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Greenfield officials say Massachusetts Virtual Academy has cost town nothing

The Massachusetts Virtual Academy, the district’s 3-year-old cyber school, “hasn’t cost Greenfield a penny,” according to School Committee Chairman John Lunt.

Every expense — the salaries of the school’s teachers, computers sent to students, curriculum run by for-profit company K12 and hours logged by Greenfield school administrators to manage and oversee operations — was paid out of a special revolving fund that did not include any Greenfield taxpayer dollars, contend Lunt and the school department’s business administrator Elizabeth Gilman.

About a dozen Greenfield students attend the school for free, but host districts for the approximately 460 other students pay $5,000 in tuition money — similar to the School Choice model — which passes through state and town hands before going into the revolving fund.

The school drew in $1.3 million in the 2010-2011 school year, $2.3 million last year and about $2.4 million this year. In addition to tuition, the school also receives special education money from sending districts, which Gilman projects will be about $76,000 this year. Expenditure reports provided to The Recorder by Gilman indicate that the school’s expenses — both internal bills and others made payable to K12 — did not exceed its revenue the last two years.

In fact, she said, Greenfield could not pay all of its bills to K12 — and the company was contractually obligated to swallow that $640,000 loss over the last two years. K12 spokesman Jeff Kwitowski confirmed this, saying in an email that his company is “always paid last after all district and school costs are first covered.” As Greenfield school officials hurriedly draft a proposal for a new virtual school — a semi-independent, state-supervised Internet school to succeed the one the school department has run for the past three years — some local residents, Town Councilors and School Committee members have questioned if Greenfield taxpayers have been, in some form, subsidizing the virtual school, and if it will in the future.

The issue was brought to the forefront last month when the Greenfield School Committee announced its intent to transition its virtual innovation school into a new state-authorized virtual school that would open July 1. The new school would be run by its own board, created by the Greenfield School Committee, and have its own budget, but could contract with the school department for special services, said Lunt.

But Lunt, Gilman and Mayor William Martin have said repeatedly, in meetings and during interviews, that Greenfield has not been subsidizing the virtual school.

Since it opened in 2010, school officials have said money from the revolving fund has been used in three ways: to pay local administrators for time spent managing the school, to pay in-district expenses (like the school’s principal and local virtual school teachers) and to pay K12 for its services (like computers, curriculum management and company-hired administrators and teachers).

The School Committee has signed off on every bill that is spent internally or sent to K12, said Lunt. All virtual school expenses — like any other school district bills or warrants — are presented at the Davis Street administrative offices for review by all School Committee members and require signatures of approval from at least four members, he said.

Administrative fee Greenfield Public Schools has retained 3 percent of tuition money — an “administrative fee” that was included in the contract so that local school officials would be compensated for time spent managing the school, said Lunt and Gilman.

That money, which is used to pay the salary of a fulltime employee who works in Superintendent Susan Hollins’ office, was $39,000 during the 2010-11 school year.

The administrative fee increased after the first year, when the school’s enrollment grew and approached the 500-student cap set by the state. It was $68,000 last year and is projected to be $69,000 this year, said Gilman.

Hollins has said her office spends as much time managing the virtual school as it does any other Greenfield brick-andmortar school. While the school district does not itemize how many specific hours each administrator spends on each school in the district, Lunt said the administrative fee “more than offsets the time that is spent on the virtual school.” “The issue is: does the work that the administrative offices do for the virtual school get compensated?” said Lunt. “The answer is unquestionably ‘yes.’” Greenfield expenses According to Gilman, the school department then takes money from the revolving fund to first pay all of the school’s in-district expenses, which she said totaled just under $192,000 in its first year and $190,000 last year.

This year’s virtual school draft budget shows that Greenfield expenses include $75,000 for a principal, $190,000 for teachers (including $17,000 in staff benefits and $42,000 labeled for special education instruction), $14,000 for technology/data services, about $24,000 for exam proctors and $4,000 for field trips and school events.

Several teachers work parttime in both the virtual school and the school’s Math and Science Academy, but Lunt said that those employees are paid out of two accounts (revolving fund money for their time as a virtual school teacher and general fund money for their time as a brick-and-mortar school teacher).

K12 expenses Gilman said the school department then pays bills sent by K12, the Virginia-based forprofit curriculum company that Greenfield has contracted with since 2010. This is where the large majority of the revolving fund money goes each year.

Of the $1.31 million that entered the revolving fund two years ago, $1.07 million went to K12 (82.3 percent). Last year, $2.26 million came in and $2 million was paid to K12 (88.6 percent).

K12’s biggest charge according to this year’s draft budget, is $582,000 for “curriculum delivery,” which Kwitowski said includes online courses, assessments, planning and progress tools for core subjects and electives.

That’s followed closely by $464,500 for instructional materials: textbooks, multimedia teaching tools and other offline materials, said Kwitowski.

The company also charges $80,000 for a program administrator, $313,500 for K12-employed teachers (including teacher benefits) and $148,000 for computers and software for teachers and students.

K12 also asks for a 7 percent technology fee (about $160,000 this year) and a 15 percent management services fee (about $345,000). Text in the contract allows the school district to prioritize other expenses first, and so it has never been able to fully pay them.

Kwitowski said administrative services include things like educational program consulting and teacher development, business administration, student records maintenance, admission/enrollment and school community activities. Greenfield administrators say that most administrative tasks are handled internally and not contracted to K12.

Before the Massachusetts Virtual Academy could open its doors, state officials capped tuition at $5,000 per student — an amount that Greenfield school administrators say is inadequate to cover all of the school’s costs.

As a result, said Gilman, the school department has been unable to fully pay K12 for those two fees — $335,000 went unpaid in 2011 and $305,000 in 2012. Greenfield was protected from assuming any financial risk in its contract, so K12 swallowed the loss, said Gilman. Kwitowski confirmed this to be true.

Gilman said that by the time the school year gets going in the fall, the district receives monthly invoices from K12. She said that each invoice is reviewed by herself, Hollins and Principal Carl Tillona.

K12 sets a price list for each of its products each year. The fees are always the same rates as determined in the contract (15 percent for administrtive servises fee and 7 percent for technology fee) and based on revenue, she said.

Contracting with private companies Still, the $1 million to $2 million that went to K12 each year raised red flags for some School Committee members, who felt uncomfortable that public dollars were being used to pay a private for-profit corporation.

The Virginia-based company has drawn criticism at schools in different parts of the country for allegations that it employed unlicensed teachers and provided fraud grades.

But Hollins and Lunt contend that those problems could never occur here because they said that Greenfield administrators manage and oversee the virtual school and only contract with K12 for curriculum-related services.

And Hollins said that every single service that K12 provides for the virtual school is one that the district pays other companies for in its brick-and-mortar schools.

“We mostly do not write our texts or curriculum materials — so all of this is purchased from private, for-profit companies,” said Hollins. “We do not build our computers or printers. ... We do not write our own software for assessment services or curriculum support services.” “The difference I think with the virtual school is that one company is providing the majority of the curriculum, software, technology equipment, and some services for the one school,” she said.

The new state-authorized virtual school would continue contracting with K12. Martin has said that K12 officials had expressed interest in setting up a new headquarters in town.

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