By Stephanie Simon

Oct 3 (Reuters) - Virtual public schools, which allow students to take all their classes online, have exploded in popularity across the United States, offering what supporters view as innovative and affordable alternatives to the conventional classroom.

Now a backlash is building among public officials and educators who question whether the cyber-schools are truly making the grade.

In Maine, New Jersey and North Carolina, officials have refused to allow new cyber-schools to open this year, citing concerns about poor academic performance, high rates of student turnover and funding models that appear to put private-sector profits ahead of student achievement.

In Pennsylvania, the auditor general has issued a scathing report calling for revamping a funding formula that he said overpays online schools by at least $105 million a year. In Tennessee, the commissioner of education called test scores at the new Tennessee Virtual Academy "unacceptable."

And in Florida, state education officials are investigating a virtual school after it was accused of hiring uncertified teachers; in the past two weeks two local school boards in the state have rejected proposals for virtual schools.

Some states, including Michigan, Indiana and Louisiana, are still moving aggressively to embrace online schools. But the anger and skepticism elsewhere is striking, in part because some of it comes from people who have ardently supported opening the public school system to competition.

"There's a sense that [online education] is a lot more mainstream now and we need to take a closer look at it," said Michael Horn, an advocate of digital learning at Innosight Institute, a think tank focused on education policy. "I don't think we need to put the brakes on completely, but we need tweaks to accountability models, which will slow growth."


THE CHARTER SCHOOL MOVEMENT

Online courses first appeared in public high schools in the early 1990s. They were promoted as a way for students in isolated rural schools to tap into advanced classes not offered in their towns, or for students at risk of dropping out to make up credits.

By the early 2000s entrepreneurs were pitching full-time online schools - perfect, they said, for athletes with heavy travel schedules, children with medical conditions that confined them at home, or almost anyone who found the hustle and bustle of neighborhood schools uncomfortable.

The concept began to take off about five years ago, as the charter school movement gained steam. Charter schools are publicly funded but privately run, in some cases by for-profit companies.

Enrollment in online-only schools, most of which are set up as charters, has jumped 30 percent in each of the last few years. At least 250,000 students take all their classes online, including physical education, and 1.8 million take at least one course online, according to the International Association for K-12 Online Learning, which represents the industry.

The schools are especially popular in Colorado, Washington, Ohio and Arizona, where 4 percent of public school students attend cyber-schools full-time.

Online classes sometimes use animation and video to bring topics alive, but often they resemble standard textbook lessons transferred to a computer screen.

A typical high school English unit asks teens to click through biographical information about American poet Walt Whitman, review a time line, then read four of his poems. As they work, they're prompted to write several sentences about about the poet's style and check their responses against an answer guide.

Teachers are assigned to each class, but their role varies depending on the school. Some give lectures and hold discussions online, with far-flung students participating via interactive software. Others spend most of their time answering individual questions by email.

Public entities, such as local school districts, run some cyber-schools. Many, however, are operated by private companies, which receive anywhere from $3,000 to more than $13,000 in public funds for each student enrolled, depending on state and local funding formulas.

The industry leader is K12 Inc., a publicly traded company that has notched huge growth in enrollment - and profits. The company recently reported profits of $17.5 million on revenue of $708 million for fiscal 2012. Both figures are up more than 35 percent from a year earlier.

Close behind K12 is Connections Academy, a unit of educational publisher Pearson PLC. Pearson does not break out financial results for Connections.


FALLING BEHIND OR CATCHING UP?

Cyber-school boosters call the programs engaging and highly personalized, since students can log in any time, from anywhere, and work at their own pace.

"Children should not be shackled to a one-size-fits-all school building the way they have been for the last 100 years," said Ronald Packard, chief executive officer of K12 Inc.

But in state after state, full-time online schools have posted poor test scores and abysmal graduation rates.

School administrators explain that their students come in far behind and need time to catch up. Indeed, students who stick with an online school for several years see steady improvement, according to data provided by K12 and a recent study by the University of Arkansas.

Yet when researchers look at all students enrolled full-time in a virtual school - a highly transient population - they find that many actually lose ground in core academic subjects.

Almost every cyber-school in Ohio ranked below average on student academic growth in preliminary report published by the state last week. A Stanford study last year found cyber-students in Pennsylvania made "significantly smaller gains in reading and math" than peers in traditional public schools. And Tennessee's first virtual school was slapped with the lowest possible score for student growth in recently released state rankings, putting it in the bottom 11 percent of schools.

Online school executives say the growth formulas are unfair and unrepresentative. Tennessee, for instance, looked at test scores from just 25 percent of the virtual school's students.

Still, the poor results are prompting caution in many jurisdictions. In Maine, the Charter School Commission this summer refused to authorize two online schools even though they were pet projects of Governor Paul LePage.

"How do you evaluate the quality of the courses?" asked Jana Lapoint, chair of the commission.

In Pennsylvania, Republican State Representative Mike Fleck is pushing a bill that would - for the first time - set minimum standards for how much time online students must spend on coursework; limit public funding for virtual schools; and curb their spending on lobbying and advertising.

"This is taxpayer money," said Jack Wagner, the state's auditor general, who was one of a handful of Democrats to back charter schools in the 1990s but now finds the online model deeply flawed. "During tough economic times, we have to be very watchful of that - and right now, in Pennsylvania, we are not."

Similar rhetoric comes out of Colorado, where the state Department of Education has announced a more rigorous process for reviewing proposed cyber-schools, so they're "not just rubber-stamped, which is sort of how it was in the past," said Amy Anderson, an associate commissioner.

Packard, the K12 CEO, who earned about $5 million last year in salary and stock awards, dismisses critiques of online schools as "negative propaganda" put out by teachers unions, school boards and others with vested interests in the status quo.

"It's like buggy-whip manufacturers saying, 'Cars aren't the solution,' " Packard said. Stepped-up regulation and delays in school authorizations are "just little obstacles in the road," he said. "I'm extremely bullish."

But other charter school operators say they're disappointed in their results and welcome thoughtful suggestions from state officials.

"Let's not say everything is wonderful and this is all working great, because it's obviously not," said Barbara Dreyer, CEO of Connections Academy.

Connections has spent heavily to reduce class sizes, train teachers and revamp curriculum, but student scores have not risen significantly, Dreyer said. So her team is sorting through data to try to pinpoint why some kids flourish and others flounder online. "We really have to figure this out," she said.

New Jersey Assemblywoman Connie Wagner, a Democrat, agrees.

"We have to learn from the mistakes of other states who have unleashed this and may be seeing the drawbacks," she said.

The New Jersey Department of Education authorized nine new charter schools to open this fall but ordered a proposed statewide virtual school - which would have been the first in New Jersey - to spend another year working on academics and logistics. In the meantime, Wagner is holding hearings on the promise and pitfalls of virtual schools.

"I'm not closing the door on it," Wagner said. "But we have to do it right."

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  • 1. Modern school supplies

    Gone are the days when students were set for school with a three-ring binder and some No. 2 pencils. Now, parents say they're making expensive runs to local craft stores each time a project is assigned and are even furnishing their students with their own laptops. "You have to have a computer, and then you have to have the programs the school runs," says Jodi Drange, a parent from Montana whose daughter goes to <a href="http://www.usnews.com/education/best-high-schools/montana/districts/laurel-h-s/laurel-high-school-12096" target="_hplink">Laurel High School.</a> "They never have enough time at school [for assignments] and they won't get their project turned in unless they can work on it at home." If your child needs a laptop, consider a refurbished model that can be significantly less expensive, Florida parent Krause recommends.

  • 2. Extracurriculars

    For the Krauses, costs of the fall play, the spring musical, and a trip for a thespian group competition were straining the family's budget. "[My daughter] was talking about also wanting to get into softball, and we were like, 'Well, we don't know if we can afford the equipment if you want to continue to do drama,'" Krause says. "It's getting ridiculous, cost-wise, to continue to fund all these things through the school." Participation in important but increasingly costly after-school programs may necessitate a family conversation, says Carol Ranft, a mother who lives within Georgia's <a href="http://www.usnews.com/education/best-high-schools/georgia/districts/gwinnett-county-public-schools" target="_hplink">Gwinnett County Public Schools</a> district and who was paying $450 a year for her son to play lacrosse. "I think that's probably one of the bigger questions for parents: As the cost of those kinds of activities increase, are their students willing to put in their time and effort into a cause or an activity?" Ranft asks. "Is it as worthwhile to them for their time as it is for the parents' cost?"

  • 3. College prep

    It's important for college-bound high schoolers to be ready for their next step, but taking Advanced Placement tests, which cost $87 each, PSATs ($14), and SATs and ACTs ($49 and at least $34, respectively) can get expensive. [Get tips on <a href="http://www.usnews.com/education/best-colleges/test-prep" target="_hplink">college test prep</a>.] "Fifty dollars doesn't seem that bad, but most kids take [the SAT] two or three times before they <a href="http://www.usnews.com/education/best-colleges/applying" target="_hplink"> apply to college,</a> so that can add up," notes Karen Schoonover, chief academic officer and principal of Pennsylvania's <a href="http://www.usnews.com/education/best-high-schools/pennsylvania/districts/new-hope-academy-cs/new-hope-academy-cs-16756" target="_hplink">New Hope Academy Charter School,</a> where low-income students get test fee waivers. If testing costs will be an issue for you, investigate waiver options with your school's guidance counselor, Schoonover recommends. Schoonover's daughter took college prep further, with subsequent costs. Through a dual enrollment program at <a href="http://www.usnews.com/education/best-high-schools/pennsylvania/districts/west-york-area-sd/west-york-area-senior-high-school-17432" target="_hplink">West York Area Senior High School,</a> she took college courses for $250 each, amassing 17 credits by graduation--which would have cost about $12,000 to earn at a university, her mother estimates. "It saved me a lot of money in the long run," Schoonover says. "I wasn't really prepared in her junior year to start writing checks for tuition, though."

  • 4. Transportation

    Even getting to and from school can get pricey. Confronted with the option to pay $1,500 a year for a school bus to come, the Krause family decided to drive their daughter both ways each day instead--a cost of about $150 a week, Krause estimates. For students who have a bus option but would prefer to transport themselves, there may be an additional cost, too: "If you're a senior and you're looking forward to driving your car and parking at a high school lot, parking fees have gone up," AASA's Domenech notes.

  • 5. Special occasions

    From senior trips to prom tickets, parents may find themselves opening up their wallets frequently--or facing the crestfallen faces of their teens when they hear the word "no." Even graduating from public high school can be costly once gowns, caps, tassels, and ceremony tickets are purchased. "I know this is all optional, but it's part of the high school experience, and it's all hidden costs," says Yvonne Johnson, a Delaware parent whose daughter goes to the <a href="http://www.usnews.com/education/best-high-schools/delaware/districts/charter-school-of-wilmington/the-charter-school-of-wilmington-4580" target="_hplink">Charter School of Wilmington.</a> "It's not always easy to say no to them, [but my daughter's] going to college, and you've got think about all those expenses." [Find out <a href="http://www.usnews.com/education/best-colleges/paying-for-college/articles/2011/09/13/get-your-kids-financially-ready-for-college-early" target="_hplink">how to talk to your children about money</a>.] The balance of costs and involvement will differ for each family, as you work as a team to figure out what you can pay for--and what you think you should. For the Montana-based Drange family, for instance, having no money saved for college was "the trade-off," mother Jodi reasons. "My kids are super, super involved in everything--I just think it's part of a well-rounded education, so we pay," Drange says. "We might not to do this or that, you know, 'cause I think the kids comes first in our lives."