DALEVILLE — Two virtual charter schools have repeatedly reported false average daily membership numbers, or ADM, allowing them to receive too much tuition support, according to the State Board of Accounts.

When auditing Indiana Virtual School and Indiana Virtual Pathways Academy, State Examiner Paul Joyce submitted an affidavit saying he had “been advised that both (schools) have substantially misreported their ADM to the State of Indiana.”

While the state's audit is still ongoing, the data referenced in Joyce’s affidavit was used in the Indiana State Board of Education’s decision Wednesday to reduce the schools’ ADMs by 50% for the 2016-17, 2017-18 and 2018-19 school years.

“The discussion that’s happening now is whether or not the (virtual schools) will receive any funding,” said Adam Baker, press secretary for the Indiana Department of Education. “What the board recommended and approved was that, No. 1, the department of education would provide more oversight into virtual charters and then, No. 2, that the DOE has the right to recoup some of that money.”

Baker said no specific figure has been determined as to how much money the virtual schools received due to its overreporting, but estimated the amount was at least $40 million.

“It is clear that these two virtual schools grossly exaggerated the enrollment figures they reported to DOE (the Department of Education), resulting in receipt of funds they should not have received,” Board Chair B.J. Watts said, in a press release. “The board’s action today was essential.”

In Joyce’s affidavit, he explained that the SBOA’s audit found that 30 students who had left the schools during the 2016-17 school year were reenrolled and included in the schools’ ADM counts during 2017-18.

Then, in the 2018-19 school year, Joyce states that a total of 907 students were reenrolled after reportedly leaving the school the following year. The school reported that 172 of those students had left the school once again after the ADM count date.

The State Board of Accounts decided to conduct “detailed audit tests and procedures” on 100 student profiles “based on risk-based prioritization factors,” and found attendance irregularities in more than 60 of the profiles.

“One student passed away on Sept. 6, 2016. He was included in IVS’s Sept. 16, 2016, ADM report and included again in IVS’s Sept. 15, 2017, ADM report,” Joyce states in his affidavit. “Two students included in IVS ADM reports had moved from Indiana to Florida after receiving services from IVS for part of the 2010-11 school year. They never moved back to Indiana and never re-enrolled in either of IVS or IVPA, yet they were included in IVS ADM reports in 2015, 2016 and 2017, and on the IVPA ADM report for 2018 and 2019.”

Data collected by Daleville Community Schools, which entered into a charter agreement with the two virtual schools in 2015 as the authorizer, was also cited during the board’s conversation.

Based on information obtained from the IDOE, Daleville officials determined that in the second semester of the 2017-18 school year, no student earned more than five credits at the Indiana Virtual Pathways Academy.

Daleville also determined that 504 students earned no credits throughout the entirety of the 2017-18 school year at Indiana Virtual School.

Prior to 2018, Daleville Superintendent Paul Garrison told the board, Daleville did not have access to data of this nature as it was not outlined in the charter agreement.

While Garrison was present for the State Board of Education's meeting Wednesday, there was no representative from the virtual schools.

“Hindsight being 20/20, I’m sure (Daleville) would have established some different things in their charter from the get-go that would provide some different oversight, but their charter agreement was not very different than what anybody else was doing at the time,” Donna Petraits, communications consultant for Daleville Community Schools, said.

Initially, Petraits said, there were several “red flags” for Daleville that led to their pursuit of data from the state Department of Education, including difficulty in receiving requested information from the charter schools. Once Daleville was able to analyze the data, however, the corporation decided to issue notices of revocation to the charter school.

These notices were issued in February, but the schools later agreed to voluntarily close and enter into a resolution agreement.

Through their agreement with Daleville, the Indiana Virtual School will “terminate operations” Sept. 19, 2019, and Indiana Virtual Pathways Academy will do so after June 30, 2020, according to the schools' websites.

“(The resolution) ended up being a much better situation for the students because, in formulating the closing agreement with the charter schools, that provided Daleville with a far greater degree of oversight than what they previously had or would have if they simply filed the closure protocol,” Petraits said.

As the schools and the state move forward, Baker said it is important to consider the consequences future decisions could have for students of the virtual schools.

“At the end of the day, and here’s what’s sad about this entire situation, there are real children and families that will be affected — there will be real children and families that sought this as an option, and it either failed them along the way or could fail them moving forward depending on what’s decided,” Baker said. “It’s easy to really overlook all of the children that are impacted by this ... that's what’s difficult about this.”

He added that, with all of the organizations involved, another difficulty that may be faced is understanding responsibilities and working together to come to a solution.

“There are some real concerns here, and it’s just really a matter of how well we move forward ... and get along to make it happen,” Baker said.

With the board’s decision to reduce the virtual schools' average daily membership, Baker said discussions regarding monitoring of virtual charter schools will be “heightened.” As these discussions are taking place, he said, who is at fault for the false reporting and how the money the schools obtained will be repaid will be also determined.

“Several board members specifically said to Daleville (at Wednesday's meeting), ‘What happened? This is in your wheelhouse, you are the authorizer, you are the provider, what happened?’” Baker said. “(When it comes to) who is responsible for what, you’ve got a complex situation when you have that extra layer, which is the authorizer in charter schools — so I think discussions right now are sort of to decide who bears what responsibility and to what degree.”

While nothing is currently planned to specifically determine who is at fault, Baker said anyone found responsible for the false reporting of facts or for being involved in the false reporting could be held liable for repaying the state.

Regardless of what is decided, however, Petraits said Daleville hopes the discussions that come from this incident will lead to better future guidance.

“I think Daleville’s biggest concern is that this be used ultimately as an example of the need for greater oversight (of virtual charter schools),” Petraits said. “I think this is a pretty clear example. We all hope that it’s a rare example, but could it have been prevented? Not without greater guidance.”

Follow Brooke Kemp on Twitter @brookemkemp or contact her at 765-640-4861 or brooke.kemp@heraldbulletin.com.