SALEM —  Concerns about transparency and use of public funds may further delay the North Bend School District’s plan to establish a virtual school that would cater to students throughout Oregon.

At an Oregon State Board of Education meeting Thursday, at the Public Service Building in Salem, board members said they were concerned on many levels  about the Oregon Virtual Academy application. To exist, the academy, which is sponsored by North Bend, needs a waiver from the State Board that would allow it to draw students from beyond North Bend boundaries. Under current law, any Oregon charter school is required to have a minimum enrollment of 25 students and 50 percent of those must come from the sponsoring district.

North Bend Superintendent B.J. Hollensteiner, Oregon Virtual Academy Chairman Jack Reeves, Academy legal counsel Mike Neff, and Peter Stewart, the senior vice president of school development for K12 Inc.  — a Web-based curriculum company in Virginia that would provide curriculum and materials for the school  —  spoke to the board. Randall Greenway, K12’s director of school development, also attended the meeting.

Hollensteiner said the North Bend School Board agreed to sponsor the academy in November because the board believes brick-and-mortar schools don’t the meet the needs of all students. She added that K12 Inc. has a proven track record of successfully educating children online.

“(It) meets individual students’ academic needs and interests,” Hollensteiner said.

The idea of using technology isn’t new for North Bend, nor are charter schools, Hollensteiner told the board. The Oregon Coast Technology School, one of two charter schools in North Bend, has been successful in introducing cutting edge technology to students and instructors, she said. Because of its success,  Hollensteiner said she jumped at the idea of a virtual school in North Bend when approached by K12.

District staff spent about 200 hours looking at the ORVA proposal and curriculum, Hollensteiner said.

Reeves, a 40-year-educator who taught in Texas, Florida and Oregon, and who served nearly 30 years as a superintendent, said the Academy recruited him as its chairman.

“The K12 charter school supplier is among the highest quality I’ve been associated with,” Reeves said.

The State Board then sat through Stewart’s Power Point presentation. He described K12, its 18 programs in states including in Washington, Idaho and California, and how it is serving nearly 40,000 students. About 54 percent of children who attend K12 virtual schools come from traditional brick-and-mortar  campuses, he said, 17.5 percent have been home schooled and 7.5 percent hail from private schools. Of that group, 70 percent are Caucasian and 30 percent are minorities, Stewart said.

Additionally, he said, although the courses are online, students do have opportunities to socialize through clubs, teacher-led field trips and other community projects, and because teachers are hired near where students live, they do get to know the children.

“We believe in face-to-face. We want these teachers to know the families in a face-to-face way,” Stewart said.

Dianne Phillips and her daughter, Laura, 10, of Eugene, described their positive experiences with K12. Laura, a home schooled sixth-grader in her fifth year with K12, said she began using the curriculum in second grade.

“All in all, I think K12 is a gold medal program,” the girl said.

While she is a supporter of public schools, Phillips said she realizes some children, including Laura, don’t succeed in traditional public schools.

“(K12) takes an individual child and it molds the program to fit,” Phillips said, noting the courses keep Laura excited.

The State Board meeting also drew some opposition to the plan.

John Granger, a Lane Community College instructor who teaches distance learning courses online, said he isn’t opposed to online education or charter schools. However, he doesn’t agree with the notion of one district teaching so many Oregon children.

“North Bend has decided it wants to educate all ... kids in Oregon,” Granger said. “Is this the structure that we want to set up, where (one district) is an educator for the state?”

He also was concerned that a company like K12 receiving state funds could become an issue, especially if it has stakeholders to answer to.

Chuck Bennett, the director of government relations for the Confederation of Oregon School Administrators,  submitted a letter opposing the waiver for any virtual charter schools because of a lack of clear statutory guidance, which he believes should be clarified by the Legislature. He also took issue with the allocation of state school funds to private entrepreneurs.

Testimony was followed by board questioning of what fees would be assessed to families, the makeup of the Academy board, whether children receive enough socialization, who hires teachers and why the waiver to the 50-percent residency rule is necessary.

When questioned by board member Lew Frederick about the waiver and if gaining more students outside of the sponsoring district was based on a business model, Stewart said establishing the academy would be cost-prohibitive without the waiver. He explained that for a district as small as North Bend, where less than 1 percent of the student body — in this case about 8 students — would be likely to join the academy, the waiver is necessary to draw enough pupils make the school viable. He said 500 to 600 students would be needed to sustain staffing levels.

Regarding ORVA board members, Stewart said none was from out of the state. Reeves said he was recommended by Rep. Betty Komp, D-Woodburn, chairwoman of the Oregon House Education Subcommittee on Innovation, but he did not know who actually recruited him.

After a short break, board members had further questions, such as why other Oregon school districts approached by K12 turned down its offer.

“I’m curious why people stayed out of it,” Frederick said.

But Hollensteiner and representatives from K12 and the Academy — except for Stewart — had already left during the break.

Board member Nikki Squire said she was concerned that the sponsoring school district would be making money from the virtual charter school and wanted a clearer picture of how public funds would be used. She said she found it difficult to meet her responsibilities on the Board of Education without more information.

Board Chairman Jerry Berger said he also had some concerns about the application, and found that while many groups that want to start charter schools have a driving desire to provide an innovative learning model to children within their community, ORVA’s board did not seem to fit that at mold.

“To me, it’s a different model,” Berger said, alluding to Reeves inability to describe who recruited him. “It isn’t a board of committed folks ...”

The board will review the issue again at its Feb. 14 -15 meeting, which will include a proposed three-hour work session.