The Cost of Online (Cybercharter) Schooling ... or Shooting Your Friend in the Foot

Today, Jennifer King Rice's critique of a Thomas B. Fordham Foundation report on the cost of full-time online K-12 schooling was published by the National Education Policy Center. Dr. Rice pointed out the many complications of attempting to put a dollar figure on ordinary brick-and-mortar schooling, let alone the price of a year of cyberschool. But the gist of both the Fordham Foundation article and Rice's critique as well as several other shots that have been taken at pricing cyberschooling is this: the latter costs about two-thirds to three-quarters of the former; roughly $10,000 per pupil per year vs $7,000. And it must be recalled that even this cost differential is clouded in the haze of dicey reporting by the for-profit cyberschooling companies (read "K12 Inc." and "Connections"). For example, the huge run-up in the past three years of K12 Inc. stock (LRN on the NYSE) includes profits on their half-billion dollars a year revenues, which profits must be sizeable to justify the price of the stock. In Arkansas, a state board of education member raised questions about the administrative costs claimed by the Arkansas Virtual Academy (a K12 Inc. company). Arkansas Virtual Academy was charging 15% administrative costs compared to 5% for brick-and-mortar schools in the state. (Perhaps K12 Inc. writes off lobbying expenses to "administrative costs." After all, in Mississippi where a pitched battle is being waged by K12 Inc. to have cyberschools included in the state's charter school system, former Governor Haley Barbour's nephew Henry has been hired as a lobbyist.)

The interesting sidebar to all this research and politicking is that one traveler in the free-market schooling campaign is shooting another fellow traveler in the foot. At the same time that the Thomas B. Fordham Foundation is putting out research claiming that cyberschools cost 30% less than brick-and-mortar schools, companies like K12 Inc. are trying to convince legislators around the country that the difference is zero, i.e., that the charter school should be reimbursed at 100% the cost of educating a pupil in a brick-and-mortar school.

In 2010, the Georgia State Commission on Charter Schools established a funding level of $3,500 per full-time K-12 pupil in online charters, plus a 3% administrative fee. Testifying in favor of 100% funding, one Allison Powell, vice president of the International Association for K-12 Online Learning (a lobbying front for the big cyberschooling companies) claimed, “The costs are pretty equal to a lot of brick and mortar schools. You don’t have the transportation or building costs, but you still have to provide Internet and computers. You have personnel. A lot of states will fund them at the same level.”

In truth, there are hardly any states that fund cybercharters at the level of funding for brick-and-mortar schools. But that is not to say that the companies are not trying. A bill currently making its way through the Arizona legislature would increase cybercharter per pupil funding to 100% state allocation provided a few easy hurdles are cleared: 50% for all students enrolled on October 1, 35% more for all who finish the year, and the final 15% for all those who pass an achievement test. The bill looks like it was written by lobbyists, who reluctantly, perhaps, acceded to pressure to add some symbolic "accountability" features.

Gene V Glass
University of Colorado Boulder
Arizona State University