Michigan cyber schools fight Snyder’s proposed aid cut

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Opposition is building to Gov. Rick Snyder’s plan to cut funding for Michigan charter cyber schools — five years after championing their expansion — and pump the extra money into brick-and-mortar high schools.

It comes as standardized test scores show students at Michigan cyber schools, many operated by for-profit management companies, are consistently underperforming their peers.

Snyder argues the cyber schools should be able to offer a high-quality education at more affordable prices because they spend next to nothing on buildings and buses that can be costly for traditional schools. But officials who run the schools argue the 20 percent funding cut proposed by the Republican governor would exacerbate the unique challenges they face.

Snyder’s proposal faces opposition in the GOP-led Legislature, where the chairman of the House Appropriations Committee on K-12 School Aid has said he plans to restore full cyber school funding before the budget is finalized, likely by mid-June.

“We fund students, not schools,” said Rep. Tim Kelly, R-Saginaw Township. “So Billy and Sally shouldn’t be dinged by the choice they make for what school they go to. Why is Billy worth less than Sally simply because of the choice of schools?”

But the second-term Republican governor argues that circumstances have changed.

“When we first started cyber schools, I could see the benefit” of providing them with full per-pupil state funding, Snyder told The Detroit News. “It was in startup mode to having a full allowance.

“But beyond that, in later years, they don’t have the same cost structures. And so it’s reasonable to say they can get by with less money. I view this as more common sense.”

Cyber schools provide students with computers, books and other materials delivered right to their door in addition to an online curriculum. Students connect with teachers in virtual, interactive classroom sessions — sometimes several times a day, depending on age level — and complete additional coursework on their own.

Most charter cyber schools in Michigan qualified for the minimum state allowance of $7,511 per pupil this year, but their funding has risen as Snyder and state legislators have worked to narrow the gap between the minimum and maximum allowance, which topped out at $8,229 for 2017.

The governor’s budget proposal for 2018 would increase the statewide minimum allowance to $7,611 but would limit charter cybers to $6,089. As a result, they could lose about $1,422 per pupil compared with the current year.

The change would save the state an estimated $16 million, which Snyder wants to redirect to high schools, which he says face higher costs related to specialized teachers and classroom equipment.

Maintaining infrastructure typically costs traditional brick-and-mortar schools 10-12 percent of their operational budgets, said Gary Miron, a professor of educational leadership, research and technology at Western Michigan University. Cyber schools avoid most of those costs and are exempt from significant expenses associated with student transportation and hot lunches.

“Sometimes they have money going to headquarters or they have regional offices where people can come in for tutoring,” Miron said. “But it’s a fraction — a very small fraction — of what brick-and-mortar schools have to pay for infrastructure. There are enormous cost savings there.”

Charter cyber school proponents argue they spend more on technology than traditional schools and already receive less government funding because they do not qualify for any local funding through property tax millages.

Public schools are authorized to ask taxpayers for property tax increases to fund their operations and finance infrastructure improvements, which cyber and charter schools cannot do.

Cyber schools fear impact

For the Michigan Great Lakes Virtual Academy, a Manistee-based cyber school that serves about 2,700 K-12 students across the state, Snyder’s proposed budget could mean a cut of more than $3 million.

The online academy — operated by Virginia-based K12 Inc., the country’s largest for-profit cyber school company — received about $20 million in state funding last year. It does not have a brick-and-mortar school for students — just an office building for staff — or provide student transportation.

But officials at Michigan Great Lakes Virtual Academy say they rent temporary space at 30 different sites around the state for students to take required standardized tests each year. The school budgeted $1.5 million for rentals in fiscal year 2016, according to documents published online.

“These aren’t just done over one or two days, they’re often done over a period of three to four weeks, and that’s totally out-of-pocket costs for the schools,” said Jeff Kwitowski, senior vice president of public affairs and policy communications at K12 Inc.

“There’s no supplemental funding for it at all, and the logistics behind it are intense. … A lot of these families are traveling 50 to 60 miles, some of them have to spend multiple nights at hotels or relatives’ houses. It’s incredibly challenging.”

Many students at Michigan Great Lakes Virtual Academy are not performing well on the tests.

About 12 percent of third-grade students rated proficient on the math portion of the M-STEP in 2016, compared with the statewide average of 45 percent. Roughly 28 percent of seventh-grade students rated proficient in English, lower than the state average of 47 percent. In 11th grade, 13 percent of students rated proficient in science, compared with 33 percent statewide.

But many students come to the academy with disadvantages, according to school head Kendall Schroeder. Roughly 14 percent are in special education programs, he said, and about 67 percent live in low-income households that would qualify them for free or reduced-price lunches if they attended a brick-and-mortar school.

Some students arrive “significantly behind” or turn to a cyber school “as a last resort, Schroeder said, noting enrollees include kids looking to escape bullying at traditional schools, females who have just given birth and students who travel frequently. It can take time for them to get used to the online learning environment.

“Our task is to help them grow in those areas that they’ve missed and strengthen those areas they’re good at,” Schroeder said. “We understand that, yeah, we’ve got a long way to go yet with that.”

He suggested the cyber school could be forced to lay off teachers and increase class sizes, eliminate counseling and adviser staff, cut elective courses and student support services, limit professional development opportunities and “dramatically” scale back statewide testing sites.

“If funding is cut, it’s going to be much more difficult for us to really provide a good setting for them, a good experience for them, good curriculum and teachers,” Schroeder said. “I think we’d see greater disparity with the academic side of things if funding was cut.”

Below average test scores

Standardized test results show the Michigan Great Lakes Virtual Academy is not the only cyber school struggling to make the grade.

Of Michigan’s seven largest cyber charter schools with 2016 test data on file, none rank in the top 50 percentile of all state schools for academic performance. One school – Michigan Connections Academy in Okemos – had students at multiple grade levels perform above state averages.

Snyder and the Legislature approved gradual expansion of cyber charter schools in 2012, building on a 2009 pilot program that had allowed two virtual schools in Michigan. The new law allows up to 15 cyber charter schools, but their student population is capped at 2 percent of public school enrollment.

Cyber schools have rapidly expanded in recent years, with many traditional public districts also offering virtual spinoffs. As of 2015, at least 57 cyber schools operated in Michigan serving about 12,500 kids, according to a report from the National Education Policy Center. More than half of those students attended a charter cyber school.

At least 33 states allow full-time virtual schools, and “they’re just terrible – the performance – and the student attrition rates are so high,” said Miron, who co-wrote the report.

Despite sluggish test scores, Miron argues cyber schools “are going to be the future.” This will be true particularly in blended learning environments, where students spend part of their day in a traditional brick-and-mortar building but take some classes online, he said.

“I believe it can work, but the model that’s being promoted and expanded upon is this corporate model, and they have not invited in educators or practitioners or others to have any input on this,” Miron said.

Miron and a colleague in 2012 conducted an in-depth analysis of K12 Inc., which operates the Manistee school, along with the Michigan Virtual Charter Academy in Grand Rapids and the Insight School of Michigan in Lansing.

How K12 Inc. operates

Nationally, the company spends little to no money on facilities, maintenance, transportation and food services, according to the report. It spends less than traditional schools on salaries and benefits for staff, which are typically the largest expenses associated with classroom instruction. Weighted for enrollment, K12 cyber schools had 61.4 students per full-time equivalent teacher in 2012.

“Given those cost advantages, why not have nine students per teacher? Why not have 10 students per teacher?” Miron said. “They can afford it with their substantial cost savings, but unfortunately that’s not the way they’re going. Most of these are run by for-profit companies, and the model they’ve gone with is not a teacher intensive model.”

Rather than simply cutting state funding, as Snyder is proposing, Miron suggested Michigan policymakers could improve cyber school performance by requiring operators to spend a certain percentage of their per-pupil funding on teachers.

“Force them to put less of it in their pocket and more into instruction,” he said.

Michigan Great Lakes Virtual Academy typically employs a full-time teacher for every 30 to 45 students, said Kendall, who added the ratio fluctuates because the school has a large number of “transient” students who come and go during the year.

“That’s obviously different because we don’t have physical classroom sizes to contend with, so they’re larger than the traditional brick-and-mortar school,” he said. “We try to keep it at a manageable number where we can still individualize that instruction for students and really impact the learning.”

Kwitowski downplayed Miron’s suggestion that K12 profit margins are holding back cyber school performance, noting that traditional public districts across the state contract with private vendors for a variety of products and services.

“We view ourselves as an education services provider,” he said.