The Cash and Consequences of For-Profit Online Education in Missouri

Online education has become big business.
Online education has become big business.
This story was supported by the Pulitzer Center.

Attorney Joshua Schindler had one word for the way Missouri school districts treat families who want to enroll their students in a virtual education program: "disgusting."

"I have been fighting from one side of the state to the other side of the state," Schindler, a St. Louis lawyer, told the Missouri legislature's Joint Committee on Education at an August 2020 hearing.

He has filed lawsuits against districts throughout the state on behalf of families seeking to enroll their children in a local program run in conjunction with one of the largest for-profit online education companies in the United States. His fees are not paid by the clients, but rather a lobbying group that has fought government regulation of the company's charter schools.

"The abuses are innumerable and would shock the conscience," he continued during his testimony.

Schindler also blasted the Missouri Department of Elementary and Secondary Education, claiming during a 2019 hearing on virtual education that DESE has denied students "the best educational opportunities available to them."

But a review of the evidence that Schindler and lobbyists have presented to lawmakers reveals that the state and school districts are not actually depriving students of a quality virtual education at anywhere near the level that Schindler describes.

In fact, it's the students who are able to enroll in a program connected to the for-profit virtual education provider, Stride, that are having little success.

In spite of students' poor performance, the corporation and its local partner, a rural Missouri school district in need of money, have seen an increase in enrollment and profit, particularly during an enormous and ongoing remote learning experiment, better known as the COVID-19 pandemic.

And now Schindler and lobbyists are telling a tale of students oppressed by the state and other school districts as part of an effort to remove pesky oversight and help Stride rake in additional tax dollars.

Republican lawmakers have received Schindler warmly and treated the state education officials as though they were villains breaking the law.

After hearing Schindler's testimony in September 2019, State Rep. Nick Schroer, (R- St. Charles County), warned DESE officials that they could "strictly comply" with the virtual education law or "you will be here the rest of 2019 and 2020, providing hordes of documents for us to review."

With the assertions promoted by Schindler and lobbyists, Republican lawmakers are now working on legislation to remove local district control of students and allow the virtual education program to collect money directly from the state, like a charter school — minus the oversight.

Grandview R-2 School District draws students for its brick-and-mortar program from a rural area about 50 minutes outside of St. Louis.

"You can't buy a gallon of gas or a gallon of milk in this district," Superintendent Matt Zoph told the Riverfront Times in 2018.

With little tax revenue to fund its schools, the district started working in 2013 with Stride to create a summer school program, the Missouri Online Summer Institute.

The superintendent who launched the program, Michael Brown, then retired and formed Show Me State Virtual Education, a company with a mission "to promote online education to students and professional development for educators."

He signed both a contract with his former employer, Grandview, and a consulting agreement with Stride, which until recently operated as K12 Inc.

A 2015 contract between Brown's company and Grandview included incentives to sign up as many students as possible from other Missouri school districts. The state would then have to pay the students' tuition. If Grandview earned more than $200,000 in net profit, Brown would receive 25 percent of the profits above that threshold.

The arrangement has drawn plenty of questions and criticism.

"Virtual schools can bring in extra money for public schools, but you can't call it 'profit' because they are nonprofit entities," Gary Miron, a professor at Western Michigan University who studies education policy told the RFT in 2018.

Luis Huerta, a professor of education policy at Columbia University, added, "If there is 'profit,' it should be returned to the district for students' services."

Grandview school board member Pam Tisher told the RFT in 2018 that she thought Brown retiring from the district and then starting the company, "was a major conflict of interest."

At a 2013 board meeting, Tisher suggested that the district table the decision to sign a contract with Brown's company until it got data on the results of the summer school, according to the minutes. The board agreed, but at the next meeting, it unanimously approved the contract, even though Tisher says they failed to get the data.

"We were never provided any of that information," Tisher says. "Dr. Brown could have sold them oceanfront property in Arizona and the school board at that time would have bought it."

That revenue became especially crucial to Grandview in 2016 when an auditor discovered that a business manager had embezzled $1.6 million over ten years — seven of them under Brown's supervision.

After the state passed a law to expand virtual education in 2018, Zoph, who succeeded Brown as superintendent, began working with Stride to set up a full-time program through Grandview. He told the school board that the contract could "be worth $625,000" and "$1,000,000 in two years," according to meeting minutes.

School districts and watchdogs worried that state support for profit-driven online educators would weaken Missouri's public schools and turn students into commodities.

During the discussion about the proposed legislation in 2018, the Missouri School Boards' Association, a nonprofit that advocates for public schools, expressed concern. Susan Goldammer, MSBA's associate executive director, said at the time that the legislation "might be an opportunity for for-profit companies to come in and receive state aid to educate students or that this is the beginning of creating a virtual charter school. ... We are very wary of any sort of scheme that would allow people to profit off of students."

The sponsor of the bill, State Rep. Bryan Spencer, (R-Wentzville), assured the St. Louis Post-Dispatch in 2018 he did not want students to take online courses already offered by their local school district. Districts would also have the right to deny a student's request for enrollment in a virtual program if they determined it was not in their best educational interests, he said.

Gov. Eric Greitens approved the legislation to create the Missouri Course Access and Virtual School Program on his last day before resigning amidst a scandal in 2018.

After the law's passage, Grandview R-2 School District set up Missouri Virtual Academy, or MOVA, which only allowed students to enroll full time, meaning that they of course would take classes that districts already offered. It's now one of thirteen such programs operating in the state.

To (supposedly) ensure that they were good quality, the law contained provisions requiring that virtual teachers be state certified, that curriculum meet state academic standards and that student data be provided to the state in a manner that protects their privacy.

But that state review process didn't apply to MOVA, because the law also contained a provision stating that since the district already offered the virtual summer program, it should be automatically approved.

In spite of that provision, DESE officials told the Grandview superintendent that it needed to submit an application for the virtual education program in order to be listed on the state virtual education website and enroll students, according to emails obtained from an open records request.

That didn't happen. But Schindler filed a lawsuit on behalf of a family in the Fulton School District who tried to enroll in MOVA but had been denied by the district because the program had not received state approval. A Cole County judge ruled in the family's favor and ordered the state education department to list MOVA on its website.

Schindler claimed that lobbyists and DESE favored cheaper, lower-quality virtual education programs and wanted to keep MOVA off the list because "it's the best program, and b) it's the most expensive," he said in a May 2020 Facebook video with the Children's Education Alliance of Missouri, a pro-"school choice" organization funded by St. Louis billionaire Rex Sinquefield that has joined Schindler in his advocacy efforts.

The organization in 2014 paid Schindler to represent students seeking to transfer out of Normandy School District, located in north St. Louis County, which had lost its accreditation.

Attorney Joshua Schindler. - COURTESY JOSHUA SCHINDLER
Attorney Joshua Schindler.

Schindler is correct that MOVA is the most expensive. The program charges districts — not parents — $525 per course; the cost of courses in other programs range from $275 to $499, according to the state virtual education site.

The program does not, however, appear to be the best. In general, kindergarten through twelfth-grade students' academic performance and graduation rates in virtual programs across the country are significantly lower than in-person institutions, according to a bounty of research.

During the 2019-2020 school year, 56 percent of the 498 students enrolled in MOVA passed their courses, which is slightly lower than the already not-so-hot average of 59 percent of students who passed courses across the various state virtual education programs, according to a DESE report. (The report does not break the performance down into letter grades or scores.)

"That means that a little more than half of the kids are learning what they should be learning. That's disastrous," says Gary Miron, who is one of the authors of an annual report from the National Education Policy Center examining such virtual education programs in the United States.

That poor performance is the norm for Stride's programs. During the 2017-2018 school year, only 29.8 percent of full-time virtual programs in the United States operated by for-profit providers like Stride achieved acceptable state standards for students' academic performance, according to the NEPC report.

Stride's programs had a 48 percent graduation rate for the 2017-2018 term, placing it 10 points below its largest competitor, Connections Education. The national average graduation rate during the 2017-2018 school year was 85 percent for public high school students, according to the U.S. Department of Education.

Those figures have prompted officials in other states to charge that Stride has pocketed millions of dollars while failing to deliver on its responsibilities to students and families.

In 2016, California Virtual Academies, a collection of thirteen charter schools connected to Stride, reached an $8.5 million settlement with the state after the company "misled parents and the state of California by claiming taxpayer dollars for questionable student attendance, misstating student success and parent satisfaction, and loading nonprofit charities with debt," Kamala Harris, then attorney general of California, said in a statement.

In Georgia, Stride lost its contract to operate a virtual charter school after the corporation took $54 million of the $90 million in state funding for the program in 2018, according to the 74, an education news organization. The program had also received grades of D's and F's on state report cards in recent years because of students' poor academic performance.

Schindler, however, insists that virtual schools offer top-level programs for students. "We have come to the point where virtual education other than brick-and-mortar school is every bit like a classroom that you would see in Ladue or Clayton or anywhere else in the state of Missouri," he says in the Facebook video. "They have heads of schools. They have counselors. They have people keeping an eye on their children."