Eugene’s HomeSource and other publicly funded programs that serve home-schooled students may suffer a severe financial blow in the upcoming school year because of a new interpretation of how the state should be paying for them.

In a memo issued last month, state Department of Education officials said school districts must apply a different per-pupil funding formula to students who are home-schooled than the one they use for students attending private alternative programs through referrals – a break with current practice.

Paula Praus-Williamson, HomeSource’s executive officer and founder, said she and other providers are still trying to piece together exactly what the new interpretation means, and what effect it would have. But her early estimates show that the difference could cut HomeSource’s $1.2 million annual budget in half.

Private alternative providers are reimbursed for per-pupil instructional hours under four different formulas, depending on the ratio of students to teachers: “tutorial,” the highest rate, for one-on-one instruction; “small group,” for five or fewer students; intermediate, for six to 15 students; and “large group,” for more than 15. HomeSource uses several of those, depending on class size, but chiefly the small-group formula.

But the memo says the administrative rule allows for only the large-group formula for home-schooled students, regardless of actual class size, said Randy Harnisch, department policy adviser.

Steeling for possible cuts, HomeSource notified families earlier this month that summer courses would be canceled, with the exception of a few that begin and end before July 1.

The new interpretation would apply to any program serving home-schooled students, including Eugene’s Impact Arts, Emerald Valley School and Full Circle Community Farm.

Harnisch said the interpretation is likely to take effect for the fall, despite requests for a delay from some alternative education providers and districts. However, he said, the issue will be on the state Board of Education’s summer agenda.

“We are aware that this is probably going to have a big impact, but I guess our position is we really feel that to look the other way or to give a choice other than what the rule clearly states exposes us, and school districts, to some risk,” he said.

Praus-Williamson said the memo contradicts what department officials said 11 years ago, when the Bethel School District agreed to contract with the start-up HomeSource to provide free classes meant to supplement a home-schooled education.

“(Department officials) proposed how the program should be modeled,” she said. “They gave us the exact direction. That’s what is really confusing to us.”

But the department now says that advice was wrong – in fact, last September another memo rescinded a 1995 letter to then-Bethel Superintendent Kent Hunsaker, saying it improperly laid the groundwork for long-running statute violations by both the district and HomeSource.

At its peak, HomeSource served more than 700 students in courses ranging from algebra and physics to knitting and tap dancing. Under the state’s alternative education statute, Bethel passed along 80 percent of net, per-pupil operating funds, keeping the remaining 20 percent. All of the money flowed through Bethel, with neighboring districts signing releases for home-schooled students.

But last year, the state said the money would have to pass through a student’s home district, not Bethel, and that those districts also would need to be accountable for and make sure students took required Oregon Statewide Assessment tests.

Partly as a result of that change, HomeSource lost nearly 90 students from two districts. Both
Junction City and Fern Ridge agreed to contract with HomeSource, but only with rigid new requirements that HomeSource found unacceptable.

The two districts would agree to release students only for what they considered “core content” classes, such as math and language arts, and Fern Ridge also refused to agree to a blanket release of any home-schooled student, as traditionally had been the practice.

Fern Ridge also was concerned that some HomeSource instructors fell short of federal standards for “highly qualified” teachers, although state statute does not hold private alternative programs to those same standards.

With contract renewals on district board agendas this spring, more clouds are gathering for HomeSource. On May 8, the Pleasant Hill School Board declined to renew a contract with HomeSource, citing philosophical and legal concerns about taxpayer-funded courses for students whose parents have opted out of the public school system.

Also, Superintendent Steve Waddell explained, “There’s no other alternative program where an individual can opt into it on their own accord. It is the district that has the charge and discretion to place a child in alternative ed, and here we have no control.”

Pleasant Hill this year sent 27 home-schooled students to HomeSource.

The majority of students in private alternative programs have been referred there by their districts because they struggled in regular schools. Such programs include the Looking Glass Riverfront School & Career Center and Northwest Youth Corps.

This Wednesday, the Eugene School Board will discuss next year’s alternative education contracts. At a work session last month, one board member, Craig Smith, questioned the practice of publicly funding home-school programs, equating it to a voucher system.

Praus-Williamson argues that contracting with HomeSource and other programs like it not only benefits home-schooled students, but also gives school districts a rare opportunity to build partnerships and generate good will within the home-school community.

And, she added, “I think it is a good use of (public) money for any student to receive an education.”

The “unsettledness” over alternative education at the state level has placed school districts in an awkward position, she said, “where it’s really hard for them to answer all the questions about the future of contracting with our program.”

But she hopes HomeSource can argue its points, make any necessary changes and forge ahead.

“We want to work to resolve this so kids can continue to be served,” she said.