Report: Virtual Charter Schools Run For Profit Grew During Pandemic

The Network for Public Education* has released a new report, Chartered For Profit II: Pandemic Profiteering, that looks at how charters run for profit fared during the previous pandemic years, including insights into how virtual charters, also known as cyber-schools, enjoyed a huge uptick in enrollment.

How can a charter be run for profit when virtually all states have outlawed for-profit charter schools? There are ways. One can, for instance, set up the East Egg Charter School as a non-profit while also creating East Egg Charter Management Company, a for-profit company that runs the school and draws its revenue and profits from the tax dollars sent to that non-profit school. East Egg Charter School is a non-profit school, but it is run for profit.

NPE reports that in 2020-21, 141 virtual charter schools were run for profit, accounting for 61% of the students enrolled.

And those enrollment numbers exploded during the pandemic. Between the 2019-20 and 2020-21 school years, when charter school enrollment was growing, NPE found that over 70% of that growth was going to virtual charters, bringing cyber enrollment up to over 483,000 students.

Virtual charters are hugely profitable. A General Accounting Office report in March 2022 noted that student-teacher ratios are higher in traditional public schools and that while a district school spends just under $14,000 per child on instructional staff, virtual charters spent only just over $8,000 per child. That’s a hefty margin for a school that doesn’t have the building or infrastructure expenses of a bricks and mortar school, particularly in a state like Pennsylvania, where cyber schools are funded at the same per pupil rate as a bricks and mortar school.

GAO investigators also found that virtual charters take considerable liberties with counting those students. Their report noted that some schools only require a student to log onto the portal; some virtual charters only took weekly or even monthly attendance. Yet for a student who only logged on briefly once a month, the cyber-charter still gets a full helping of tax dollars.

The NPE notes the alarming frequency with which virtual schools have been caught cooking the books and lying about enrollment, sometimes to the tune of tens of millions of dollars. Notable cases include the A3 charter school network, Epic charter schools, California Virtual Academy (CAVA), and Ohio’s Electronic Classroom of Tomorrow (ECOT), which owed the state of Ohio $80 million dollars in tuition reimbursement.

It’s also worth noting that even supporters of charter schools and choice, like the National Alliance for Public Charter Schools and 50CAN, have been very critical of virtual schools, issuing reports calling for reforms in the sector. While cyber-charters can serve students with specific needs, they have generally performed poorly and failed to serve students well.

Virtual charters highlight the problem of running charter schools for profit; there is a built in conflict between the needs of the students and the aims of the operators. Every dollar spent on students is a dollar subtracted from profits. If virtual schools are going to remain a large presence in the education landscape, more regulation and oversight are needed to protect the interests of students and taxpayers.

*Full disclosure: I am an NPE member.