Nyssa School District Earns $14 Million From Virtual Students

The Nyssa School District in eastern Oregon collected approximately $14 million in retained state funds for online students during the current school year. This amount represents nearly one-third of the district’s general fund support. The revenue stems from a partnership with OpenEd, a for-profit education company based in Utah.

In late 2021, Matt Bowman, founder of OpenEd, proposed a virtual school model to the Nyssa school board. He explained that under Oregon’s funding rules, the district would receive full state allocation for each enrolled student. OpenEd would manage the low-cost online program in exchange for 60% of those funds. The district would keep the remaining 40%. At the time, Superintendent Darren Johnson stated the plan would protect funding for local schools.

Enrollment in Nyssa Virtual School has grown to 3,060 students, which is more than double the number of students attending traditional brick-and-mortar schools in the district. The district retains about $4,650 per online student. These funds have financed major capital improvements, including a $1.6 million football field, a $600,000 elementary school playground, science labs, and six new tennis courts scheduled for completion by spring. The money is generated by students who do not physically attend Nyssa schools.

Nyssa is part of a wider trend in Oregon. Online school enrollment has nearly tripled over the past decade, reaching 31,000 students, or 6% of the state’s K-12 population. This growth rate is four times faster than the national average. However, academic outcomes for virtual students lag behind those in traditional settings. Statewide, only 59% of virtual high school students graduate within four years, compared to an 83% average for traditional schools. Less than two-thirds of Oregon virtual students are on track to graduate on time.

Pooja Bhatt, a former education adviser to Oregon’s governors, described the sector’s expansion as unchecked. She noted that public dollars are often spent on programs that yield inferior outcomes compared to traditional schools. The lack of strict oversight has allowed for-profit entities like OpenEd and Stride Inc. to operate with high margins. Stride, which serves three virtual schools in Oregon, reported earnings of $338 million last year and paid its CEO $21,496,095 in total compensation.

Many online schools also provide parents with annual tax-free stipends ranging from $1,000 to $3,000 per student for education-related expenses. OpenEd pays $2,750 per child. Parents in online forums have reported using these funds to purchase items such as trampolines, golf clubs, stand mixers, and travel for recreational activities. Dan Goldman, superintendent of the Northwest Regional Education Service District, called the practice insanity because it allows taxpayers to subsidize non-educational purchases while students underperform academically. George Mendoza, superintendent of the La Grande School District, labeled the stipends predatory marketing that creates potential for fraudulent behavior.

Liz Barrowcliff, co-founder of Fossil Charter School, defended the model by noting that parents serve as unpaid learning coaches. She argued the stipends compensate for the time and resources parents dedicate to managing their children’s education at home. The district’s virtual program relies on low student-to-teacher ratios, which can reach 150 to 1, and lower staffing costs compared to traditional schools. OpenEd executives and Nyssa administrators have largely declined to answer questions regarding the financial structure and academic results of the program.