Mr. Number Asks: Does the State Give AZVA Too Much Money?

by David Safier

NOTE: You can read all my posts on the topic of AZVA, K12 Inc. and outsourcing here. If you only want to read one post, this is the one that pulls most of the threads together.

(TASL) Arizona Virtual Academy is a charter school that educates its students online, yet it gets the same amount of money per student from the state as brick-and-mortar charter schools. Mr. Number believes AZVA doesn’t need that much money to educate its students, and will attempt to prove his contention using his advanced arithmetic skills.

(As an aside, let me say that the overfunding has more to do with state law than with AZVA or its parent company, K12 Inc. If the legislators in their infinite wisdom decide to use the same cost-per-student formula for all charter schools, who can blame a for-profit corporation for taking what it’s given, using what it needs to run the school and keeping the rest?)

Let me begin the exploration into AZVA’s budgetary needs with what, for this old teacher, is a jaw-dropping statistic. AZVA has a student-teacher ratio of 50:1. Fifty to one. Apparently that’s the ratio K12 tries to maintain for all its schools, so I imagine the sharp pencils in the corporation decided that’s the magic number it needs to create the desired profit margin.

The Star published a fact sheet about charter schools serving Tucson students. It listed the AZVA student-teacher ratio at 45:1, slightly different from my figure, but close. Most other schools had ratios of between 15:1 and 20:1. Another source lists the average student-teacher ratio in all 50 states, and Arizona schools come in at about 21:1. That, by the way, is the second highest in the nation, right behind Utah with a little over 22:1.

Let’s look at what this means in terms of dollars and cents. We’ll start with an average salary-plus-benefits package for a charter school teacher of $50,000 — an approximation, but a nice, round number for the sake of this calculation. A school with a 20:1 student-teacher ratio would spend $2,500 per student on teacher salaries. A school with a 50:1 ratio would spend $1,000 per student.

$2,500 vs. $1,000. That’s a difference of $1,500 per student. If we use the AZVA enrollment number cited in a recent Star article of 4,600 students, that means AZVA is paying a total of $6,900,000 less in teacher salaries than if it had the more standard 20:1 ratio.

A six million, nine hundred thousand dollar bonus for AZVA in teacher salary savings every year! Aren’t numbers fun, boys and girls?

So, does AZVA have almost $7 million in expenses to balance out its yearly windfall? Let’s see what we can come up with.

An online school certainly needs far greater server capacity than brick-and-mortar schools since most of its education happens online. The sheer volume of transactions would require a large, robust, costly array of hardware. And it has to have a far more sophisticated online communications system than other schools. Every day, curriculum has to be downloaded, student assignments have to be uploaded and two way communication between student and school has to be fast and effective. All that requires a complex, expensive technological infrastructure.

But come on. Sure, it’s very expensive to set up a system like that, but once it’s in place, it only needs occasional tweaking, updating and, if the student population grows, additional hardware to handle the increased loads. Entering new students in the system each year is no more difficult than other schools’ bookkeeping tasks. And AZVA doesn’t have to set all this up on its own. K12 Inc. does the technological heavy lifting for its schools all over the country including AZVA, creating huge economies of scale. A centralized bank of computers and servers in Virginia run the operation.

An additional expense comes from K12 giving every student a laptop and paying part of the cost of an internet connection. But remember, K12 doesn’t buy laptops one at a time like regular folks. It buys them by the gross at what must be huge savings. I imagine their price per computer is about what big box stores like Best Buy pay. Let’s also remember that returning students don’t need new computers every year. So the cost is less per student than it may seem at first glance.

An online school also needs to create a far more detailed, comprehensive curriculum than a school where students sit in a classroom. When I taught high school, I was given the basic texts for my classes, then I created my own curriculum. The whole concept of online, lesson-plan-in-a-can education is that teachers assist students with a prepackaged, one-size-fits-all curriculum. Lots of time and money has to go into creating something like that.

But let’s put the cost in perspective. Creating the initial curriculum is costly and time consuming. It’s like an educational publisher creating a textbook. But the curriculum for each course is a one time expense. Once K12 creates the course materials for Algebra 1, for example, it’s done. Next year, it doesn’t have to create the material all over again. I imagine a minimal cost goes into improvements each year,but that’s it. And K12 doesn’t have to print a huge textbook for each student and ship it. It just sends the electronic material from a Virginia server to the student’s computer, simple as that. That’s the same formula that made billions for Microsoft. Once MS Word is created, each additional copy costs pennies.

K12 uses its curriculum nationwide, serving, I’ll estimate, about 40,000 students. So once again, huge economies of scale come into play to bring down costs. And the corporation also sells its curriculum privately to home schoolers as well as schools that might want to offer a few online courses for its students. That generates an additional profit stream from the same material.

So, do technological infrastructure and curriculum costs amount to $7 million a year for AZVA? I don’t imagine it costs a fraction of that.

Now, figure in the huge savings for AZVA because it doesn’t need physical school buildings. No real estate costs, building costs, utilities or upkeep. I don’t need to know the exact figures to be certain, that’s a serious chunk of change AZVA doesn’t have to spend.

$1,500 per student savings in teacher salaries alone, for a total of $7 million per year. More savings from eliminating the need to house its students in a school building. And some extra expenses in technology and curriculum development. Mr. Number thinks AZVA’s savings far outweigh its extra costs.

Of course, the last math course Mr. Number took was freshman Calculus in 1964, so he could be wrong. I encourage anyone to chime in and correct his incorrect assumptions or faulty mathematical calculations.

MAKE A COMMENT OR SEND ME AN EMAIL: If you want to add information to this story, please click the “Comments” link below or email me directly.