Eye on Education

EdisonLearning, K12 Inc. Among National Companies Looking To Open New Online Charter Schools In Ohio

Dan Honda / Contra Costa Times/MCT/Landov

David Vasconez is running radio ads in Ohio for his company’s new online charter school. He’s working on a sponsorship deal with a minor league sports team. And there’s a grassroots student recruitment plan in the works.

But Vasconez and his colleagues at EdisonLearning don’t actually know if the state will approve the new online charter school the company wants to open next year. They can’t even put in their application with the state until Friday, at the earliest.

Still, Vasconez said EdisonLearning is eager to get into the Ohio online school market.

“Even though we weren’t the first in Ohio, we don’t want to be the last,” he said.

The number of Ohio students attending school online has grown from less than 2,000 when the first online school opened in 2000 to more than 30,000 today. Nearly all of those students are enrolled in seven statewide online charter schools.

In 2005, the state legislature imposed a moratorium on opening new online schools citing concerns about the schools’ operations. Among the concerns were schools reporting students as enrolled — and thus eligible for state funding — even if they were not actually attending classes. 

On average, Ohio online charter schools get about $6,337 in state funding for each student enrolled, about the same amount as brick-and-mortar charter schools. But some operators of online schools say it’s possible to operate an online school for about $3,600 per student, making online education a potentially profitable business.

And Ohio funds online schools at higher rates than many other states, making Ohio particularly attractive to companies that operate online schools, said Wells Fargo analyst Trace Urdan.

Open For Business

Legislators lifted the moratorium for the 2013-14 school year, allowing up to five new online schools to open with no restriction in state law about the number of students each new school can enroll.

In the years since the moratorium, the state has cracked down on online schools’ enrollment reporting and testing requirements. New rules governing in general terms how online schools operate went into effect this year.

At least four school operators plan to apply for one of the new online school spots.

All but one of the new schools would be operated by national, for-profit companies that also run online schools in other states. Interviews with school operators, school sponsors and and reviews of public records indicate that likely applicants for the new online school spots include:

  • K12 Inc., a Herndon, Va.-based company that operates one of Ohio’s largest online schools, Ohio Virtual Academy, as well as full-time online schools in 28 other states as of 2011-12;
  • EdisonLearning, a Knoxville, Tenn.-based company that operates brick-and-mortar charter schools in Ohio and other states as well as online schools in Colorado, Georgia and South Carolina;
  • Mosaica Education, a New York-based company that operates brick-and-mortar charter schools in Ohio and other states and online schools in Arizona, California and Colorado; and
  • A group founded by James McCord, the former superintendent of the Virtual Community School of Ohio, an existing online charter school that has been under probation for the past year because of concerns over how the school was managed.

(A spokesperson for K12 Inc., McCord and a representative for the sponsor of McCord’s proposed new school did not respond to inquiries from StateImpact.)

Several Steps Ahead

Schools can’t formally apply for the new online school spots until at least the end of this week. It’s up to the Ohio Department of Education to review applications and notify schools by July 1 if they’ve been approved to open for the 2013-14 school year.

Under state law, the department must give preference to companies and sponsors — generally nonprofit groups or regional educational service centers that oversee charter schools — with previous experience operating or overseeing successful online schools.

The substantial start-up costs for opening a new statewide online school — as much as $1 million, Vasconez estimates — limit the kinds of groups that can even try to open new online schools.

The online school business depends on economies of scale, Urdan asid.

“That’s the reason that virtual schools have to be supported by for-profit companies in the first place,” he said. “It’s not the kind of thing you can easily provide on a one-off basis.”

And since school starts in mid-August, those groups must make investments now to begin recruiting staff and students without knowing for sure whether those investments will pay off.

For now, many of the potential new online schools are aiming low, expecting to recruit a couple hundred new students in their first year of operation.

K12 Inc., for example, is aiming to recruit about 360 students in grades K-12 for its new online school this fall, according to the school’s potential sponsor. K12 Inc.’s current Ohio online school enrolls more than 11,500 students.

“Given that we only have a couple of months to recruit, we don’t expect thousands,” said Joseph Olchefske, head of online education for Mosaica.

But Mosaica does expect enrollment to grow significantly over time.

Ohio is “at the forefront of this sea change that is out there regarding parents’ and students’ acceptance of online learning,” Olchefske said.

“I think there’s a rich marketplace…that’s only growing.”


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