Transforming Via Technology: Competition and Choice
The following is an excerpt from What Lies Ahead for America’s Children and Their Schools, a new book edited by Chester E. Finn, Jr. and Richard Sousa for Hoover Institution Press. This excerpt comes from a chapter called “Transforming via Technology” by John E. Chubb.
School districts cannot be expected to engage in revolution. Left to their own devices, they would incorporate technology incrementally, slowly—safely. That is what online AP, credit recovery, and the like are all about. Technology has not left it at that. Over the last decade, the advance of technology, outside and inside of education, has inspired policymakers in a few places to push aside opposition and offer students new ways to access technology-based education. Most of the action has been at the state level, though some districts have had the will as well.
Legislation authorizes institutions other than traditional public schools to provide public education online. Legislation concomitantly provides students and their families the right to choose education online, with and without approval from traditional public schools. They can choose online education both full-time and part-time. 
Twenty years ago state legislators began to approve charter schools in order to give families public school options other than their district or neighborhood schools. Today, forty-one states and the District of Columbia permit charter schools. Nearly 6,000 charter schools enroll over two million students, approaching 4 percent of all public school students.  This is remarkable growth, and a generally positive influence on public education—for the students choosing charter schools and the traditional schools spurred to compete with them.  The results have not been consistently good. But charter schools have won bipartisan support for being a largely positive force for change, especially for disadvantaged students who are most in need of better schools. 
Legislators have chosen similar measures to spur technological innovation.  States that permit brick-and-mortar charter schools are increasingly authorizing charter schools that serve full-time students completely or mostly online. These schools often serve entire states or at least multiple school districts. Students from rich and poor neighborhoods have access to the same online schools, an opportunity that brick-and-mortar charter schools cannot duplicate. Home-schooled students, who number 1.8 million nationally, have access to instruction otherwise unavailable to them. Legislators have also authorized state-operated virtual schools. These new entities offer students the opportunity to take individual courses online as well as, occasionally, to enroll full-time. For individual courses, legislation usually gives students the right to choose most any course, with limited guidance or veto power by their school of record.
A few states—Florida, Pennsylvania, and Utah being exemplars—are on their way to creating a dynamic of choice and competition in cyberspace. Students have more full-time and part-time options than choice in the brick-and-mortar world could ever create. As states become more accommodating, providers of online instruction have entrepreneurial outlets for their content; they need not depend on reluctant school districts as their only customers. Because the dynamic is at the course level as well as the school level, it has the potential to be far more disruptive to the status quo than traditional school choice. Whereas relatively few students may use school choice to improve their educational prospects, many if not most students may use course choice. The early numbers bear out expectations. Over two million students are already choosing online learning as a public education alternative. 
Response and Counter-Response
The growth of online education, in all of its forms, has been driven by the inexorable development of information technology itself and by the competitive dynamic that state policymakers are beginning to create by extending choice to cyberspace. Online providers are responding to the new demand with a proliferation of offerings. Traditional public schools have countered with their own offerings. Competition has enriched the options for students and accelerated the use of information technology in schools of all kinds.
As of 2012, cyber-charter schools operated in thirty-one states, or three-fourths of the states that allow brick-and-mortar charter schools.  Where cyber-charters have not yet emerged, they are either proscribed by the charter school law or funded too poorly to be viable. These new online schools enroll about 275,000 students nationwide. In states with firmly established schools, the growth in enrollments has been strong: about 15 percent per year. State laws have a major influence on enrollments, and growth rates have varied accordingly by state. Five states—Arizona, Ohio, Pennsylvania, California, and Colorado—enroll about half of the nation’s full-time online charter school students. If all states that authorize charter schools had laws similar to these five, enrollments overall would no doubt be much larger. Some charter laws limit enrollment geographically or numerically; other laws, like New York’s and New Jersey’s, prohibit cyber-charters. Demand for full-time online schools is likely well above the 275,000 students enrolled today. 
Still, most students interested in online education will not want to skip the traditional school experience altogether. They will want social learning experiences, proximity to friends, and the panoply of extracurricular activities available in many brick-and–mortar schools. While online schools find ways to assemble students for activities of various kinds—including an annual prom—online schools largely have students working at home, supervised by a parent. This is not every parent’s cup of tea either, especially working parents.
Policymakers have offered students a part-time option, most often provided by a state-sponsored virtual school.  In 2012, twenty-seven states had such schools with total enrollment of 619,847. The most recent annual growth rate was 16 percent. As with full-time cyber-charters, student participation varies widely across the nation as a result of state policies. One state, Florida, saw over 300,000 course enrollments, nearly half of the national total. The Florida Virtual School is one of the oldest state cyberschools. But its size is not a product of its age. Florida policymakers gave students the right to choose most any course in the state secondary school curriculum and receive school credit, without school permission—and used the student’s pro-rated local per-pupil funding to pay the state. The program was thereby self-financing, and generously so. States with fewer enrollments may require a student’s home school to give permission—which it may resist if that would jeopardize sufficient enrollment in core school offerings. Less successful states may fund their state virtual schools with extra appropriations, rather than regular public school aid, thereby limiting course offerings. Nevertheless, six states have state–sponsored virtual schools enrolling over 15,000 students per year. One of them, North Carolina, is approaching 100,000 course enrollments annually.
In all, state law enabled 900,000 students nationwide to participate in online education outside of their local school districts, full-time or part-time. That is less than 2 percent of all public school students. But a higher percentage of high school students participated. They constitute most of the course-takers and a large portion of the full-time students. Traditional public schools have taken notice and are fighting back.
In Pennsylvania, school districts have banded together to create their own full- and part-time online schools. Pennsylvania is one of the largest cyber-charter markets in the country, with over 32,000 full-time enrollments in 2012 and continued double-digit growth. Districts pay cyber-charters about $9,000 per pupil. In recent years, Intermediate Education Units (IUs)—multi-district consortia that provide various services to member school districts—have created online schools. Individual school districts often lack the scale to open their own online schools, so their IUs have taken up the challenge.  Chester County, outside of Philadelphia, offered online education to students in thirty-eight school districts; Philadelphia recently became the thirty-ninth. Philadelphia currently pays to send 6,000 students to online charter schools each year. It hopes to shift 1,000 students to the Chester County–run school, saving $4,000 per student. Similar IU-run schools surround Pittsburgh and Harrisburg, the latter enrolling 1,200 full-time students after just four years of operation. Exact counts of multi-district schools are not available for every state, but most states have IU’s—or districts big enough to create their own online schools. Cyber-charters and state virtual schools should expect continued competition from school districts.
John E. Chubb is the president of the National Association of Independent Schools.
Notes:1. The status of legislation authorizing, funding, and regulating online learning at the state level is detailed in “2012 Digital Learning Report Card,” Digital Learning Now! an Initiative of the Foundation for Excellence in Education. 2. For current statistics, see Center for Education Reform, “National Charter School and Enrollment Statistics 2011–2012.” 3. For a rigorous study of charter school performance, see Caroline M. Hoxby, Sonali Murarka, and Jenny Kang, “How New York City’s Charter Schools Affect Student Achievement: August 2009 Report” (Cambridge, MA: New York City Charter Schools Evaluation Project, September 2009). 4. For the mixed results, see Center for Research on Education Outcomes, “Charter School Growth and Replication,” Stanford University, January 2013. 5. On the challenges and opportunities for state online policy, see John E. Chubb, “Overcoming the Governance Challenge in K–12 Online Learning,” in Creating Sound Policy for Digital Learning (Washington, DC: Thomas B. Fordham Institute, February 16, 2012). 6. Based on estimates of the gamut of student uses in Watson et al., Keeping Pace, 20–33. 7. Statistics in this section are from ibid., 24–27. 8. For more on the effects of state laws, see Chubb, “Overcoming the Governance Challenge.” 9. See Watson, Keeping Pace, 29–32. 10. See Benjamin Herold, “Philadelphia to Launch Online School,” NBC 10 Philadelphia, April 20, 2013. Reprinted from What Lies Ahead for America’s Children and Their Schools, edited by Chester E. Finn Jr. and Richard Sousa, with the permission of the publisher, Hoover Institution Press. Copyright © 2014 by the Board of Trustees of the Leland Stanford Junior University.