Virtual School Boom Leaves Oregon Districts Profitable While Students Fall Behind

Oregon’s rural school districts have turned virtual education into a lucrative revenue stream, retaining millions in state funding while independent data indicates their online students lag significantly behind peers in brick-and-mortar classrooms.

The model relies on a state rule that follows funding to the student. Districts contract with for-profit operators to run low-cost online schools, keeping the difference between the state appropriation and the operator’s fee. In the Nyssa School District, a rural community of 1,100 students, the arrangement has generated nearly one-third of the district’s general fund support.

In late 2021, Matt Bowman, founder of the Utah-based company OpenEd, pitched the concept to the Nyssa school board. He proposed a virtual school that would enroll students from across the state. The board approved a contract in which OpenEd would receive 60% of the per-student funding from the Oregon Department of Education, leaving the district with the remaining 40%.

The financial upside has driven rapid expansion. This school year, Nyssa Virtual enrolled 3,060 students, more than double the number attending physical schools in the district. After paying OpenEd, the district keeps approximately $4,650 per online student, totaling about $14 million. Local officials used these funds to build a $1.6 million football field, a $600,000 playground, science labs, and six tennis courts.

While enrollment has nearly tripled over the past decade, academic outcomes have not matched the financial growth. Statewide, 31,000 students, or 6% of the K-12 population, attend online programs. Oregon’s virtual schools are growing four times faster than the national average. However, only 59% of virtual high schoolers graduate on time, compared to the state average of 83%. Less than two-thirds of virtual students are on track to graduate, and dropout rates are double or triple the state norm.

Operators also offer parents annual tax-free stipends ranging from $1,000 to $3,000 for education-related expenses. OpenEd pays $2,750 per child. Parents on social media groups have listed purchases including horseback riding lessons, a stand mixer, golf clubs, and dolphin encounters in Hawaii. Critics, including superintendents from Clatsop and La Grande districts, describe the practice as predatory marketing that pits districts against one another.

The Oregon Department of Education has not mandated specific testing or instructional standards for these schools. Pooja Bhatt, a former adviser to Governors Tina Kotek and Kate Brown, stated that virtual schools have proliferated unchecked. She noted that public dollars are funding inferior outcomes. The state currently hosts 76 virtual schools, many operated by for-profit entities like Stride Inc. and Connections Academy.