Audit: Utah’s “Ghost Student” problem.

Image © The Goldwater institute
Image © The Goldwater institute

Editor’s note: This article is specifically written to highlight serious allegations and problems noted within the State Board’s audit. This is in no way written, or meant to infer that home schooling and charter schools are bad. It highlights specific issues, and specific actors. Who have committed acts that must be addressed and fixed if school choice, and educational freedom are to be able to function without scrutiny.

Recently, the State of Utah requested a performance audit of distance and online educational programs from the Utah State Board of Education. The results, released on February 7th, are astounding.

Titled “Distance and Online Education Programs in Utah Schools,” the results are not the kind that encourages further government funding. Especially if you have something to hide.

And from the outset, the audit is full of indicators that someone had something to hide. The audit was requested because of numerous complaints about how the online and distance programs the state funds were being run, including, Federal Educational Rights and Privacy Act or “FERPA” violations. Including accusations of unlicensed or unauthorized users with access to confidential student information; improper contracts issued in violation of Utah procurement laws, improper benefits given to students and parents, and inadequate supervision contractor performance by local school districts.

Even more concerning was the revelation of the so-called “ghost students,” or students who appear on the rolls of local, publicly funded charter schools, but don’t exist. Arizona had a problem with “ghost-students” a couple of years ago, and the Goldwater institute wrote a report about it and the costs that it was having on the educational system within the state, to the tune of $125 million dollars lost.

Approved by the state. Supported by your tax funds. But instead of students who attend classes, they are students home schooled by parents and provided incentives from contractors who had performance goals to boost the rolls of these online programs.  This allowed charter schools to report larger student populations, qualifying for more funding, but keep costs artificially lower than would otherwise be if the students were actually in class.

In fact, these ghost students don’t have any association, contact, or interaction with the charter school. Instead,  they  were receiving a portion of the state funds funneled to charter school contractors for reimbursements and incentives to enroll and stay enrolled until at least after October 1st each school year.

Why an arbitrary date like October 1st? Because that is the last census date needed for school Weighted Pupil Units: or “WPU” funding calculations for the next school year.

So, before we get too much further. Let’s review a few things:

Charter schools are public schools formed by local stakeholders who see a need for something different from standard public education. They offer specialized learning curriculums and smaller class sizes. But they remain certified public schools, funded by tax dollars, allocated based on the school’s student population. Because of the specialized curriculum, they are somewhat independent and to a certain degree have more autonomy than a typical public school.

Some of Utah charter schools offer online or distance learning programs. This allows students who are outside of the immediate geographic area of the school to be admitted as a student, and as a result the school receives additional WPU funding. Because of the technical infrastructure necessary, and the cost for deployment, these distance education services are usually contracted out. The online contractor and the local school collaborate on student records and information.

Now, back to the audit of these online and distance learning programs. The audit highlights numerous issues:

  • Students enrolling in these programs get a free* computer or receive money when they enroll.
  • Students enrolled within these programs have had no interaction with the school(s) and schools did not know which students enrolled in their program.
  • If a neighbor teaches piano, dance, or some other extracurricular activity and a student studies with the neighbor, schools give credit, but claim the value of the WPU for these courses. Effectively, the school is getting paid for someone else’s work…which the student is usually paying for, anyway, directly in lesson fees.
  • Students were not required to participate in state required assessments.
  • Students were not required to take full course loads, but schools received full funding as if the student was enrolled full time, no matter how many courses in which the student actually taking.
  • Third-party providers are paid from restricted funds (such as special education funding, which is funded by both state and federal sources) when they were not providing these services.
  • Students are only required to be enrolled until the October 1st student census, which determines funding, and in some cases home-schooled students were provided to enroll until the October 1st head count, and then allowed to withdraw without their academic status codes being updated correctly (if at all), or incorrectly coded.
The word “free” in this context does not mean “free” as in 0.00 it cost somebody, something to acquire the computer.

As previously indicated, charter schools are unique because they have unique ability to select their curriculum, as long as it meets Utah’s core standards. However, beyond that oversight appears to be limited, including regarding vendor purchased courses or materials that did not appear to be evaluated or reviewed to ensure compliance with Utah’s laws and regulations.

Utah law traditionally requires that schools stop counting a student after ten consecutive absences. But several charter schools were caught using “progress-based” monitoring for their online programs. Also, the report highlighted that these schools “do not appear to be monitoring instructional hours, and have not established a required level of daily participation for their distance and online students.”

Another large problem outlined within the audit was the “flex program” offered by Harmony, one of the contractors catering to the charter schools. Using this model, a student’s parents selected the curriculum and established specific learning “objectives” for their specific grade level and subjects.

Then, something strange happens: parents are reimbursed up to $125 per course subject, per student. These students are then home schooled and are able to make the determination of what will be sent back to Harmony for prove the student has completed the objectives. So where did the rest of the money go? It looks like that the Contractors actually kept a large portion, if not the left over funding.

Both Harmony and My Tech allowed parents to purchase curriculum outside of the contractors’ purview, such as music lessons from a private third party unaffiliated with the school, state or contractor.

State law requires that the “curriculum must be available and affordable for the general public, must be a group course, include an instructor and be a secular course and the website must be provided prior to approval ” Up to $300 can be reimbursed through the My Tech program, allowing parents to teach in a home school setting. Parents can also be reimbursed for textbooks, literature, science lab equipment, online subscriptions, private tutoring (from a non-family member). These reimbursements are up to $150 per course, per student.

Problems arose when it emerged that charter schools that contracted with these companies had not supervised or participated in monitoring the learning objectives or the establishment of curriculum. Nor could any proof be provided that showed these courses were in compliance with the Utah Core Standards, a baseline standard for state funding.

Both Harmony and My Tech have a practice of reimbursing parents using unrestricted WPU funds. Up to 800.00 total per year, per student for the courses purchased through Harmony. And up to $900.00 per year, per student for course work purchased through MyTech.

Essentially, Harmony and MyTech are both paying parents to use their courses, receiving the WPU funding from the state, and then paying a cut of the WPU back to the parents, all without requiring any proof of course completion or progress. Meanwhile, the local school receives funding for students who are home schooled. As the audit noted, contractors Harmony and My Tech specifically kept their own student information systems and did not collaborate with the schools. They simply provide a head count to the charter school. This formula is allows schools to receive more state funding for having less students who are actually enrolled. This money, in turn is used to not benefit your students, but to pad the pockets of companies who are making profits off these practices.
So if the parents get up to $800 or $900 per year, where did the rest of that money go? Did it go to just the contractors? Did it go back to the school? That is the question that must be answered.

According to Utah School Board Rules “All teachers in public schools shall hold a Utah educator license along with appropriate areas of concentration and endorsements.” Further, Utah Statute 53A-1A-512 says that “Charter schools shall employ teachers who are licensed, including board approved charter specific licenses”

The programs set up by the chartered schools and then awarded a contract to have Harmony and MyTech execute and operate are paid for by public funds. The students enrolled were represented as public school students in state approved charter schools.

Contrary to state law, and state school board rules, they were unsupervised and unmonitored homeschool students. While there is nothing wrong with homeschooling, it is an effective solution for many parents and their children. This piece should not be seen to be an indictment on homeschooling; but more of an indictment of how your taxes and public funds are being mismanaged, and out rightly abused to benefit a few private companies. Not for the benefit of students as we are lead to believe our funding is used for. Every year, the Utah State Legislature struggles to fund public education. Cuts are made, changes put into place. But these schools, and their affiliated contractors are abusing the system. Placing more of a strain on the limited funding.

Under state law, home school courses do not qualify for tax dollars. Any charter school could, many did, develop “distance learning” programs geared towards home schooled students and then claim that these courses were eligible for state funding. Returning some of the funds received to the parents, but these private contractor(s) get to keep the majority of the money.

Utah state law provides that schools are required to create a schedule that ensures students will annually receive 180 days (990 hours) of instruction or the school cannot qualify for state education funds.

If a student stops attending for ten consecutive days they are dropped from the WPU report; however, the school can recommence counting if the student resumes attendance.  the audit showed many cases where students withdrew or transferred to home school after the October 1st census without explanation.

For at least two years, Harmony and My Tech have contracted with schools to recruit, and enroll a specific number of students by the October 1st census.

The problem? Currently Utah has no law that prohibits this from occurring.

When asked about this issue, Holly Richardson (a Utah Politico Hub team member) said:

“I am very disappointed to learn that our children are being used in some sort of shell game that benefits failing charters, pads the pockets of contractors and abuses both taxpayer dollars and their trust.”

Speaking of “Failing Charters” How much does one of these ventures actually cost taxpayers? 

The amount of money per student paid to the contractor(s) by the local Charter Schools.
The amount of money per student paid to the contractor(s) by the local Charter Schools. (Click to see full size)


If you live in Provo, the Provo School District e-school pays 132% of the WPU per student to their contractor Harmony. And 99% of the WPU per student to MyTech (Provo e-School contracts with both providers)

Any students enrolled within one of these programs, including those who are home schooled, are counted towards the school district’s WPU and enrolled census.

Basically, these students are listed public school students, even though their parents took them out of the public school system (either by choice, or necessity).  This is in addition to those in the charter schools, who are funded with state education funds, but cannot prove that their distance learning programs comply with Utah’s common standards for education.

Currently there are approximately 2,600 students enrolled in these distance and online education programs. It appears that this audit has just scratched the surface.

What is next? The audit has been distributed to the Utah State Auditor John Dougall, as well as Senator Deidre Henderson and others.  You can expect to hear more about this soon.

When speaking about why she (Senator Henderson) likes charter schools, but we can’t let them get away with this she said;

“I like charter schools, but I like accountability even more. The dishonest practice of a few schools who exploit ‘ghost students’ for profit undermines the model of school choice. It needs to be stopped.”

And she is correct. Cooking the books is akin to fraud. Charter Schools aren’t inherently bad. This report highlighted a few bad actors, and not the entire idea, or every one of the nearly 100 charter schools state wide.  Charter schools, and parental choice are important and have been proven to offer some real advantages over traditional K-12. But we as citizens, and members of the community have the need to know how money is being used to fund the education our children receive. We have the right to demand that those who abuse the system and the process are held accountable in such a way, that we can ensure transparency, and know that those in charge of the purse strings of our tax money are doing so in an ethical, and honest way that ensures their fiduciary duties to the tax payers within the state are being met.

If the charter system, and parental choice are going to work, we need to know what is going on. If these schools are going to be funded with public tax money, they must be treated, and subjected to the same rules and regulations as traditional K-12 schools that we are traditionally used to or the system becomes compromised and will eventually fail. Giving those opponents of “doing things the way we always have” in K-12 education ammunition to say “See, it doesn’t work!”

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