Audit looms over Vilas' Web school

Report today could signal end of Hope's spectacular growth

Nancy Mitchell and Lou Kilzer, Rocky Mountain News

Published December 11, 2006 at midnight

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VILAS - An audit to be released today in Denver could stem the soaring growth of the online education programs that have bloomed here in the farmlands of southeastern Colorado, a virtual effort begun with the goal of keeping this tiny community and its single school alive.

In the midst of what is little more than a cluster of worn homes, the Vilas School District over the past six years has used the Internet to multiply its enrollment - and its budget - nearly 30 times over.

But few beyond the envious superintendents of nearby school districts noticed until Vilas authorized the charter of an online program with a twist.

Instead of providing computers for kids to use to study at home, Hope Online Learning Academy Co-Op rapidly opened a series of computer centers throughout the Front Range, drawing thousands of students from metro-area school districts.

This year alone, Denver Public Schools estimates it will lose 600 students - and more than $4 million in state per-pupil funding - to Hope and to Vilas.

Some metro-area district officials got concerned and some got angry, and at least one threatened to sue.

They talked to powerful friends and, earlier this year, the Office of the State Auditor launched an examination of online education programs in Colorado.

Auditors traveled to Vilas - twice - and to other online programs to produce a report outlining whether state tax money is being well spent on these programs and, if necessary, recommend changes.

Few predict the report will leave the online landscape unchanged.

"They think we're all dummies down here, I guess," said Dennis Thompson, a fourth-generation Vilas resident who is the school board president.

"We were just trying to survive. It grew so fast. We didn't realize so many kids were not happy in the big areas."

Online beginnings

In 1999, with the number of children enrolled in Vilas School dropping below 100, new superintendent Bill Hines told his computer teacher to create online classes.

In fall 2000, Vilas opened its first online school and recorded the state's highest enrollment increase - 60 percent growth in a single year.

"It takes a certain number of pupils in order for us to economically open the door, and if we don't have that number, we have to close down," computer teacher Gene Endersby told the Rocky Mountain News then.

"We don't want to close down."

Vilas became the state's second diploma-granting online program. The first was begun in 1995 by the Monte Vista district in southwest Colorado.

Both districts are tiny, rural and - at least then - were grappling with dwindling student numbers.

That such districts have led the state in online education is not unusual, said Todd Ziebarth, director of research for the National Alliance of Public Charter Schools, which has tracked 150 virtual charters.

Ziebarth said Pennsylvania, Ohio and Wisconsin have seen similar developments. Small rural districts led the way online, largely to recoup enrollment numbers. Later, national online schools moved in and opened sites in urban areas.

DPS, for example, has a small online high school - fewer than 50 students - but also is home to a Connections Academy Charter, which operates in 13 states.

Another online charter school with national ties, the Colorado Online Virtual Academy, operates in Northglenn.

"In each of these states . . . it becomes sort of a mixture of the private companies and school districts operating their own," Ziebarth said.

What is unique about Colorado, he added, is Hope.

Paying for growth

Bill Hines brought the online concept to Vilas, and then he brought Hope. He is seen here as a virtual guru, and his pay has risen along with Vilas' student count.

Hines, who is 65, became the district superintendent in fall 1998, with an annual salary of $54,300. Last year, as Vilas' online consultant, he made $121,371.

"I really don't understand why my income is important to people," he said from his home in Canute, Okla., about five hours from Vilas. "I don't draw near as much money as most superintendents do."

Joe Shields, Vilas' current superintendent, earns $75,000.

Hines' pay is built on a concept he has made central to Vilas: financial incentives for growth.

Hope, for example, receives a "volume discount" in its charter contract with the district.

If Hope enrolls 1,500 students, the school gets a discount of 15 percent off the fees it pays Vilas for online curriculum and other costs. If enrollment increases to 2,500 or more, it's 25 percent off.

"Mr. Hines cut the deal on that," Shields said. "He said, 'OK, since this many kids are using the product, it should be offered cheaper.' "

Similarly, Hines' annual base pay is $50,000 plus 2 percent of the state per-pupil revenue brought in by new Hope students.

Last year, that amounted to $71,371.

But Hines said he has had little to do with Hope's rapid growth, from 1,500 students in fall 2005, its first year, to more than 3,700 this year.

His job, as consultant, is to travel nationally to ensure that Vilas keeps up with online trends and to find schools willing to purchase the online curriculum that Vilas has created.

"I was out hunting out-of-state schools that we could sell our curriculum to," he said.

Hines now also operates his own for-profit school, ABCyber School. He has signed a contract with Vilas to pay $650 per student for district services.

'Trying to survive'

Thompson, who is the third generation of his family to serve on the Vilas school board, said it's hard for outsiders to understand just how small, just how poor, his community is today.

"We've got people down here making a living on minimum wage and they're happy," he said.

Later, he and another school board member, Vance Alfrey, debated whether there are three homes in Vilas worth more than $40,000.

They talked in the hallway of Vilas School, standing beneath the pictures of graduating seniors that stretch back to 1938. Thompson's own picture is there, among the nine members of the Class of 1969. Alfrey's is, too.

"It's hard to keep our own kids interested in staying here," Thompson said. "Farms are getting bigger, they need less people.

" . . . We thought we could take our teachers here, teach online kids and bring in a little more revenue."

The growth has afforded some extras at Vilas School. District budgets show the addition of music and art instruction, a guidance counselor and more classroom aides. Meanwhile, some nearby districts have had to combine classes and cut clerical staff.

But there are drawbacks. Online programs tend to draw students who have struggled in traditional school, and Vilas' test scores have dropped as its enrollment has grown.

Last month, state education officials placed Vilas on academic probation.

Then there are the snide remarks directed Vilas' way from other school district officials. You've taken our kids, one superintendent told Shields.

"We didn't think we would grow this fast, that's why everybody is mad at us," Thompson said.

"But if we don't change, we can't keep up."

Online education explodes

The tiny school district of Monte Vista in the San Luis Valley opened the state's first diploma-granting online school in 1995, enrolling about a dozen students. Since then, Colorado's online enrollment has grown rapidly:

• Fall 2006 8,000+*

• Fall 2005 6,201

• Fall 2004 3,853

• Fall 2003 3,332

• Fall 2002 1,987

• Fall 2001 705

• Fall 2000 166

ENROLLMENT BY THE NUMBERS

• 2,476 Colorado Virtual Academy Charter in Northglenn-Thornton

• 1,516 Hope Online Learning Academy Co-Op Charter in Baca County

• 1,075 Branson School Online in Las Animas County

• 369 V.I.L.A.S. Online School, in Vilas