he said, particularly after the school’s poor performance on state exams torpedoed the district’s own state rating.

Most recently, Kline said, they’ve told Insight that they must see “a big improvement.”

Contact Nancy Mitchell or Burt Hubbard

Excerpts from the Colorado Department of Education online complaint log

A 2007 law required state education officials to track complaints about online programs, after auditors found the CDE was receiving but not addressing an average of five online complaints a month.

  • 2007 – Parent phone call – “Son did not have any coursework to work on until October. Students have been hanging around the learning center, outside smoking, for weeks waiting until they have something to do … “
  • 2008 – Email exchange – CDE staff member questioned online provider about using contractors in India to review English essays – “How does this practice fulfill the highly qualified teacher requirement?”
  • 2009 – Parent phone call – “School started today and no personnel can be located, no personnel to answer phones or inquiries … What gives here and who at state edu is in charge?”
  • 2010 – Email from La Junta schools superintendent – “This year, our district had 25 students leave for online learning after heavy recruiting … this online school was on street corners, holding free BBQs in the park and in restaurants buying meals. I was having lunch one day and saw the representative of the school take the parents’ bill to pay for.”
  • 2010 – Email from St. Vrain Valley assistant principal – “It was reported, from out district truancy officer, that the online school had a van in Longmont High School’s parking lot and were recruiting students during lunch time and passing periods … Two of our students have stated that at the local mall, the school representatives gave them King Soopers cards as incentive to enroll in the program.”

Emails to state officials about Insight School of Colorado

Nov. 23, 2010

  • – Anonymous email, later claimed by Insight principal Benjamin Valdez, who said he was fired for sending it. In February, Insight was sold to another company, then sold again in May:“As a teacher and employee of Insight Schools I am very disturbed with the way my company is treating students. They are not seen as students who have educational issues and need strong support with academic interventions. Instead they are simply viewed as money making objects … they are receiving tax payer funds to operate these schools and are not doing what is educationally best for the students. It is even more of an outrage since .. they are doing everything in their power to reduce any and all educational cost to make the company look at profitable as possible.”

Aug.9, 2011 – Valdez emailed state Sen. Nancy Spence, R-Centennial, who forwarded the message and accompanying document to state education officials. Valdez said he was never contacted:

  • “I would like the opportunity to speak with you about how this for-profit entity is utilizing Colorado taxpayer funds to bolster their profits all at the expense of the students they claim to serve … Insight corporate office was utilizing funding from Colorado to cover loss and operating expenses in other states where they had operations … This school is a fraud and plays on the emotional strings of parents and students.”

Ratings of Colorado’s largest online schools under state accountability system

  • Colorado Virtual AcademyPriority Improvement. One of the state’s two lowest ratings, requiring the school to submit an improvement plan for state approval and giving it five years to improve or face state sanctions. This rating was revised upward, from the lowest rating of Turnaround, with the state’s approval. See the rating report and read the improvement plan.
  • Hope OnlineTurnaround at elementary and middle school, Priority Improvement at high school. The state’s two lowest ratings, requiring the school to submit an improvement plan for state approval and giving Hope five years to improve or face state sanctions. See the rating report and read the improvement plan.
  • Insight School of ColoradoTurnaround. The state’s lowest rating, requiring the school to submit an improvement plan for state approval and giving it five years to improve or face state sanctions. Read the rating report and see the improvement plan.
  • Connections AcademyImprovement, the second best rating on the state’s four-level rating system. Connections was initially rated Priority Improvement, one of the two lowest levels, but state officials agreed to upgrade the level after the school changed its authorizing district from Denver to Mapleton. The level doesn’t require the state to approve its improvement plan though all schools are required to submit one. Read the improvement plan.
  • GOAL AcademyImprovement, the default rating for alternative education campuses. Read the rating report and see the improvement plan.

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