States Struggle With How to Fund Online Schools

Online learning is growing quickly and more and more schools are embracing online education system, but in the US, states are running into operational problems. The main issue for all states seems to be how much money from the state education budget should be spent on online courses.

Sunny Deye, a senior policy analyst at the National Conference of State Legislatures, said the issue of funding online schools is “huge” and “ongoing” and concerns are growing over how to fund online education in a fair and equitable way. The funding problem is prompting legislators to create a range of policies, but no clear consensus has yet emerged, according to Olga Hajishengallis of USA Today.

She [Deye] said, for most states, the focus is on online high school education. One trend has been a focus on “funding student choice at the course level,” which involves taking a percentage of the funding to pay for the online course, Deye said. Students are “blending” the brick-and-mortar experience with online courses, Deye said, and states are opening up to providers who can accommodate those students and parents’ choices of courses.

Also, some states, including Texas, are placing limits on how many of online courses a student can take. In Texas, lawmakers in June approved legislation that allows students to take a maximum of three courses from providers outside their district.

Michigan passed a bill in June designed to permit students to take two online classes from another district each semester.

Jamey Fitzpatrick, president and CEO of the Michigan Virtual University, said students in grades 5-12 can reference both their local school district’s catalog of courses and the statewide catalog. He said there is nothing preventing a Michigan school district from partnering with a for-profit provider to supplement learning. However, for-profit providers cannot independently place their online courses in the statewide catalog, which will be made available the first week of October.

Earlier this year, Tennessee passed a new law to place a cap on how many students can be initially enrolled in full-time online schools, while also making sure the schools meet performance standards, according to Deye. Under the bill passed in January, students who enroll in full-time online schools are fully funded by the state, said Jason Horne, principal of the Tennessee Online Public School.

In addition to funding, states are also exploring a quality control issue. In Arizona, a 2012 bill that would have established quality control over online courses was vetoed by Republican Gov. Jan Brewer.

Some states, including Utah and Louisiana, give 50% of the funding upfront to the online provider and 50% upon course completion, so the stakes are high to ensure successful outcomes.

John Watson, founder of the Evergreen Education Group, said online schools are often funded similarly to charter schools. The most controversy with funding online schools, he says, has been seen in Pennsylvania and Arizona, where school districts feel they are losing a high level of funding to online schools.

According to Stuart Knade, chief counsel of the Pennsylvania School Boards Association, many people believe that online schools are getting excessive funding.

“What we are missing is a funding scheme that is predictable, reliable and consistent that has a direct relationship to the cost of providing an education and the number of kids being educated,” Knade said.