The oversight board of two virtual charter schools at the center of an enrollment inflation scandal and a federal investigation voted Monday to close both schools.

The Daleville Community Schools Board unanimously voted to revoke the charters for the Indiana Virtual Schools and Indiana Pathways Virtual Academy. State officials accused the schools of receiving more than $40 million in state funds by including students that no longer attend the schools in enrollment rolls.

Daleville Superintendent Paul Garrison says the district will begin a shutdown process that would close the schools Sept. 30. But, Garrison says the charter schools manager is expected to vote Tuesday to shutter itself sooner.

No one representing the virtual schools, the schools’ organizing nonprofit foundation, or related companies attended Daleville’s school board meeting. An attorney for the schools told Daleville officials last week enrollment is correct.

The focus now, Garrison says, is helping current students transfer to new schools.

“The charter schools are functionally inoperative. And we expect very little assistance from them,” Garrison says. “We will do, what we can do on our own.

“We now have limited access, at least, to student records and are making arrangements to receive copies of the student paper records so that we can work on transfer documentation.”

The virtual schools told students to stop working on course work by Aug. 20. Teachers and staff found out last week they would not be paid for work in July and August and were no longer needed.

The state is working to recover more than $40 million after an audit found the Indiana Virtual School and Indiana Virtual Pathways Academy exaggerated enrollment for three years. Representatives of the schools were called in front of a federal grand jury earlier this month. The U.S. Attorney’s office issued a subpoena to the school seeking enrollment, financial and other records.

Daleville authorized a charter for Indiana Virtual School in June of 2011. An additional online charter school, Indiana Virtual Pathways Academy, was authorized in 2017.

A 2017 Chalkbeat investigation found the Indiana Virtual School paid a company run by the schools’ founder, Thomas Stoughton, millions of dollars. Soughton has since sold his interest in AlphaCom.

A year ago, Daleville School Board members say they became concerned with the enrollment data after gaining access to school records. Daleville began the revocation process in February that could lead to the closure of the schools. Afterward, the schools proposed a voluntary shutdown: September 2019 for Indiana Virtual School and June 2020 for Indiana Virtual Pathways Academy.

But Daleville says leaders of the virtual charter schools did not follow through on their mutual agreement. The district then began the revocation process again.

Garrison says he and the board had little guidance on how to oversee online charter schools run by a private manager.

But some education officials criticized how the school corporation oversaw the two charter schools.

Last month State Board of Education member David Freitas said it was Daleville’s fault for not making a stronger contract with the organizer.

Monday night, Garrison says the district “did the best we could with the information we had.”

“If I had known everything I know now, back when we organized these with it would have never helped,” he says.

Garrison says lawmakers need to make tighter regulations for authorizers and charter schools.

“We still believe in the need for online education and it is hard to express the profound disappointment we all have about this situation. As educators, it is unconscionable to see students, parents and teachers left to the side without adequate support from their schools The students and parents did not create this situation.”

Students enrolled at Indiana Virtual Schools and Indiana Pathways Virtual Academy should contact Daleville Community Schools for academic transcripts.

Contact WFYI education reporter Eric Weddle at eweddle@wfyi.org or call (317) 614-0470. Follow on Twitter: @ericweddle.