Into the Breach: South Carolina Cracks Down on Poor-Performing Virtual Charter Schools, Rejects Their Bid for New Sponsor

Following months of political tensions and a contentious public hearing, the South Carolina agency that oversees 39 of the state’s charter schools has signed off on the requests of five charters seeking permission to transfer to a new sponsor. Another four, though, including three online schools, are in “breach” status because of persistently poor performance and will not be allowed to leave.

“We don’t feel that’s taking care of our fiduciary duties,” Don McLaurin, chair of the statewide South Carolina Public Charter School Board, said of the underperforming schools’ request to leave. “That’s just not how you improve education.”

The three virtual schools — the Cyber Academy of South Carolina, the S.C. Virtual Charter School, and Odyssey Online Learning — all contract with the for-profit, publicly traded K12 Inc. for services ranging from day-to-day operations and instruction to curriculum. The fourth, Midlands STEM Institute, is a technology-focused “bricks-and-mortar” public charter school located near the city of Columbia.

Separately, the state’s Office of the Inspector General is examining data the schools submit to the board that raise questions about enrollment and attendance at the four schools whose transfer requests were denied. Early in the hearing at which the transfer requests were heard, board members were told the auditors have found nothing so far that should factor into their decision.

Other states and charter school authorizers that have attempted to shutter poorly performing online schools with for-profit operators have found themselves waging wars of attrition, with the companies spending lavishly on lobbying and donating to sympathetic elected officials.

South Carolina, where 10,000 of the state’s 26,000 charter school students attend virtual schools, is shaping up to be no exception. According to public disclosures analyzed by The 74 in a previous story, the for-profit schools and their representatives have spent nearly $1 million in the state since 2010. In 2015 the Center for Research on Education Outcomes at Stanford University, better known as CREDO, found that online schools have an “overwhelming negative impact” on student growth.

Anne Louise Peterson, general counsel and director of policy for the Public Charter School Alliance of South Carolina, which advocates for the state’s charter schools, rejects the idea that poor academic performance is at the heart of the dispute between the schools that want to switch authorizers and the charter district board.

“We know our virtual schools have become dumping grounds for kids who are on the border,” she said. Beyond that, the charter district “has paid lip service to this being about academic performance, but that’s not what it’s been about. This has been a straight-up turf war.”

The charter district has failed to provide adequate support to the schools it oversees on a number of fronts, she added, charging that some schools have not gotten their fair share of state and federal funds and have not received training and that the charter district staff have offered to cut oversight fees for some schools and not others.

“I’m not remotely saying we don’t need accountability,” Peterson said. “But the district should be accountable, too.”

Charter district superintendent Elliot Smalley denied the accusations, explaining that the agency adheres to state law in handling school funds. “Why would we hold on to four low-performing schools if this was about ‘competitive pressures?’ ” he asked. “And if this were about holding on to schools for the 2 percent authorizing fee from those schools [as has been alleged by the Alliance and others], why would we have put those schools on breach in the first place, signifying a potential path for revocation?”

The board uses four ratings to categorize the performance of the schools it oversees. After a school has been in breach status for three years, state law requires the board to revoke the charter that gives it permission to operate.

In recent years, the district tightened its expectations for both existing and new schools, last year closing a poor-performing program and rejecting 12 of 17 applications for new charters. Local school districts can authorize schools, but the lack of alternative statewide sponsors put schools under pressure to comply.

But then last summer, a small, cash-strapped private college announced it would begin overseeing charter schools, which pay 2 percent of their revenue to their sponsor. Nine schools quickly applied to Erskine College’s newly formed Charter Institute. Before the schools could transfer to a new authorizer, state law says the current overseer must agree.

The five schools whose transfer requests were approved include one that was able to show the board its academic performance had improved substantially, one operated by a company with another school that will be overseen by Erskine, and three schools with short but good track records.

“Some of the schools, there was really no reason to deny them,” said McLaurin. “They’re new, but we think they’re going to turn out to be good schools.”

At the hearing, leaders of several of the schools said they were not “authorizer shopping” — insider parlance for pushing off a likely charter revocation by starting the clock over with a new sponsor or with one with different standards.

The schools complained that the state board had implemented a “one size fits all” framework for holding schools accountable — in the case of the online schools, without regard for their unusual populations. They also said that the board, which operates as a school district under state law, had offered inadequate support.

Erskine, school leaders testified, has pledged to provide professional development for teachers and student-to-student mentoring. The college has also pledged to keep any underperforming school in breach status, although it has also said it believes each program should be evaluated on its individual merits, not a fixed standard.

Hours before the hearing started, the newspaper in rural Greenwood, South Carolina, the Index-Journal, published a lengthy investigation into the college’s decision to begin authorizing charter schools. In “Praying for Dollars,” the paper cited Erskine alumni association meetings and other documents that suggest the 614-student fundamentalist college sees the schools as a potential source of new enrollment.

The story traced the beginning of a steep enrollment decline at Erskine to the school’s decision to begin requiring faculty and other employees to affirm the “inerrancy” of the Bible and, in particular, to declare abortion and homosexuality to be sins.

The paper reported that the college has received letters of interest from 24 groups seeking to open new charter schools, several of them “restoration schools” — a term the college seems to be applying to classical schools that are designed to appeal to Christian families — which would graduate 1,000 students a year.

In many places, virtual schools have enrolled large numbers of students who were previously homeschooled for religious reasons.

Erskine did not comment for the Index-Journal story and supplied only a short statement in response to inquiries from The 74. “Several of the statements contained in the Index-Journal piece were incorrect, which is not unusual,” institute CEO Cameron Runyan said in an email. “The Charter Institute at Erskine looks forward to working with the schools and the South Carolina Public Charter School District to ensure a smooth transition to Erskine.”

The most contentious portions of the transfer hearing were the exchanges between leaders of Midlands STEM and board members. Midlands chair Kevin Thomas accused the board of being “vindictive” in asking state auditors to look at the school’s attendance records.

Board secretary Kathleen Bounds in turn said that the school’s financial reports show it spends just 57 percent of revenue on instruction, which she opined must have an impact on its lagging academic performance.

McLaurin objected to the word “vindictive,” insisting his staff was doing its job in asking for a review of potentially irregular attendance and enrollment data.

Because South Carolina set up the board as a school district, he explained, it performs some functions other public charter school overseers don’t, such as handling state and federal funds. It has no authority to order the schools to do the things traditional districts frequently require of schools undergoing turnarounds, such as hiring a new leader or adopting a new curriculum.

Some of the services the Alliance has complained the charter district hasn’t provided, such as teacher professional development, are typically among the services for-profit education management organizations provide to the schools that contract with them. At the hearing, for example, the leader of one school replied to a question about its school board meetings by explaining that minutes for the meetings can be found on the K12 Inc. website.

Peterson said she will meet with her clients this week to talk about next steps, which will likely include pushing for legislation to change portions of the charter funding system.

For his part, McLaurin says the charter district and the board plan to support the schools in improving performance. “These schools staying with us, we’re going to work with them,” he said. “If they want to transfer, they have to get out of breach status.”

At a meeting earlier in the fall, the board tabled a resolution creating a rule barring the transfer of schools in breach status until the new year.

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