TRAVERSE CITY — When the pandemic hit, academic life at Great Lakes Virtual Academy changed very little — virtual learning systems repelled the wave of disruption that sent traditional school districts into a tailspin.

But the Manistee cyber school’s finances did. By the time the last wave of the pandemic relief money arrives, Great Lakes will have received $4,357 per student.

That’s more than twice the amount allotted to students at Traverse City Area Public Schools, and more than three times what was allotted to students in the Kingsley Area Schools, a traditional school district serving about 1,500 students.

“That’s been a problem with school funding all along. We treat students as students and the online programs get the same amount of per-pupil funding as traditional, public brick-and-mortar schools,” Kingsley Superintendent Keith Smith said. “That inequity has been there for a long time.”

Great Lakes is one of 14 cyber schools in Michigan that received COVID-19 relief money designed to help schools respond to the pandemic. The school received money based on federal formulas that didn’t differentiate between traditional and cyber schools and rewarded poorer districts more generously.

Cyber schools placed in low-income locations, like in Manistee, received dollops of aid money — nearly a quarter of which went out of state to a for-profit education company billing the schools an overhead fee.

“Nobody should be profiting off of a pandemic and online learning,” Smith said. “Those monies should be accountable to the taxpayers.”

Smith admits that, as an administrator, he profits from a school every time he gets a paycheck. The difference, Smith said, is that he is beholden to the taxpayers of his district and those same taxpayers can see how much he and every other Kingsley Area Schools employee is paid.

The same cannot be said for many charter schools.

“The tough part is that there’s no accountability on that funding,” Smith said. “If people are making x-amount of money off the school, that should be public knowledge.”

In the case of Great Lakes, some of the aid money will never reach Michigan students.

That’s because of school contracts that predate COVID-19 relief, which direct 22 percent of state school aid to Stride K12, a private company that runs the day-to-day operations of the school. That off-the-top payment covers administrative and technological overhead, while the remaining percentage goes toward the operational costs of running the school.

Great Lakes’ Superintendent Kendall Schroeder confirmed that the aid money infusions also were subject the school’s charter contract.

Which means that of the money earmarked for Great Lakes Virtual Academy in Manistee, about $3.3 million will arrive there, only to be rerouted to Herndon, Virginia, Stride K12’S location.

“Where the frustration comes in is: I know a lot of districts around the state that could use much more money than what was appropriated,” said Casey Petz, superintendent of Suttons Bay Schools.

“If you’re a for-profit school and $15 million dollars drop in that bucket, I would think that the general tax-paying public would have a problem with that,” Petz said. “That’s problematic. I know a lot of educators that would have a problem with that.”

Michigan is one of 11 states that allowed emergency relief money to be given directly to cyber schools that were already remote.

These programs are distinctly different from the hybrid remote programs that public school districts tried to implement last year. In Michigan, cyber schools are designed as full-fledged alternatives to in-person schooling, from a child’s first class in kindergarten until their graduation day.

As COVID-19 cases fluctuated, they advertised themselves as pandemic-proof schooling options, nudging traditional school districts that had to scramble to develop virtual programs.

That scramble was expensive. School districts spent heavily to purchase technology for students, reinvent curriculum, run meal programs and implement sanitation protocols.

Smith called the transition a significant investment of time and money.

“To have to pull off much of that overnight, to have to rewrite curriculum and move everything online, those virtual schools didn’t have to do that,” Smith said. “They didn’t have to change much.”

Great Lakes Virtual Academy will receive about seven times the aid payments Kingsley received, while having about twice as many students. In March of 2020, it received $460,000; in December it was earmarked for $4.3 million; and in March of this year, the school was granted another $9 million in COVID-19 relief funds under the American Rescue Plan.

A portion of that $9 million has been restricted to address learning loss. Schools have been given broad leeway to spend the rest of the money as they see fit.

Schroeder said that when the pandemic hit, most of the educational systems remained intact. There were challenges — some teachers had to juggle having their own children at home, and the school brought on a counselor to address the emotional and mental needs of students. But on a day to day basis, virtual classes went unchanged.

Schroeder pushed back against criticism that his school shouldn’t have received the funds, saying the money was still needed, and describing the critique of charter school funding as a common reflex from traditional school districts.

“They always say that,” said Schroeder, who added the enrollment increases in the 2020-2021 school year also presented a challenge

“We were thankful for the money,” Schroeder said. “I do feel like this money is meant to support students, and that’s what it’s being used for.”

Four other schools run by Stride K12 also received large sums of money. After Great Lakes, Michigan Virtual Charter Academy in Detroit also received more than $4,000 per student. K12 also runs another virtual school in Mesick called Highpoint Virtual Academy. That school received $2,482 per student.

On a per-pupil basis, GLVA and Michigan Virtual Charter Academy received close to double the median disbursement received by traditional schools statewide, a result of federal money for COVID-19 largely being distributed through Title I — a formula for school funding that weighs student poverty levels as a means to determine how much money a school district receives.

GLVA teaches students from 80 of Michigan’s 83 counties. But it is based in Manistee, a county where per-capita incomes are about three-quarters of the statewide average, according to census data from 2019. The location allows GLVA to pull more from state funding than the cyber school might in a wealthier county.

Officials from Michigan’s Department of Education said that they were following federal instructions when they sent the money to virtual schools. Demonstration of need was not necessary in order for virtual schools to access the money, said Christopher May, a financial specialist for the MDE.

John VanWagoner, TCAPS superintendent, said the disbursements to virtual schools showed broader problems with the state’s school funding model.

“Really looking at a funding system that creates equity depending on the needs of students — including at risk, transport, special education — are really key things that our state legislators need to consider,” VanWagoner said.

“The reality is that’s indicative of broader inequities in our state funding model.”

Educators and education advocates are working to identify and address those inequities.

The School Finance Research Collaborative, a Michigan-based group, released findings from its 2019 study and called for the state to fund all school districts at the same per-pupil figure of $9,590. The study also showed additional money should be given to districts per pupil based on weighted formulas for special education students, English language learner students, students in poverty and students in career and technical education.

Smith appreciates ongoing conversations about school funding inequity. The Kingsley superintendent also said the SFRC study might open some eyes that using only a per-pupil formula might not be the best way to fund a school system.

The extra money flowing in from the pandemic relief funds is welcomed and appreciated, Smith said. But he — and many other educators — are concerned that major cuts to school funding will follow when that well dries up.

“The school funding model needs to change. It is broken,” Smith said. “This is just a band-aid.”

Data Journalist Luca Powell’s reporting is made possible by a partnership between the Record-Eagle and Report for America, a journalism service project founded by the nonprofit Ground Truth Project. Generous community support helps fund a local share of the Record-Eagle/RFA partnership. To support RFA reporters in Traverse City, go to www.record-eagle.com/rfa.

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