1. FULL-TIME VIRTUAL CHARTER SCHOOL PERFORMANCE-BASED FUNDING: A potential APPROACH FOR OHIO

2. ABOUT THE NATIONAL ALLIANCE FOR PUBLIC CHARTER SCHOOLS
The leading non-profit organization focused on increasing student achievement by fostering a strong charter school sector.
Our work focuses on four areas: Federal Policy, State Policy, Communications, and Research and Data.

3. Background: what other stateS are doing
Currently, four states fund full-time online schools with performance-based funding.
In Florida, every online course is funded entirely upon successful completion of the course. Florida funds upon success on end-of-course exams when they are available.
Minnesota funds for successful course completion. 88% of per-course funding goes to the provider and 12% to the enrolling district or charter school.

4. Background: what other stateS are doing
In New Hampshire, the Virtual Learning Academy Charter School (VLACS) is funded through a formula based on successful course completion as determined by competency metrics for each course. VLACS is developing smaller, in-course competency milestones to generate smaller funding units prior to course completion.
New Hampshire also allows for partial payment and persistence. If a student finishes 80% of a course by the end of a semester, the school is funded at that percent for the course. If the student continues on and successfully completes the course in a subsequent semester or school year, the school will get the remaining 20% of the per-course funding.  

5. Background: what other stateS are doing
Utah provides half of the per-pupil payment up front and the balance upon course credit earned. The balance can be paid in the following school year if that is when the course credit is earned. 

6. Successful completion
State
Standard
Who determines
Successful completion
Partial
Payments
Florida
Pass end-of-course exam No
Minnesota
Course completions
New Hampshire
Competencies mastered
Teacher
Yes
Utah
Credit registration/credit earned
State Board of Education

7. costS
A 2011 Fordham study found that the average cost of a full- time online school is $6,400, with a range between $5,100 and $7,700.
The study identified an average cost for a traditional brick- and-mortar school at $10,000 (excluding central administrative costs).

8. FUNDING LEVELS
However, some states fund full-time virtual charter schools similarly to brick-and-mortar charter schools.
Some states, however, don’t provide full-time virtual charter schools with the same level of funding as brick-and-mortar charter schools, with the levels varying from state to state.

9. wrong incentives
Because authorizers often receive a percentage of a school’s per-pupil funding for each student enrolled, there is an unfortunate incentive for authorizers to keep large, poorly performing full-time virtual charter schools open. If they close the school, they lose significant revenues.

10. wrong incentives
Two thirds of full-time virtual charter schools are operated by for-profit entities. As funding is based on a per-pupil basis, the incentive is to drive up enrollment numbers, largely through advertising.
However, with high student churn rates, the mostly for-profit operators of full-time virtual charter schools receive millions in taxpayer dollars for students who will soon leave for another school.

11. INacol Considerations for performance-based funding FOR FULL-TIME ONLINE SCHOOLS
Clear principles
Adequate levels of funding
Protecting rigor in defining student success

12. NAPCS RecommendationS for ohio
STEP 1. Determine actual per-pupil amount necessary for full-time virtual charter schools to deliver curriculum.
STEP 2. Provide half of this amount at the beginning of the school year (to provide base funding).  
STEP 3. Pay the remainder at the end of the school year based on successful completion, which should be defined in different ways for different grade levels. For grades K-8, we recommend course credit or course completion with a passing grade. For grades 9-12, we recommend using end of course assessments when present and course credit when end of course assessments aren’t present.

13. NAPCS Recommendations for ohio
STEP 1. The cost of education is determined to be $6,400.
STEP 2. $3,200 is paid at the beginning of the school year.
STEP 3. $3,200 is paid for successful completion of all courses at end of the school year.

14. Further considerations
A further policy consideration is whether to allow for persistence. In this scenario, a student would generate the second part of the funding when he or she completes the course, such as in the following semester or the next school year. This approach provides incentives for schools to ensure that students finish their courses, even if it takes them longer than normal.

15. Further considerations
Another potential refinement is to divide the total amount per student by the percentage of actual credits earned against credits taken. For instance, if a student completes 80% of courses started, he or she would generate 80% of the potential funding. Additionally, if persistence is included in the formula, he or she could generate the other 20% in the following semester or the next school year.

16. Further considerations
A final policy consideration is to provide the state with the ability to “claw back” dollars paid to schools. Currently, Ohio provides monthly payments to full-time virtual charter schools. If the state shifts to providing half of the per-pupil amount at the beginning of the school year, it will need to ensure that it has the ability to retrieve funds for students who leave the school before the first half of the year.

17. For additional information