The Cash and Consequences of For-Profit Online Education in Missouri

This story was supported by the Pulitzer Center.

Attorney Joshua Schindler had one word for the way Missouri school districts treat families who want to enroll their students in a virtual education program: "disgusting."

"I have been fighting from one side of the state to the other side of the state," Schindler, a St. Louis lawyer, told the Missouri legislature's Joint Committee on Education at an August 2020 hearing.

He has filed lawsuits against districts throughout the state on behalf of families seeking to enroll their children in a local program run in conjunction with one of the largest for-profit online education companies in the United States. His fees are not paid by the clients, but rather a lobbying group that has fought government regulation of the company's charter schools.

"The abuses are innumerable and would shock the conscience," he continued during his testimony.

Schindler also blasted the Missouri Department of Elementary and Secondary Education, claiming during a 2019 hearing on virtual education that DESE has denied students "the best educational opportunities available to them."

But a review of the evidence that Schindler and lobbyists have presented to lawmakers reveals that the state and school districts are not actually depriving students of a quality virtual education at anywhere near the level that Schindler describes.

In fact, it's the students who are able to enroll in a program connected to the for-profit virtual education provider, Stride, that are having little success.

In spite of students' poor performance, the corporation and its local partner, a rural Missouri school district in need of money, have seen an increase in enrollment and profit, particularly during an enormous and ongoing remote learning experiment, better known as the COVID-19 pandemic.

And now Schindler and lobbyists are telling a tale of students oppressed by the state and other school districts as part of an effort to remove pesky oversight and help Stride rake in additional tax dollars.

Republican lawmakers have received Schindler warmly and treated the state education officials as though they were villains breaking the law.

After hearing Schindler's testimony in September 2019, State Rep. Nick Schroer, (R- St. Charles County), warned DESE officials that they could "strictly comply" with the virtual education law or "you will be here the rest of 2019 and 2020, providing hordes of documents for us to review."

With the assertions promoted by Schindler and lobbyists, Republican lawmakers are now working on legislation to remove local district control of students and allow the virtual education program to collect money directly from the state, like a charter school — minus the oversight.

Grandview R-2 School District draws students for its brick-and-mortar program from a rural area about 50 minutes outside of St. Louis.

"You can't buy a gallon of gas or a gallon of milk in this district," Superintendent Matt Zoph told the Riverfront Times in 2018.

With little tax revenue to fund its schools, the district started working in 2013 with Stride to create a summer school program, the Missouri Online Summer Institute.

The superintendent who launched the program, Michael Brown, then retired and formed Show Me State Virtual Education, a company with a mission "to promote online education to students and professional development for educators."

He signed both a contract with his former employer, Grandview, and a consulting agreement with Stride, which until recently operated as K12 Inc.

A 2015 contract between Brown's company and Grandview included incentives to sign up as many students as possible from other Missouri school districts. The state would then have to pay the students' tuition. If Grandview earned more than $200,000 in net profit, Brown would receive 25 percent of the profits above that threshold.

The arrangement has drawn plenty of questions and criticism.

"Virtual schools can bring in extra money for public schools, but you can't call it 'profit' because they are nonprofit entities," Gary Miron, a professor at Western Michigan University who studies education policy told the RFT in 2018.

Luis Huerta, a professor of education policy at Columbia University, added, "If there is 'profit,' it should be returned to the district for students' services."

Grandview school board member Pam Tisher told the RFT in 2018 that she thought Brown retiring from the district and then starting the company "was a major conflict of interest."

At a 2013 board meeting, Tisher suggested that the district table the decision to sign a contract with Brown's company until it got data on the results of the summer school, according to the minutes. The board agreed, but at the next meeting, it unanimously approved the contract, even though Tisher says they failed to get the data.

"We were never provided any of that information," Tisher says. "Dr. Brown could have sold them oceanfront property in Arizona and the school board at that time would have bought it."

That revenue became especially crucial to Grandview in 2016 when an auditor discovered that a business manager had embezzled $1.6 million over ten years — seven of them under Brown's supervision.

After the state passed a law to expand virtual education in 2018, Zoph, who succeeded Brown as superintendent, began working with Stride to set up a full-time program through Grandview. He told the school board that the contract could "be worth $625,000" and "$1,000,000 in two years," according to meeting minutes.

School districts and watchdogs worried that state support for profit-driven online educators would weaken Missouri's public schools and turn students into commodities.

During the discussion about the proposed legislation in 2018, the Missouri School Boards' Association, a nonprofit that advocates for public schools, expressed concern. Susan Goldammer, MSBA's associate executive director, said at the time that the legislation "might be an opportunity for for-profit companies to come in and receive state aid to educate students or that this is the beginning of creating a virtual charter school. ... We are very wary of any sort of scheme that would allow people to profit off of students."

The sponsor of the bill, State Rep. Bryan Spencer (R-Wentzville) assured the St. Louis Post-Dispatch in 2018 he did not want students to take online courses already offered by their local school district. Districts would also have the right to deny a student's request for enrollment in a virtual program if they determined it was not in their best educational interests, he said.

Gov. Eric Greitens approved the legislation to create the Missouri Course Access and Virtual School Program on his last day before resigning amidst a scandal in 2018.

After the law's passage, Grandview R-2 School District set up Missouri Virtual Academy, or MOVA, which only allowed students to enroll full time, meaning that they of course would take classes that districts already offered. It's now one of thirteen such programs operating in the state.

To (supposedly) ensure that they were good quality, the law contained provisions requiring that virtual teachers be state certified, that curriculum meet state academic standards and that student data be provided to the state in a manner that protects their privacy.

But that state review process didn't apply to MOVA, because the law also contained a provision stating that since the district already offered the virtual summer program, it should be automatically approved.

In spite of that provision, DESE officials told the Grandview superintendent that it needed to submit an application for the virtual education program in order to be listed on the state virtual education website and enroll students, according to emails obtained from an open records request.

That didn't happen. But Schindler filed a lawsuit on behalf of a family in the Fulton School District who tried to enroll in MOVA but had been denied by the district because the program had not received state approval. A Cole County judge ruled in the family's favor and ordered the state education department to list MOVA on its website.

Schindler claimed that lobbyists and DESE favored cheaper, lower-quality virtual education programs and wanted to keep MOVA off the list because "it's the best program, and b) it's the most expensive," he said in a May 2020 Facebook video with the Children's Education Alliance of Missouri, a pro-"school choice" organization funded by St. Louis billionaire Rex Sinquefield that has joined Schindler in his advocacy efforts.

The organization in 2014 paid Schindler to represent students seeking to transfer out of Normandy School District, located in north St. Louis County, which had lost its accreditation.

Schindler is correct that MOVA is the most expensive. The program charges districts — not parents — $525 per course; the cost of courses in other programs range from $275 to $499, according to the state virtual education site.

The program does not, however, appear to be the best. In general, kindergarten through twelfth-grade students' academic performance and graduation rates in virtual programs across the country are significantly lower than in-person institutions, according to a bounty of research.

During the 2019-2020 school year, 56 percent of the 498 students enrolled in MOVA passed their courses, which is slightly lower than the already not-so-hot average of 59 percent of students who passed courses across the various state virtual education programs, according to a DESE report. (The report does not break the performance down into letter grades or scores.)

"That means that a little more than half of the kids are learning what they should be learning. That's disastrous," says Gary Miron, who is one of the authors of an annual report from the National Education Policy Center examining such virtual education programs in the United States.

That poor performance is the norm for Stride's programs. During the 2017-2018 school year, only 29.8 percent of full-time virtual programs in the United States operated by for-profit providers like Stride achieved acceptable state standards for students' academic performance, according to the NEPC report.

Stride's programs had a 48 percent graduation rate for the 2017-2018 term, placing it 10 points below its largest competitor, Connections Education. The national average graduation rate during the 2017-2018 school year was 85 percent for public high school students, according to the U.S. Department of Education.

Those figures have prompted officials in other states to charge that Stride has pocketed millions of dollars while failing to deliver on its responsibilities to students and families.

In 2016, California Virtual Academies, a collection of thirteen charter schools connected to Stride, reached an $8.5 million settlement with the state after the company "misled parents and the state of California by claiming taxpayer dollars for questionable student attendance, misstating student success and parent satisfaction, and loading nonprofit charities with debt," Kamala Harris, then attorney general of California, said in a statement.

In Georgia, Stride lost its contract to operate a virtual charter school after the corporation took $54 million of the $90 million in state funding for the program in 2018, according to the 74, an education news organization. The program had also received grades of D's and F's on state report cards in recent years because of students' poor academic performance.

Schindler, however, insists that virtual schools offer top-level programs for students. "We have come to the point where virtual education other than brick-and-mortar school is every bit like a classroom that you would see in Ladue or Clayton or anywhere else in the state of Missouri," he says in the Facebook video. "They have heads of schools. They have counselors. They have people keeping an eye on their children."

The Missouri law allows districts to deny a request for enrollment in a virtual program if they determine it's not in the student's best educational interests.

But when districts have issued denials, they have often faced lawsuits or letters threatening legal action from Schindler.

The law allows parents to appeal a district's decision to the school board and then DESE, but in at least three cases, Schindler filed lawsuits against districts before the parents had done so, according to the defendants' court filings.

A mother living in the Willard public school district in southwest Missouri tried to enroll her middle school student in MOVA in 2019. Her daughter was getting C's, D's or F's in each of the four core subjects while learning in person. Based on her academic performance, the district determined virtual learning was not in her best interest, according to a letter sent to the family.

"What we have found is that the students who have the ability to self-regulate, they can be successful in the virtual world," says Matthew Teeter, superintendent of Willard Public Schools. But students who "have an inability to come to school, are missing multiple days ... and don't tend to make up the work that they missed don't tend to be successful in the virtual world."

Schindler alleged that the district had denied the enrollment in MOVA and instead encouraged her to enroll in Launch, a virtual education program run by Springfield Public School that charges $225 less per course than MOVA.

But a letter from the district to the parent in December 2019 makes no mention of Launch in denying her request and states that it does not believe she would succeed in virtual courses.

Schindler eventually dropped the suit. The student did not enroll in MOVA through Willard, Teeter said.

"Parents, I think, do always want to have the best interest in mind for their kids," Teeter says. "I can also say that sometimes the evidence doesn't back up their opinion ... because we have enough evidence to suggest that virtual education would not be the best option, so how can we as a school district in good conscience allow a student to fail?"

The state's virtual education programs operate within an unusual loophole. While MOVA only accepts students on a full-time basis, their students' performance on state standardized tests is not factored into Grandview's state assessment. It's counted against the district in which they reside, which no longer teaches the student. And those districts still have to pay virtual education programs on a student's behalf.

"Even though a student may never walk in our doors, and they go to an online for-profit, virtual school, we as the school district in which they reside is still responsible for their state assessment score, so [Grandview has] zero accountability in all of this, but they are receiving a substantial amount of revenue for the services they provide," says Dale Herl, superintendent of Independence School District near Kansas City.

Schindler filed two lawsuits against the district concerning students who wished to enroll in MOVA. In one case, the mother dropped the suit and said in a private Facebook message that her daughter no longer attends MOVA. She declined an interview request.

In the other, the court ruled against the student. The Jackson County judge found that the student had not been legally allowed to enroll in MOVA at Independence's expense before DESE ruled in the case. The court also stated the district, which is responsible for the student's performance, had a legal right to ask the student to submit an assessment of her progress more than once a semester.

Otherwise, the "student could fail a class, or simply not participate, and [Independence] would not know until it was too late to intervene, thereby harming the student, losing educational time, and wasting taxpayer funds," the ruling states.

Herl and other superintendents still say that some students can be successful virtual learners. The Independence district also has a virtual education center that Herl says uses Stride curriculum.

The difference is "we have a face-to-face piece to our online education. We do ask that our students come in so we can proctor tests and monitor their progress," he adds.

Herl says the district has calculated that it costs the district about $3,000 per student per year, which is half of what MOVA charges.

But some parents say virtual education is better than the alternative in their district. Jasmine Hill turned to Schindler after St. Louis Public Schools denied her request for her elementary school-aged son to attend MOVA. The district eventually allowed her son to enroll and Schindler dismissed the suit.

"I am an entrepreneur, and I am a single mom, and with my lifestyle, it's better for him and me both for me to teach him one-on-one," says Hill, a hairstylist whose son would spend time with her at a salon near Washington University and "be tutored by different people."

Her son was supposed to attend Monroe Elementary School, she says, a school where the entire student body lives below the poverty line and where less than 9 percent of students test as proficient or advanced in English, math and science, according to the state's annual performance report in 2019.

She tried the St. Louis Public Schools' internal virtual education program but says her son "started getting sick and nauseous and throwing up."

"I just don't think it's that great to keep children on a computer for that long without interaction from other humans," Hill said in July 2020, as her son was preparing to start at MOVA.

Asked whether virtual education would then be a good fit, given her son's reaction to the district's version of online school, Hill said she had been told a typical day at MOVA included plenty of time away from the computer.

In a follow-up interview in December, Hill said her son was "loving it. It came with all the tools he would need, from computer to printers to books to teaching tools, supplies, and paint and brushes. It comes with a lot of stuff, and I really like it."

Schindler admits that he is paid by the National Coalition for Public School Options, a lobbying group that has fought efforts from state and charter school groups to provide additional oversight of Stride's virtual charter schools around the country. The 74 documented that Stride and the coalition have shared the same lobbyists in Washington.

But in spite of Schindler's praise for MOVA and significant evidence of cooperation between Stride and the coalition, Schindler denies that he works on the company's behalf.

"I am an absolutely one-trick pony: If a parent has a right under [the virtual education law] and that right is being thwarted, I am going to fight to vindicate the parents — this is not anything other than that," he tells the RFT.

But at the August hearing, Schindler referred to a map created with information he received from MOVA showing the number of applicants throughout the state who were awaiting district approval.

"If DESE, doing its homework, also goes and finds out which school districts are sitting on applications and not even ruling on them, steps should be taken against those districts," Schindler said.

Republican lawmakers appeared moved by Schindler's words.

State Sen. Ed Emery (R-Barton) suggested that the state implement a checklist for districts to comply with the state virtual education law and that superintendents could be dismissed if they don't.

To bolster MOVA's case, one of its employees also created a spreadsheet titled "NCPSO [the company Schindler works for] Count of Denied MOCAP students" that was distributed to lawmakers at the hearing, according to a letter from DESE.

That spreadsheet contained the personal information of 1,450 students. State officials were outraged, describing the list as a "significant data breach" and a violation of state and federal law.

That information could expose children to identity theft, says Chris Neale, assistant commissioner with DESE.

And "if you are human trafficking, you could use a stolen child's identity to cover a child you should not be in possession of," Neale says. Asked whether the state would take action against Grandview or MOVA, Neale describes it as an "ongoing legal matter."

Schindler "used the spreadsheet data in an effort to convince members of the Joint Committee and others that there was a tremendous backlog of students waiting to be enrolled in MOCAP courses," according to a letter from DESE's chief counsel.

Even though he referred to the map of students created with information provided by MOVA, Schindler now says, "I think I merely represented in general terms that I understood that there were a lot of students who were not being processed."

MOVA's principal also produced a separate list of 1,600 students allegedly awaiting district approval, which a Stride employee then distributed to Missouri State Board of Education members, the company admits in a letter responding to DESE's complaint. That had students' dates of birth, phone numbers, parents' names, addresses and information on disabilities, Neale said in a sworn deposition.

Stride's attorney states in a letter to Neale that the spreadsheets did not contain the sort of personal information that would constitute a violation of state law but said the company would contact families whose information had been shared.

Ironically, those reports revealed the holes in Schindler's claims about the terrible abuses committed by districts.

The persons listed in those spreadsheets had only expressed interest in enrolling or had created Stride online accounts "but did not have complete applications," Stride's attorney states in the letter.

When the state's virtual education office followed up with 58 districts that allegedly had the largest number of students awaiting approval, they found that among 750 students, less than 5 percent were still awaiting an enrollment decision, according to a letter from the DESE attorney.

DESE also received 618 form letters through a website called Oneclickpolitics.com requesting that the state waive its approval process for enrollment in virtual education programs because of the COVID-19 pandemic, according to a Missouri State Board of Education meeting agenda. When the state reached out to the senders, "those who did respond indicated that they did not send the email and did not know what it was about," the agenda states.

After Schindler testified in August, Nicholas Elmes, communications manager for CEAM, the group funded by Sinquefield, told the committee that three parents had planned to testify about the problems they encountered when trying to enroll their children in virtual education. None showed up.

One parent woke up in the morning and had a check engine light on in her car, Elmes said. Another had an emergency doctor's appointment. The third had to work. When asked by the Riverfront Times to connect with these parents, Elmes did not respond.

Amidst the allegations that districts and the state are preventing students from enrolling in virtual education, MOVA has still been able to rapidly expand. This school year, during the ongoing pandemic, MOVA had 905 students enrolled as of January, an 81 percent increase over last school year, according to DESE. (DESE does not yet have data on the number of students who passed the virtual courses during the first semester.)

The state growth is part of a national trend. Stride reported revenue of $376.1 million during the second quarter of fiscal year 2021, a 46 percent increase from last year, largely due to an increase in student enrollment.

In spite of the lack of evidence that districts are actually breaking the 2018 law, and in spite of the fact the sponsor of the 2018 legislation said the virtual program was not intended to duplicate courses that districts were already offering, Republican lawmakers would now like to cut districts out of the equation.

State Sen. Bob Onder (R-St. Charles County), who sponsored the Senate version of the 2018 bill, has introduced new legislation that would make the parents, rather than school districts, the gatekeepers over students wishing to enroll in virtual education. A district or the state education department could object to the parents' decision, but that objection would only be sent to the parents for their consideration.

The state, rather than the district, would then pay the virtual education provider, similar to the arrangement Stride had in Georgia and California when it received hundreds of millions of dollars in state funding despite students' poor academic performance.

Susan Goldammer of the Missouri School Boards' Association worries about the vague language contained in the bill, which states that DESE "shall revoke or suspend or take other corrective action regarding" a "course or provider no longer meeting the requirements of the program," but only after notifying the provider and providing them a "reasonable time period" to take corrective action.

"Even if a vendor is not providing any education to students, we cannot simply cut them off," Goldammer wrote in an email. "We have to give the provider 'reasonable time' to avoid revocation. Lawyers will debate all day how much time is 'reasonable.'"

A district that does not advertise the state's virtual education program on its homepage would be fined $100 each day.

That sort of provision is needed because many of these school districts "have refused to give children access to longstanding, very high-quality virtual school programs that have been in existence for many years and provided excellent education to children," Onder says.

But what about the state's report showing that only 56 percent of students in MOVA's program had passed their courses? Onder says he had not seen it.

What about the data breach? Onder says he did not know anything about that.

When presented with the evidence that DESE had reviewed the list of students allegedly denied enrollment and found that largely not to be the case, Onder says, "The idea that this bill is not needed is somewhat disingenuous on the part of DESE, and I have been very disappointed with DESE in its cooperation" on the virtual education law.

The sponsor of the House bill, State Rep. Phil Christofanelli (R- St. Peters) did not respond to a request for comment.

Another motivator for Christofanelli and Onder could be Sinquefield. One of the largest contributors during their past two runs for office was the billionaire's campaign committee Grow Missouri, which gave them a total of $36,400, according to Followthemoney.org.

The legislation has been folded into a Senate bill that would expand charter schools and provide tax credits for contributions to organizations that provide scholarships for private education. On January 21, the education committee passed it on a 5-4 party-line vote, with the exception of one Republican who voted against it.

Goldammer sees the new legislation as the culmination of what she predicted in 2018. "We believe the intent of this all along was to open up Missouri for virtual charter schools," she says. "If Onder's bill passes, that is exactly what we will have, only there is even less accountability for our virtual charter schools than there are for our existing charter schools in St. Louis and Kansas City."

The virtual education program has certainly been good for Grandview's finances. The district was able to increase its spending per student to $11,740 in 2019, a 21 percent jump from 2017 when that figure was $9,700.

Matt Zoph, its superintendent, is also doing well. He made $151,500 during the 2019-2020 school year, a 31 percent raise from the previous year, which caught the attention of the Post-Dispatch.

Zoph did not respond to the RFT's requests for comment but told the Post-Dispatch he was initially paid significantly less than other superintendents and was told "that this was a trial and that my salary would be adjusted in the future based on performance."

In 2019, Grandview also followed a trend among rural districts and shifted to a four-day week in order to address "the decade old problem of the inequity in teacher pay between our district and the surrounding school districts," Zoph stated in a letter to parents.

As to its virtual program, MOVA Principal Steve Richards sees the state data on performance as skewed by students who come and go throughout the semester.

Just months into the 2019 school year, 25 students had already withdrawn from MOVA, according to emails between the program and DESE. An administrator told DESE that "as long as a student achieved progress in a course, a district will be billed for a student."

"Missouri Virtual is a legitimate school option," Richards says. "I am not saying virtual is for every student because it's not necessarily, but if for whatever reason virtual is something you need, I really feel like the program that we deliver is very high quality and that we're on the path to being a very successful school."

If Onder's legislation passes, virtual education providers, unlike public school districts, will still be able to make use of a best educational interest clause — in order to remove the student from their program, at which point they presumably would drop out entirely or reenroll in their public school district.

"Virtual programs have the ability to kick a student out if they are not performing at a level that they deem appropriate. Obviously public schools don't have that right," Herl, the Independence superintendent, said. "It's my belief that school districts will be left to pick up the pieces when kids start to struggle and these for-profit providers start kicking them out."