Skip Navigation
archived information
Skip Navigation

Back to Ask A REL Archived Responses

REL Midwest Ask A REL Response

Online Courses

October 2019


What research is available on state funding models for e-schools?


Following an established Regional Educational Laboratory (REL) Midwest protocol, we conducted a search for research reports and descriptive studies on state funding models for e-schools. For details on the databases and sources, keywords, and selection criteria used to create this response, please see the Methods section at the end of this memo.

Below, we share a sampling of the publicly accessible resources on this topic. References are listed in alphabetical order, not necessarily in order of relevance. The search conducted is not comprehensive; other relevant references and resources may exist. For each reference, we provide an abstract, excerpt, or summary written by the study’s author or publisher. We have not evaluated the quality of these references, but provide them for your information only.

Research References

Gemin, B., Pape, L., Vashaw, L., & Watson, J. (2015). Keeping pace with K-12 digital learning: An annual review of policy and practice (12th ed.). Durango, CO: Evergreen Education Group. Retrieved from

From the ERIC abstract: “Online learning has steadily become a more integral strategy for schools and districts in their efforts to offer students greater access to the courses they need. Where in the past, much of the online learning activity happened at the state level or regional level, more and more schools are exercising greater control over their online and digital learning programs as affordable options are now more available, schools’ expertise grows, curriculum and technology products improve, and teachers become more skilled at integrating online courses and techniques into their instruction. The 2015 edition of ‘Keeping Pace’ reflects this change in the online and digital learning landscape, placing greater emphasis on the users and suppliers of online learning, and how these interrelationships help define the digital learning space, rather than a state-by-state chronicling of activity. In this edition of ‘Keeping Pace,’ the authors provide a greater number of snapshots of digital learning activity to illustrate the why and how behind school and district implementation, and in some cases the policies that shape them. Some snapshots show how suppliers partner with schools to deliver online products and services, and highlight the breadth and depth of activity at the state, district, and school level. ‘Keeping Pace’ is also more streamlined than it has been in recent years. This year’s edition aims to provide more visual representations of data and information, including greater use of tables and graphics to allow readers to more easily analyze, compare, and contrast findings.”

Johnson, A. F., Hopper, F., & Sloan, J. E. (2016). A preliminary investigation of Maine virtual charter school costs relative to the Essential Programs and Services funding model. Gorham, ME: Center for Education Policy, Applied Research, and Evaluation, School of Education and Human Development, University of Southern Maine. Retrieved from

From the ERIC abstract: “In 2015, the Maine State Legislature’s Joint Standing Committee on Education and Cultural Affairs commissioned the Maine Education Policy Research Institute (MEPRI) to study the state’s Essential Program and Services (EPS) K-12 education funding model in relationship to the funding for Maine’s two virtual charter schools. The study was initiated with a review of available literature and reports on virtual school funding in other states. Because the structure of Maine’s virtual schools differs from typical models in other states, most notably because core academic subject teachers are required to teach from one central physical location, further cost analysis was conducted using only Maine-¬based data. The expenditure data available was from one school (Maine Connections Academy) in its first year of operation in 2014-¬15. This limits the generalizability of the findings. Data were analyzed by categorizing the virtual school expenditures as much as was possible into nineteen separate components of Maine’s Essential Programs and Services funding model. In each category, the report first provides a qualitative description of how the virtual school carries out that type of work. This provides background to aid the reader in understanding how virtual schools operate, and in interpreting any differences in expenditures. Next the quantitative analysis for that cost category is detailed, followed by a concise summary of whether the expenditures for that category were higher, lower, or similar to the EPS cost model, unless inadequate data were available to make a determination. An appendix provides a summary of virtual school policies in other states.”

Mann, B., & Baker, D. P. (2019). Cyber charter schools and growing resource inequality among public districts: Geospatial patterns and consequences of a statewide choice policy in Pennsylvania, 2002–2014. American Journal of Education, 125(2), 147–171. Retrieved from

From the ERIC abstract: “An analysis from 2002 to 2014, aligning media reporting of the effectiveness of the fully online K-12 cyber charter school model with data on enrollment flows to cyber charter schools and expenditure and demographic indicators across all 500 residential public school districts in Pennsylvania, finds a three-part geospatial-social process. Initial high-tech cachet surrounding the option stimulated statewide spread in enrollments, but over time growth in student flows became more pronounced among disadvantaged, lower tax-base public school districts. As mass media coverage shifted to a research-substantiated narrative of the model’s academic ineffectiveness, cyber charter enrollments declined first in districts with higher parent educational attainment and then intensified. With the large movement of students, the mean amount of public funds transferred from residential districts in 2014 was about $800,000 (standard deviation about $3,100,000). With dubious academic benefits, districts with the lowest tax base lost significant revenue to cyber charter providers.”

Note: REL Midwest was unable to locate a link to the full-text version of this resource. Although REL Midwest tries to provide publicly available resources whenever possible, it was determined that this resource may be of interest to you. It may be found through university or public library systems.

Miron, G., Shank, C., & Davidson, C. (2018). Full-time virtual and blended schools: Enrollment, student characteristics, and performance. Boulder, CO: National Education Policy Center. Retrieved from

From the ERIC abstract: “This sixth NEPC Annual Report on Virtual Education provides a detailed overview and inventory of full-time virtual schools and blended learning, or hybrid, schools. Full-time virtual schools deliver all curriculum and instruction via the Internet and electronic communication, usually asynchronously with students at home and teachers at a remote location. Blended schools combine virtual instruction with traditional face-to-face instruction in classrooms. Evidence related to inputs and outcomes indicates that students in these schools differ from students in traditional public schools. In particular, school performance measures for both virtual and blended schools indicate that they are not as successful as traditional public schools. Nevertheless, enrollment growth has continued. Compared to prior years, there has been a shift in source of growth, with more school districts opening their own virtual schools. However, these district-run schools have typically been small, with limited enrollment. Thus, while large virtual schools operated by for-profit education management organizations (EMOs) have lost considerable market share, they still dominate this sector. This report provides a census of full-time virtual and blended schools. It also includes student demographics, state-specific school performance ratings, and—where possible—an analysis of school performance measures.”

Miron, G., & Urschel, J. L. (2012). Understanding and improving full-time virtual schools: A study of student characteristics, school finance, and school performance in schools operated by K12 Inc. Boulder, CO: National Education Policy Center. Retrieved from

From the ERIC abstract: “K12 Inc. enrolls more public school students than any other private education management organization in the U.S. Much has been written about K12 Inc. (referred to in this report simply as ‘K12’) by financial analysts and investigative journalists because it is a large, publicly traded company and is the dominant player in the operation and expansion of full-time virtual schools. This report provides a new perspective on the nation’s largest virtual school provider through a systematic review and analysis of student characteristics, school finance, and school performance of K12-operated schools. Using federal and state data, this report provides a description of the students served by K12 and the public revenues received and spent by the company at the school level. Further, the report presents evidence from a range of school performance measures and strives to understand and explain the overall weak performance of these virtual schools. While the authors share the excitement of new technologies and the potential these have to improve communication, teacher effectiveness, and learning, they recommend that policymakers move forward cautiously and only after piloting and thoroughly vetting new ideas. The authors express hope that their findings will help inform policymakers and motivate researchers to carefully study various aspects of full-time virtual schools. They conclude that a better understanding of virtual schools can serve to improve this new model and help ensure that full-time virtual schools can better serve students and the public as a whole.”

Molnar, A., Miron, G., Elgeberi, N., Barbour, M. K., Huerta, L., Shafer, S. R., et al. (2019). Virtual schools in the U.S. 2019. Boulder, CO: National Education Policy Center. Retrieved from

From the ERIC abstract: “As proponents continue to make the case that virtual education can expand student choices and improve the efficiency of public education, full-time virtual schools have attracted a great deal of attention. Advocates contend that this potential for individualization allows virtual schools to promote greater student achievement than can be realized in traditional brick-and-mortar schools. NEPC researchers found, however, that the research evidence does not support this claim. This three-part brief provides disinterested scholarly analyses of the characteristics and performance of full-time, publicly funded K-12 virtual schools; reviews the relevant available research related to virtual school practices; provides an overview of recent state legislative efforts to craft virtual schools policy; and offers policy recommendations based on the available evidence.”

Molnar, A., Miron, G., Gulosino, C., Shank, C., Davidson, C., Barbour, M. K., et al. (2017). Virtual schools in the U.S. 2017. Boulder, CO: National Education Policy Center. Retrieved from

From the ERIC abstract: “In the five years since the first National Education Policy Center (NEPC) ‘Annual Report on Virtual Education’ was released in 2013, virtual education has continued to be a focal point for policymakers. Proponents argue that virtual education can expand student choices and improve the efficiency of public education. In particular, full-time virtual schools (also sometimes referred to as virtual charter schools, virtual academies, online schools or cyber schools) have attracted a great deal of attention. Many believe that online curriculum can be tailored to individual students more effectively than curriculum in traditional classrooms, giving it the potential to promote greater student achievement than can be realized in traditional brick-and-mortar schools. Further, the promise of lower costs--primarily for instructional personnel and facilities--makes virtual schools financially appealing to both policymakers and for-profit providers. The assumption that virtual schools are cost effective and educationally sound, coupled with policies expanding school choice and providing market incentives attractive to for-profit companies, continue to help fuel virtual school growth in the U.S. There is, however, little high-quality systematic evidence that the rapid expansion of the past several years is wise. Indeed, evidence presented in the NEPC annual reports argues for caution. Nevertheless, the movement toward virtual schools continues to gather steam, often supported by weak or even dishonest data. For example, as a part of the confirmation hearings for the current Secretary of Education, National Public Radio reported that Secretary Betsy DeVos responded to a written question from Senator Patty Murray using performance data provided by a for-profit corporation that inflated the four-year graduation rates of virtual schools--in some cases by as much as 300%.1 The 2017 NEPC Annual Report contributes to the existing evidence related to virtual education, and so to debates surrounding it. It provides objective analysis of the characteristics and performance of full-time, publicly funded K-12 virtual schools; available research on virtual school practices and policy; and an overview of recent state efforts to craft new policy.”

National Alliance for Public Charter Schools. (2016). A call to action: To improve the quality of full-time virtual charter public schools. Washington, DC: Author. Retrieved from

From the ERIC abstract: “Currently, more than 180,000 students attend 135 full-time virtual charter schools in 23 states and the District of Columbia. While some students do well in a full-time virtual charter school environment, too many of these schools are not providing a quality educational program to the vast majority of their students, while enrolling too many who are simply not a good fit for attending a fully online school. In this report, ‘A Call to Action to Improve the Quality of Full-Time Virtual Charter Public Schools,’ the National Alliance for Public Charter Schools, the 50-State Campaign for Achievement Now (50CAN) and the National Association of Charter School Authorizers (NACSA) propose specific policy recommendations to help states better hold full-time virtual charter schools accountable for student results.”

Patrick, S., Myers, J., Silverstein, J., Brown, A., & Watson, J. (2015). Performance-based funding and online learning: Maximizing resources for student success. Vienna, VA: International Association for K-12 Online Learning. Retrieved from

From the ERIC abstract: “There is a new conversation taking place in public education on creating systemic incentives through school finance to encourage schools to innovate and be rewarded for positive student outcomes and performance. What if education funding was not based on seat-time, but on rewarding student performance? Performance-based funding is a term that captures this new concept. Performance-based funding means that funding is tied to an outcome-a policy outcome. In higher education, institutions seek outcomes tied to degree completion. In K-12 education, the performance-based funding outcomes have historically been tied to course completion (as the outcome). As students successfully develop competencies and complete courses, they would trigger payment and performance-based funding incentives. It is important to protect quality and ensure student performance outcomes are validated through independent assessments and/or end-of-course exams. As interest in online courses grows, many states are looking for guidance regarding costs, models and performance-based funding policies. The research in this report is focused on online learning to focus on the issues of equity and adequacy of funding in the context of performance-based funding models.”

Pazhouh, R., Lake, R., & Miller, L. (2015). The policy framework for online charter schools. Seattle, WA: Center on Reinventing Public Education. Retrieved from

From the ERIC abstract: “Online charter schools, charter schools that primarily utilize remote online instruction, have been both popular and controversial. As of October 2015, fully online charter schools operate in 26 (soon to be 27) states and enrolled approximately 200,000 students in the 2013-14 school year, comprising over 8 percent of all public charter school enrollments nationwide. Despite their growing popularity with students and families, online charter schools have received their share of bad press, thanks to reports of lackluster student outcomes and high-profile controversies over contracting for school management services with for-profit providers. This paper looks at the question of how state policy shapes the online charter school landscape. The authors reviewed the legal framework affecting online schools that operate as charter schools (as opposed to online schools operating on contract with a district or the state). The authors wanted to know: (1) In what ways do state laws vary? (2) How might that policy variation influence the ability of online charter schools to operate efficiently and effectively? and (3) What are emerging trends in state policy and how might charter online laws be improved? Overall, it was found that states’ charter laws and administrative regulations create varied policy environments for online charter schools. With few exceptions, the regulatory framework targeting online charter schools is layered on to the overarching state charter law, which falls under the general education code. Moreover, the analysis shows that existing regulation arises in response to problems and concerns, not as a proactive set of policies to guide the unique opportunities and challenges of online charter schools.”

Stedrak, L. J., Ortagus, J. C., & Wood, R. C. (2012). The funding of virtual schools in public elementary and secondary education. Educational Considerations, 39(2), 44–54. Retrieved from

From the ERIC abstract: “The advent of information technology throughout the United States has revolutionized the educational process and sparked the rapid growth of virtual education at the K-12 level in almost every state such that courses in every imaginable subject can now be offered outside the geographic constraints of school districts and traditional brick-and-mortar buildings. Virtual education for elementary and secondary students has grown into a $507 million market and continues to grow at an estimated annual pace of 30%. With the dramatic growth of virtual education, state policy and funding issues related to virtual schools have become increasingly important. Such issues include, but are not limited to, equity, access, choice, and cost-effectiveness. Yet, little systematic research exists to assist state policymakers in their decision-making. To that end, this article presents an overview of the type and funding of virtual education by state as a first step in providing policymakers with much needed information.”

Watson, J., & Pape, L. (2015). School accountability in the digital age. Keeping pace with K-12 digital learning (Policy Brief). Durango, CO: Evergreen Education Group. Retrieved from

From the ERIC abstract: “Public schools in the United States operate under state accountability systems that vary by state and are meant to measure individual school performance against criteria determined by state policymakers. The purpose of these systems is to hold each school accountable for increasing student performance. However, it has become clear that a single system does not accurately measure all schools. Among the problems is that these systems do not adequately assess schools with high rates of student mobility or a high number of students who enter as over-age or under-credited. Although online schools most commonly face these issues, these concerns also have ramifications for blended schools (those combining digital and face-to-face instruction) and many traditional physical schools as well. The ways in which fully online schools are held accountable vary based on how they are overseen, and by state. Online schools fall into one of several categories, and accountability structures differ based on the categories. This report recommends the following policy changes to help address some of the current accountability system issues: (1) Credit schools with graduating students in five or six years; (2) Measure students’ progress towards graduation, especially for situations in which students switch schools; (3) Change funding mechanisms to systems that minimize the impact of high student mobility; (4) Publish data on student mobility for all schools, and consider creating a designation specific to schools with high rates of student mobility, regardless of other student demographic factors; (5) Require separate reporting on online programs so that online student outcomes can be tracked; (6) Calibrate performance penalties for schools that miss targets for the percentage of students who take state assessments; (7) When students change schools, require that the sending school transfer complete student information to the receiving school quickly; and (8) End counting by cohorts, and determine where students go after leaving an online school.”


Keywords and Search Strings

The following keywords and search strings were used to search the reference databases and other sources:

  • “Electronic learning” “educational finance”

  • E-school

  • E-school funding

  • “Florida virtual school”

  • “Virtual schools”

  • “Virtual schools” Florida funding

  • “Virtual schools” funding

  • “Virtual schools” U.S. funding

Databases and Search Engines

We searched ERIC for relevant resources. ERIC is a free online library of more than 1.6 million citations of education research sponsored by the Institute of Education Sciences (IES). Additionally, we searched IES and Google Scholar.

Reference Search and Selection Criteria

When we were searching and reviewing resources, we considered the following criteria:

  • Date of the publication: References and resources published over the last 15 years, from 2004 to present, were included in the search and review.

  • Search priorities of reference sources: Search priority is given to study reports, briefs, and other documents that are published or reviewed by IES and other federal or federally funded organizations.

  • Methodology: We used the following methodological priorities/considerations in the review and selection of the references: (a) study types—randomized control trials, quasi-experiments, surveys, descriptive data analyses, literature reviews, policy briefs, and so forth, generally in this order, (b) target population, samples (e.g., representativeness of the target population, sample size, volunteered or randomly selected), study duration, and so forth, and (c) limitations, generalizability of the findings and conclusions, and so forth.
This memorandum is one in a series of quick-turnaround responses to specific questions posed by educational stakeholders in the Midwest Region (Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, Wisconsin), which is served by the Regional Educational Laboratory (REL Midwest) at American Institutes for Research. This memorandum was prepared by REL Midwest under a contract with the U.S. Department of Education’s Institute of Education Sciences (IES), Contract ED-IES-17-C-0007, administered by American Institutes for Research. Its content does not necessarily reflect the views or policies of IES or the U.S. Department of Education nor does mention of trade names, commercial products, or organizations imply endorsement by the U.S. Government.