Government Attacks on Parental Choice in Virtual K-12 Education in Virginia. Chapter 5: Driving Out Commercial Providers

by James C. Sherlock

There was plenty of VDOE-computed “capacity” in Richmond Public Schools (RPS) to accommodate out-of-district students for purposes of their being taught by the leading MOP provider.

(MOP’s are the privately-run, state-funded “Multidivision Online Providers” of educational services which are a legal option for parents of Virginia school kids.)

Then RPS suddenly cancelled its long-standing contract with that provider, eliminating that artificial “capacity.”  

RPS never laid eyes on those students.  

It registered them, got the state share of direct aid to education money that follows the students, turned the kids over to the provider, paid the invoices and kept the difference. This is a financial shell game required by the state.

The state share is re-computed at the new host district’s ability-to-pay rate. Richmond’s state share of Direct Aid to Public Education funds is higher than most. The MOP even hired an administrator for RPS  for the contract to spare them the expense.

Finally, the contract had a budget protection clause that required the provider to absorb the loss if the provider invoices ever exceeded the state share that followed the kids. 

RPS enrolled 1,321 of their students in the VDOE’s Virtual Virginia in 2021-22 after cancelling the MOP contract.  

Because of the sliding scales of Virtual Virginia fees to districts based upon ability-to-pay, RPS:

• made more money in the difference between state share and direct fees (as opposed to total costs) for the 1,321 students it sent this year to VDOE’s school;
• than it did as the contracting agent for Stride/K12’s Virginia Virtual Academy whose contract they cancelled ahead of the same school year.  

RPS packed all of the MOP students, those who lived in Richmond and those from out-of-district, into two Richmond schools for accounting purposes. Here, provided by VDOE, is a table showing RPS MOP students from 2016-17 through 2019-20. The explanation of the table:

Here is a fall membership table you may find useful. Keep in mind, some of the RPS MOP students are residents of the city. When this is the case, they are included in the “Richmond City Students” column of the table. The “Nonresident Virtual Students” column displays students who are zoned to attend school divisions other than Richmond.

The SOL scores of the MOP kids registered in George Mason Elementary/Henry Marsh III Elementary have exceeded not only the RPS averages (by a lot), but also the state averages. Here are the Henry Marsh III (ex-George Mason) SOL scores pre- and post-COVID. Here are the scores for Richmond Alternative. Please note that the MOP students not only did not demonstrate learning losses in those two years, but their SOL scores either maintained or actually improved during COVID, especially the elementary school students.  

Read that last line again. That happened because their educations are excellent and were uninterrupted. Those kids never set foot in the actual brick-and-mortar schools.

RPS cancelled the MOP contract knowing the terrific SOL performances of the kids enrolled in the Stride option. 

There were 6,783 MOP kids registered in those two RPS school in 2020-21, 6,028 of them from out-of-district. The out-of-district kids will disappear from the rolls of those two schools and the district.

That loss will tank even further the historically awful SOL performance of the division.  

The MOP program for Richmond kids ended just before this school year as well.  I hope the parents of the 755 kids living in the RPS district boundaries that had gone to the Virtual Virginia Academy last year know what they have lost. I expect that they do. 

RPS could have kept the MOP contract. It chose not to do so. I do not know why.

The shell game even involves VDOE. VDOE is required by law to pay a school division — it has hired tiny Caroline County — to handle its HR functions, hire the teachers and manage some of the financial accounts for its virtual school in order to comply with Virginia law. VDOE is not permitted to hire active school teachers.

The empire strikes back on “capacity.” In the early part of 2021, RPS cancelled its contract just ahead of the registrations for this school year. On short notice the provider was unable to replace with new contracts and with new districts the lost Richmond “capacity.”  

“Capacity” is an artificial figure which is by state computations about 10,000 out-of-district kids in RPS before local share kicks in. “Capacity” is calculated by dividing 

• the excess expenditure of local funds above that required by VDOE’s calculation of local share;
• divided by the contractual maximum fees per student that will be invoiced to the host district.

As example, see https://rga.lis.virginia.gov/Published/2020/RD41/PDF. Go to page 5 and look at column titled FY 2019 Actual Local Expenditures for Operation above RLE (Required Local Effort). Divide any cell you wish by $6,000, an estimate of MOP invoices per child in FY 2019. You will find out how many out-of-district students could have been supported by those excess local expenditures before increased local share kicks in. 

In the case of RPS, scroll down to page 7. The result of dividing Richmond’s $70,560,701 by $6,000 is 11,760 kids. So RPS had plenty of “capacity” for the 2,480 kids it sent to the MOP in FY 2019, including out-of-district kids. It’s “capacity” for this school year would have been about 10,000. Had it signed the contract.

But if you are RPS or its MOP contractor, you are not done yet. You must ensure that the RPS state share per child comfortably exceeds your $6,000 in expected MOP invoices.

If you then go to https://www.doe.virginia.gov/administrators/superintendents_memos/2018/041-18f.pdf and scroll down to Richmond City, an unnumbered page about 85% of the way through the document, you will find that total state funds projected for that city public schools in FY 2019 was $149,621,840 for 23,503 projected students, or $6,366 per student.  

With that information, both sides signed a contract for the 2019-20 school year.  RPS could have expected to pocket at least $366 each for 2,480 MOP students.  It will have negotiated a tuition discount for its own students, and has a budget protection clause in the contract that its total payments do not exceed its state share for those students. It would not, as always, be expected to shoulder the non-instructional costs associated with the VDOE option, Virtual Virginia.

So, since what little work RPS has to do to administer the contract is funded by the contractor and it appears from the data that it will show at least a million dollar profit and is guaranteed not to lose money on the deal, it signs. 

It did not sign in early 2021 for the current school year.  

Needles in a haystack – why MOP is a difficult business in Virginia. The drill above shows the twin needles that a MOP contractor has to thread simultaneously to do business in Virginia providing an education that is free to the parents.  

It has to find and contract with one or more school divisions that have both: 

• capacity for out-of-district students as a function of its excess local expenditures on education; and 
• sufficient state share per child to comfortably cover the expected invoices.  

Fairfax, at one extreme of ability-to-pay, has over a billion dollars worth of “capacity” but its state share is far too small to cover the invoices for their own kids much less out-of-district children. It is not going to spend local tax money to educate out-of-district children.

Lee County, at the other end of the ability-to-pay spectrum, gets something like $8,000 per child in state share but only has enough excess local expenditures to cover 87 out-of-district kids.

Richmond, where Virginia Virtual Academy found a home for its out-of-district kids, blew up its contract for this school year. Virginia Virtual Academy was able to cobble together some contracts in Southwestern Virginia, but together they did not have the capacity for its applicants.  

The parents of 4,000 children were denied their choice.  

Virginia needs to fix this requirement that providers hunt for the very rare school division that meets both criteria or for multiple contracts that aggregate capacity to meet parental demands for their services.  

Otherwise, parents seeking public funding for virtual education for their kids will lose the option for the nationally recognized commercial providers altogether. 

Virginia is on the verge of becoming one of the few states in the union that does not offer that option.