LANSING — A $1.8 million misstep by Traverse City Area Public Schools could have ripple effects on several similar statewide investigations.

Former State Superintendent Sheila Alles sent down a ruling July 31 denying a TCAPS appeal regarding its virtual home-school program — the Northern Michigan Partnership — allowing the state to reclaim $707,000 in state aid from the 2017-18 school year. The state likely will claw back another $1.17 million after local officials finalized the audit of the program’s 2018-19 school year, resulting in a recommended deduction of per-pupil funding equal to 149 students. NMP had 264 students in ‘18-19.

Alles’ decision could set a precedent for future rulings on these matters.

Kyle Guerrant, Michigan Department of Education deputy superintendent, said state officials are looking at nearly 10 other districts with similar programs that have either “caused some concerns or raised some flags.”

Both Center Line Public Schools and Niles Community Schools are in the appeals process for the same issue as TCAPS, Guerrant said.

MDE officials flagged TCAPS in July 2018 when a quality control review concluded the district received more funding for the 2017-18 school year than allowed under the State School Aid Act because of a misclassification of NMP students. TCAPS erroneously reported the number of students enrolled in NMP as part of a home-school program at 0.75 FTE (full-time equivalency) instead of part of a shared-time program at 0.15.

Programs such as NMP and other virtual charters are put on a three-year rolling audit process, which means they are not audited every year by the state.

Guerrant said that audit process is just now catching up to policy adjustments in the previous three to four years regarding virtual programs, how those students are classified and what amount of per-pupil funding districts can receive through shared-time programming.

“We’re starting to get in a cycle here where some of that stuff is coming on the radar. This is really the first opportunity for it to come on the radar,” Guerrant said. “We’re finally getting in the window of looking at these programs fiscally and from a pupil membership perspective.”

Although Guerrant said these investigations are the result of the regular audit cycle, former TCAPS Superintendent Paul Soma called the MDE’s efforts “clear governmental overreach” and “state-sanctioned bias” against home-school students.

Dan Applegate, Niles superintendent, declined to comment on his district’s appeal. Eve Kaltz, Center Line superintendent, could not be reached for comment on her district’s standing with the state.