Steve Hinnefeld writes about education in Indiana.

In this post, he explains the deep corruption in the virtual charter industry and how the frauds were facilitated by generous gifts to key politicians.

He writes:

We’ve known something fishy was going on with virtual charter schools since 2017, when a Chalkbeat Indiana investigation exposed shady business practices and lousy test scores and graduation rates at Indiana Virtual School and its sister school, Indiana Virtual Pathways Academy.

A blockbuster report this week from the State Board of Accounts shows just how bad it was – and it was worse than we’d imagined. The report charged that the schools overbilled the state by $68 million by vastly inflating the number of students who were enrolled in and attending classes online.

It also found schools made $85.7 million in questionable payments to vendors in which school officials or family members had an interest. Much of the taxpayer money that the schools received, the report shows, went to a network of for-profit businesses tied to school founder Thomas Stoughton and his associates.

The state investigatory report suggests officials at the virtual schools were “focused on maximizing profits and revenues,” not on serving students.

How did they get away with it? For one thing, they appealed to the dominant ideology in the Republican-controlled state government, which holds that choice and competition in the educational marketplace are an inherent good. For another, they played the game of politics.

Businesses that were associated with and benefited from Indiana Virtual School and Indiana Virtual Pathways Academy gave over $140,000 since 2016 to the campaigns of

Republican legislators and Gov. Eric Holcomb. The schools also paid over $300,000 to a high-end lobbying firm, according to the report.

That’s in addition to similar amounts paid by other online education providers – e.g., K-12 Inc. and, for a time, Connections Academies – to promote an environment conducive to virtual schools.

Political connections

Indiana Virtual School and its initial operator, the Indiana nonprofit Business Consulting Inc., worked with politicians from the get-go. In July 2011, just a month after the school got its first charter, its board approved a contract with the consulting firm of state Sen. Travis Holdman, R-Markle.

Holdman said in a statement that the schools paid him a monthly retainer from 2011 to mid-2019 to be “available for general business consulting on legal and personnel matters, contract interpretation, the relationship with the school’s authorizing entity and strategic planning.” He said he had no day-to-day involvement with the schools and terminated the

contract once news media reported “alleged malfeasance” by school officials.

Early board members of Indiana Virtual School included Sue Richardson, a former member of the State Board of Education, and Linda Chezem, an influential retired state appeals court judge.

Daleville Community Schools, a small, rural school district near Muncie, approved the charters for Indiana Virtual School and Indiana Virtual Pathways Academy and was supposed to monitor their performance. That’s an unusual situation. Most charter schools in Indiana are authorized by Ball State University, the mayor of Indianapolis or the Indiana Charter School Board.

But Daleville, by serving as authorizer, was able to collect 3% of all money the two virtual schools received from the state. As enrollment ballooned, so did Daleville’s revenues. In a sense, the authorizer was another “related party” with a financial stake in the schools’ growth.

It gets worse. Money, politics, education. Why not steal from the children? Why not sacrifice their futures to make a profit?

Do taxpayers in Indiana care? How do they feel about their tax money going into the pockets of the entrepreneurs?