Amid concerns about quality, cost, and corruption in Pennsylvania's extensive system of cyber charters, state officials are considering eight new proposals for independently managed schools providing mostly online instruction.

The new cyber charters, which would receive public funding that would otherwise benefit traditional school districts, aim to serve almost 10,000 students by 2017.

If all the pending proposals are approved, the new cybers would receive roughly $350 million in taxpayer money over the next five years, according to a NewsWorks/Notebook analysis.

During hearings held in Harrisburg last week, Pennsylvania Deputy Secretary of Education Carolyn Dumaresq touted the value of online options.

"The beauty of the cyber charter is that any child, anywhere in Pennsylvania can participate," said Dumaresq. "I think they serve a unique role in providing additional opportunities for students."

But some public education advocates - as well as some traditional school districts, including Philadelphia – are raising red flags. They argue that the state's existing cyber schools overspend public dollars while generating mostly poor academic results.

"We have to make sure that children are protected and that taxpayers are protected," said Rhonda Brownstein, executive director of the Education Law Center, which has called for a statewide moratorium on new cyber charters.

Pennsylvania officials are expected to make final decisions on this year's proposals sometime in January.

A growth industry

Though local school districts in Pennsylvania currently have the sole right to approve new bricks-and-mortar charters, only the state Department of Education can authorize cyber charters.

In the past two years, the department has approved eight new cybers, bringing the statewide total to 16.

This year, Pennsylvania taxpayers will spend about $400 million so that roughly 35,000 students can be taught through cyber charters instead of traditional public schools.

According to the Evergreen Education Group, a consulting firm that produces an industry-sponsored annual report on the state of online education, only Ohio and Arizona had more students in "multi-district, fully online schools" in 2011-12.

Funding projections based on most available per-pupil allotment to Pa. cyber charters
($11,052 in 2010-11,Pennsylvania Department of Education.)

A variety of options – and opportunities for profit

Hoping to capitalize on surging demand from parents, eight applicants are seeking to open new cybers for next school year.

Their proposals highlight the growing diversity in online education models.

The Allentown, Pa.-based Pennsylvania Career Path Cyber Charter, for example, proposes to focus on "work-based learning" that includes job shadowing and internships. The Philadelphia-based Akoben Cyber Charter, meanwhile, proposes to become the "first African-centered cyber charter school in America."

Dumaresq praised the variety of options.

"You name it, it's out there for children," she said.

During a hearing in Harrisburg last Wednesday, Diana Moninger gave her pitch for why the state should open the Insight PA Cyber Charter, which aims to serve 3,600 dropouts and other hard-to-serve teens by 2017.

"Insight PA's well-conceived virtual education program will boost student achievement, serve the unique need of Pennsylvania's at-risk students and families, and offer a new model for effective public education in the 21st century," Moninger told the nine members of Pennsylvania's cyber charter committee.

The school's application calls for a weeklong, in-person orientation for students; a first year focus on "synchronous" online education in which students have real-time access to their teachers and other students; and the opportunity for regular face-to-face time at "learning centers" across the state.

Moninger is the family literacy coordinator at the Bowlby Public Library in tiny Waynesburg, Pa. She's also the parent of two students who attend cyber charters. More recently, Moninger became a founding board member of PA Community Partners in Education (PACPE), a newly formed group applying for the charter to run Insight PA.

Pennsylvania law mandates that charters may only be granted to not-for-profit organizations.

If Insight PA is approved, PACPE intends to contract with K12, Inc. to manage the school and provide its curriculum.

K12, based in Herndon, Va., is the country's largest for-profit operator of online K-12 schools. Company officials were on hand for last Wednesday's hearing, answering state officials' questions about everything from the technology to be used by Insight PA to the school's plans to focus its recruitment efforts on Pittsburgh and Philadelphia.

"My role is to help founders through the application process," said Todd Thorpe, a senior director of school development with the company.

K12 is currently involved in at least two existing Pennsylvania cybers: Agora and PA Virtual. The company has recently come under heavy scrutiny for the academic performance of schools using its curriculum, as well its teacher hiring practices, the amount its affiliated schools spend on advertising, and the company's aggressive lobbying efforts.

In Pennsylvania, K12 has also drawn questions because state budget secretary Charles Zogby is a former vice president in the company.

Thorpe defended K12's record, saying the company focuses on students' growth during the school year and provides a valuable option to families.

A second proposed cyber charter, Phase 4 America, also intends to use the K12 curriculum if approved. Others propose to contract with e2020, Inc. or Mosaica Education to provide curricula or management services.

Dumaresq said she's not concerned about for-profit companies playing such a prominent role in the state's publicly funded cybers.

"Profit-making is not a dirty word," said Dumaresq, so long as schools are following the law and delivering a quality education.

'Dramatically less learning' in cybers

In the most comprehensive study to date, Pennsylvania's cyber charters as a group were found to have poor academic performance.

In 2011, the Center for Research on Education Outcomes (CREDO) at Stanford University compared the learning gains of students in eight Pennsylvania cybers with their counterparts in other types of schools.

They found that traditional public schools and bricks-and-mortar charters helped students learn at about the same rate in reading, while traditional public schools did slightly better in math.

But cyber charters lagged significantly behind both other types of schools.

"The cyber schools we were able to study have dramatically less learning per year in both reading and math for their students," said Macke Raymond, CREDO's director.

Robert Fayfich, the executive director of the Pennsylvania Coalition of Public Charter Schools, acknowledged the "mixed" performance of the state's cyber charters, but said that test score data needs to be balanced with on-the-ground reviews.

"I would put more credibility in the perception of the parents who are actually increasing the enrollment of the cyber schools," said Fayfich. "They're seeing some improvement in their child that they're not seeing elsewhere."

Others, though, have seized on the results of the CREDO study as a major reason to be skeptical of Pennsylvania's cyber charters.

In their review of the Philadelphia School District's operations, the Boston Consulting Group described the quality of Pennsylvania's cybers as "notoriously low." The consultants recommended that the district start its own online program to draw students back.

And Brownstein of the Education Law Center wants a freeze on all new cyber charters.

"With all of the dismal academic performance, we think that the Pennsylvania Department of Education should slow down, take a look at what the problem is, and not go on to approve additional [cybers]," she said.

A threat to Philadelphia?

For many, concerns about the academic performance of the state's cyber charters are intertwined with concerns about their funding.

"Taxpayers are paying a lot of money for these schools that aren't performing perhaps as they should," said Steve Robinson, the director of public relations for the Pennsylvania School Boards Association.

When a Pennsylvania student enrolls in a cyber, the charter bills the student's home school district for an amount equal to the per-pupil funding level in that district. In 2010-11, the more recent year for which a figure is available, Pennsylvania cybers received an average of just over $11,000 per student, according to the Department of Education.

Critics contend that's too much money, arguing that cybers – which generally have higher student-teacher ratios and lower facilities costs than bricks-and-mortar schools – receive more than they need to operate. In June 2012, state Auditor General Jack Wagner contended that Pennsylvania was dramatically overspending on cybers and called for a statewide cyber charter funding rate of $6,500 per student.

The state legislature has tried and failed twice in recent months to reform the way charters are funded. But Lori Shorr, the chief education officer for Philadelphia Mayor Michael Nutter, said there is bipartisan consensus that the system needs to be reworked.

"The way we fund schools looks pretty much the same as it did 15 or 20 years ago, [but] the way we're delivering education is much different," said Shorr. "We need to sit down and talk about what the price tag is for delivering [cyber] instruction."

It's not just a question of fairness.

The state's largest cyber charter - PA Cyber, which last year served more than 10,000 students – was searched by federal agents in July of this year. The Pittsburgh Post-Gazette reported that the school pays tens of millions of dollars annually to spinoff entities run by former executives of the school.

In addition, Shorr and other city education leaders are worried that the continued expansion of cybers will blow a hole in the cash-strapped Philadelphia School District's already unbalanced budget.

Before the hearings on the new proposals began, Philadelphia Superintendent William Hite submitted written testimony on behalf of the district.

Last year, wrote Hite, almost 5,000 Philadelphia students were enrolled in state cyber charters, resulting in almost $50 million in per pupil payments from the district.

"Cyber charter school enrollment has an enormous impact on the School District's budget and Five Year Financial Plan," wrote Hite. "We expect that by 2017, cyber charter seats will cost the School District more than $75 million per year" – even if no new cyber schools are approved.

Charter proponents argue that traditional school districts should be able to offset the expense of losing students through corresponding reductions in spending.

School districts counter that the correlation is not one-to-one: They don't get to cut their teaching staff, cancel a bus, or stop heating a school just because a given student leaves for a cyber charter.

Philadelphia school officials declined to be interviewed for this article. They've previously maintained it is only possible for their district to recapture about 30 percent of the revenue lost when a student leaves their system for a charter.

Shorr said it doesn't take an accountant to understand the financial implications for Philadelphia if the state approves a new batch of cyber charters.

"It's like anybody's checkbook at home," she said. "If you have a big new cost, and you have no money left over from the previous month, you've got to take the money from someplace else."

9,800 students, $350 million?

If the state were to approve all eight of this year's proposals, the applicants project a total enrollment in the new cybers of 2,750 students in 2013-14 and 9,800 students by 2017-18.

Using the most recently available per-pupil allotment figure, that would mean the new cyber charters would receive roughly $30 million in public funding in the first year, and $350 million over five years.

Last year, Pennsylvania eventually approved four of seven cyber charter applicants.

Rulings on this year's crop of proposals must be made sometime in early 2013.

The inclination in Harrisburg seems to be for continued expansion, with a focus on trying to ensure quality.

"My interest is in making sure the curriculum is rich, [and] we need to make sure that [schools are] financially sound," said Dumaresq.

"I don't have any concerns about growing, as long as they're quality cyber charters."

This story is the product of a partnership in education reporting between WHYY/NewsWorks and the Public School Notebook.