Financial Viability of Some ‘Personalized Learning’ Charter Schools Unclear, Report Says

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A group of charter schools that have tried to pioneer “personalized learning” in schools face big questions about the sustainability of their approaches after private sources of funding run dry, a new analysis suggests.

The report, published by the Center for Reinventing Public Education at the University of Washington, Bothell, examines 16 schools that received support through Next Generation Learning Challenges, a competitive grant program that makes awards to support personalized instructional approaches through technology and other means.

The “personalization” strategies in play in those schools vary widely, and include “station-rotation” models that move students through different approaches to learning, with different experiences with technology. Other strategies, especially in secondary schools, rely on project-based learning, and fashioning individualized online learning paths for students, among other approaches.

Twelve of the 16 schools studied missed their enrollment projections for their first year of operations, depriving them of critical revenue and forcing them to make difficult financial calls, the report says. Despite the heavy emphasis on using technology in the schools studied, one of the report’s takeaways is that when the charter schools faced a financial pinch, they tended to cut tech, rather than cutting personnel.

“[T]he schools we studied treated technology as a luxury good—they paid for it when they had extra money to spend and reduced it when they were short on resources,” the report says.

In the foreword to the report, the center puts it as such: “This study should reassure those who worry that teachers will be replaced by technology under personalized models.” When faced with budget trade-offs, the charters typically “cut technology costs to preserve small class sizes and staff positions.”

All of the schools received significant funding through the NGLC competition. The NGLC receives financial backing from the Bill & Melinda Gates Foundation, which also funded the report, though the CRPE’s authors say the conclusions are theirs alone. (The Gates foundation has also supported various areas of coverage in Education Week;  the foundation has a vast reach across K-12 education.)

But are the charters too dependent on outside funding? The report found that 13 of 16 of the schools studied ran budget surpluses in their first year of operation. Yet nine of the 16 used private money to pay for recurring costs that will remain after the private funding goes away. While all of the schools have reduced their reliance on private funding, it remains to be seen whether some of them can survive without it, the authors say.

How Long a Lifespan?

The upward trajectory of costs is laid out in one section of the report, which describes the average, non-recurring expenses of a cohort of schools the authors studied, beginning in 2012. Over three years, the non-recurring expenses rose from $94,626 to $246,794. Per-pupil expenses during that time rose from $188 to $547.

The non-recurring expenses for the charter schools emphasizing personalized learning “need to come down” if those schools want to succeed long-term, said Betheny Gross, the research director and a senior research analyst at the center and one of the report’s authors. “They need to get to a place where a school doesn’t need private funding to keep going.”

The charter schools in the report are not identified by name. Gross said they were granted anonymity by the researchers, in exchange for providing an unvarnished look at their finances.

Andy Calkins, the deputy director of the Next Generation Learning Challenges, told Marketplace K-12 in an e-mail that all the grantees committed to coming up with models that are sustainable by various standards. But the grantees also set their own budgets and are free to shape their priorities as they want. “Innovating that costs extra money doesn’t end after the first two or three years,” he said.

The “first and most important contribution” the NGLC grantees can make is to “demonstrate dramatically higher effectiveness and richer, deeper outcomes for all students,” he said, “while still keeping costs in the realm of affordability and heading towards that sustainability goal.

Calkins also warned against reading too much into schools choosing to cut technology, rather than personnel, when faced with tough budget choices.

Some of the decisions made by K-12 officials to cut back on technology, he noted, are a result of their frustrations with the inadequacy of digital tools to meet their needs, Calkins said.

“It’s important not to draw a 1-to-1 link between ‘spending choices’ and ‘degree of innovation,’ ” he said. “These schools all point to technology as an enabler, but none of them would say that technology is the main headline … Deciding to invest in people rather than technology doesn’t automatically mean, ‘This model is now leaning back towards status quo.’ ”

The charter schools in the study underestimated an array of start-up costs, the authors found. Those include hefty fees to consultants to help them get rolling, and expensive remodeling of facilities, as well as other purchases.

(Schools in a pair of cohorts studied spent nearly $65,000 on consultants during their first year of operation; the average number was $134,000 for the second year of operations in five schools for which the authors had data, with most of those schools spending much more.)

In some cases, the schools’ ambitions came in conflict with their desires to keep costs low, the report says. One example is what the authors call the “Chromebook effect”—the tendency of some schools to choose those devices because of what they see as their low cost and dependability, without realizing that the tools’ reliance on cloud computing can drain a school’s bandwidth and require an investment in tech infrastructure. And in some of the schools evaluated, their personalized learning models required software that could only run on more powerful expensive computers than Chromebooks.

The report is a “realistic reminder that this work is still very young,” said Gross, “and there’s a lot of exploring, and a lot of pull toward a traditional way of thinking about [how to use] resources in a building.”

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