Virtual school funding increase benefits House Speaker’s client

Indiana House Speaker Todd Huston maintained Thursday that virtual charter schools deserve equal funding as their brick-and-mortar counterparts and denied that a virtual education company he consults for would unfairly benefit from an increase in taxpayer dollars proposed in the state budget

The for-profit Stride, Inc. operates seven Indiana-based virtual public, charter and private schools, according to its website and as reported by the School Matters blog. 

Indiana virtual schools like Stride currently receive 85% of the per-pupil state funding that goes to “traditional” public schools. Funding would increase to 100% under the House Republican budget proposal that’s now under consideration in the Senate. 

That means virtual schools stand to get a significant funding boost. For instance, Union School Corporation’s enrollment is almost all virtual, and it will see a 30% increase in total base funding in the first year of the budget. By comparison the statewide average increase in base funding for all school would be 6%.

Based on its current student enrollment, Stride stands to win big, as well — to the tune of some $9 million.

Although Huston and other GOP lawmakers have — as recently as a few years ago — supported decreases to virtual charter school appropriations, the House Speaker now maintains that his caucus wants to see “equalized” funding for those schools.

“It’s been the House’s tradition since I’ve been here,” Huston said Thursday, speaking about the push to increase funds for virtual charters. He added that the House Ways and Means Committee “has decided to continue that tradition this year.” 

Millions of new dollars for Stride

Recent Indiana Capital Chronicle reporting revealed that Huston is one of at least 15 state lawmakers who provides professional advice and guidance to private businesses outside of the Statehouse.

Huston started TMH Strategies Inc. last year, a little more than a month after his high-profile departure from a six-figure role at the College Board, according to his latest statement of economic interest.

He listed his consultancy’s current clients as Fishers-based tech company Spokenote, as well as Stride, Inc. — a for-profit education management organization that provides online curriculum to homeschooled kids and other schools. 

As of fall 2022, Stride-operated Indiana virtual schools enrolled about 8,350 students, according to the Indiana Department of Education (IDOE). 

Of those, 5,343 students were at Indiana Digital Learning Schools, an online-only elementary and junior-senior high school that Stride operates for Union School Corporation in Randolph County. The related Indiana Digital Alternative School recorded 668 kids. 

Enrolled students do not have to live in the same district as the charter to attend the school.

Another 1,745 students were enrolled in Indiana Gateway Digital School, a separate Stride school connected to the Clarksville Community School Corporation in southern Indiana. 

Some 500 middle and highschoolers were in the Hoosier College and Career Academy, also run by Stride. Another 91 students were enrolled in three online Stride-operated private schools, which qualify for state funding through Indiana’s Choice Scholarship voucher program.

The Indiana Capital Chronicle estimated that Stride could gain $9 million by looking at the base per pupil funding for virtual schools in the budget’s school analysis. It shows about $7,200 per pupil for fiscal year 2024. Eighty-five percent of that would be about $6,120 — so the benefit of going to 100% funding is about $1,080 a student. And Stride has about 8,350 students under its umbrella.

There are some caveats though. First, the per pupil funding would vary slightly if the student is connected to a specific school district. And some of that money would be shared with the sponsoring public school districts.

There are about 25,000 students statewide in virtual charter schools operated by organizations like Stride or by the schools themselves, according to a House GOP school funding projection.

Huston history

Other familiar Indiana names are connected with the same virtual organization.

The President of Schools at Stride, Inc. is Tony Bennett — former Indiana Superintendent of Public Instruction before he was defeated in 2012 by Democrat Glenda Ritz.

Huston left Cisco Systems, Inc. in 2009 to serve as Bennett’s chief of staff at the state education department. But he returned to the company in 2010.

The Associated Press detailed Huston’s involvement in the 2012 sale of a $1.7 million Cisco videoconferencing system to the IDOE that officials later determined was a waste of taxpayer money.

Bennett also contributed $15,000 to Huston’s campaign account since 2020.

But Huston emphasized Thursday that he stays “completely out of those discussions” that deal with specific funding mechanisms for virtual charter schools.

Although he voted in favor of the budget on the House floor, he said that’s a bill “we all vote on.”

“It impacts everyone, but that’s been a long standing rule. There’s things in the budget that touch all of us,” he said. “I made sure I’ve avoided any topic, any conversation around that topic.”

The GOP’s change in heart

For years, virtual schools have gotten less state money to account for the fact that they don’t have overhead for school buildings such as utilities, janitors and lunch programs. They also don’t provide transportation and often employ fewer teachers and other staff.

Virtual schools have long received fewer state dollars than other public schools. They used to receive 90% of the state’s foundation funding – the baseline amount of money that schools receive for every enrolled student.

In the 2019 budget-writing session, lawmakers cut that to 85% over concerns with the performance and behavior of virtual charters. Huston supported that budget. But amid the COVID-19 pandemic — when instruction moved online — many Hoosier schools stood to lose millions of dollars to the 85% rule. 

Huston said that caused lawmakers to “see the light” and support total, 100% funding for virtual schools. House Republicans proposed 100% funding in the 2021 budget as well. 

It’s not clear if Senate Republicans will be on board. Senate Pro Tem Rodric Bray said in 2021 that increasing virtual charter school funding would be expensive and noted that such schools don’t incur “brick-and-mortar” costs. 

The Senate likely won’t unveil their version of the state budget until early next month. A final version of the budget is expected by the end of April.