The Commercial Appeal

Ind. audit shows virtual schools got $68M extra

- Arika Herron Indianapol­is Star USA TODAY NETWORK

INDIANAPOL­IS – Early estimates of just how much two online schools were overpaid by the state of Indiana were too low, according to a report filed Wednesday by the Indiana State Board of Accounts.

A special investigat­ion into malfeasanc­e by Indiana Virtual School and Indiana Virtual Pathways Academy found that the schools inappropri­ately received more than $68.7 million collective­ly. Last summer, state investigat­ors revealed that the charter schools had inflated their enrollment to defraud the state – by enrolling students who’d simply requested informatio­n on the schools’ website, re-enrolling students after they’d left the schools or, in one case, by keeping a deceased student on their books more than a year after their death.

The state funds public schools – which include virtual charter schools – based on the number of students enrolled each year. At the time, investigat­ors estimated overpaymen­ts to be around $40 million.

The new report details widespread fraud, misuse of state funds and a severe lack of oversight by school officials and the schools’ charter authorizer, Daleville Community Schools.

Officials with Daleville have said they did not have access to the charter schools’ data until August 2018, at which point they took concerns over irregulari­ties in the schools’ reporting to SBOA.

Daleville closed both last year.

Now, the state is looking to get back the cash it paid for students who weren’t actually attending the online schools – plus millions more that investigat­ors say was funneled through the schools and into companies owned by their administra­tors and their family members. The $68 million overpaid to the schools came from thousands of students improperly included in enrollment counts. From 2011 until last year, more than 14,000 students were counted as enrolled when they should not have been.

While SBOA found instances of enrollment inflation each year, the number of falsified student records ballooned in the fall of 2017.

In the 2017-18 school year, SBOA found more than 3,200 ineligible students were counted in enrollment figures. In 2018-19, that number was 5,694, according to the report.

Only a fraction of registered students were actually listed as “active” in the student lists provided to teachers, according to the report. SBOA also raised questions about course completion reporting figures, self-reported by the school.

From the 2016-17 school year to the 2018-19 school year, the two schools received more than $103 million in state funds and funneled more than $85 million to related parties, including several companies run by the schools’ founder, Thomas Stoughton, and his son.

The state is requesting reimbursem­ent of the $85 million, improperly paid to 14 different vendors that were related to the schools through a common employee or family member.

SBOA said it has sent its findings to local and federal prosecutor’s offices, the Indiana Inspector General’s Office and to the Indiana Attorney General’s office.

 ?? INDIANAPOL­IS STAR FILE ?? Two virtual schools in Indiana closed last year. Now the state is seeking millions of dollars it says the schools were overpaid.
INDIANAPOL­IS STAR FILE Two virtual schools in Indiana closed last year. Now the state is seeking millions of dollars it says the schools were overpaid.

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