But does online schooling, Vilas-style, constitute a boon for at-risk students, and a solution to the financial problems of declining rural school districts? Or is it simply a clever maneuver that transfers state money to the countryside while disserving students? The answer is unclear now, and may remain so. As this article was being researched, Vilas RE-5 and Hope Online Academy began negotiations that could result in the end of their partnership.

In general, rural school districts have been losing population and students since World War II. As America urbanized, small towns shrank and financial activity in them contracted, reducing the local tax bases that had been the major source of support for rural schools. As the tax money dried up, the number of school-age children also fell. The result has been a death spiral: Lacking both money and students, rural school districts have been forced to merge, one after another.

Vilas is used to dealing with shrinkage and consolidation. In 1880, it had a population of 750, a printing office, a bank, six saloons, a 20-room hotel, several cafes, livery stables, real estate firms and a blacksmith shop. Now, Vilas is home to about 100 people and has almost no commerce other than the steel-gray Tempel Grain elevator on Route 160. The median price for a home: $46,600.

As the county has shrunk, so have its schools, some hovering painfully close to the 65-student cutoff that leads to forced school mergers.

Thompson was on the school board in 1999 when he heard about a workshop on online schools; he and then-Vilas superintendent Bill Hines decided to attend. At the time, there was just one online school for K-12 students in Colorado. The Monte Vista Online Academy (which actually served grades four through 12), opened in 1995 in the San Luis Valley. “We decided to try it,” Thompson says. “We had to do something. People are leaving this area, and they ain’t coming back. Baca County now has four school districts with under 100 students.”

Distance learning is nothing new; the University of Houston offered televised college credit classes as early as 1953. But in the 1990s, conservative educational theorists fed up with what they saw as the poor performance of conventional schools began to see big potential — ideological and financial as well as educational — in online elementary schools.

Since then, online classes for elementary and secondary schools have grown explosively. According to a November 2006 report from the Sloan Consortium, a pro-online group formed with funding from the Alfred P. Sloan Foundation, online learning in the nation’s primary and secondary schools has increased more than tenfold in six years. In 2005-2006, some 700,000 students were served online. In Colorado, the number of such students has increased more than 80 percent during the past three years, from 3,400 students in 2004 to almost 6,200 in 2006.

To start the Vilas online program, Hines contacted an Englewood, Colorado-based online learning company, Jones Knowledge. “The first year we focused on at-risk students, those kids who, for whatever reason, weren’t making it in a brick-and-mortar school, like a girl that was pregnant or someone’s who’s bashful or picked upon,” Thompson says. “We got 32 students.”

At the time, Heather O’Mara was the president of Jones Knowledge. When Hope Online Academy was formed as a nonprofit school in 2004, it named O’Mara president. She found a natural ally with the Vilas school district, which granted Hope charter-school status in 2005.

A charter school must be authorized by a local school board, but once authorized, it receives public funding while operating more or less independently. Without a charter, Hope Academy was merely a nonprofit organization with ambitions to educate kids online. With the backing of Vilas, it became an online powerhouse.

The partnership with Hope sent Vilas’ enrollment through the roof. The district went from having roughly 400 students in 2004 (100 in the brick-and-mortar school and 300 in the online program) to 1,500 students in 2005. By 2006, it had 3,800. People started to notice. And some of them asked questions.

In October 2006, Rocky Mountain News education writer Nancy Mitchell began investigating the connection between Hope and Vilas.

“I was following up on the collapse of Manual High School (a troubled Denver school that closed in June 2006),” says Mitchell. “Some kids transferred into Hope. I chose one girl and followed her around for a day and was appalled. I thought that this sort of thing can’t be publicly supported. At this learning center, kids were playing on the concrete parking lot and chasing a rat. I thought I better call the DPS (Denver Public Schools) and check it out.”

Mitchell ran a series of hard-hitting stories, questioning almost every aspect of Hope Academy’s existence: its connection with Vilas; the source of its money; its murky relationship with supporters of vouchers (i.e., public funding of private schools) and church schools. Mitchell also took aim at the academy’s inexperienced teachers and its high student-to-teacher ratio.

Mitchell did not know that the Colorado Office of the State Auditor was also conducting a study of Hope and Vilas. The auditor’s report came out in December 2006, hammering Vilas RE-5 and its two wayward charges, Hope Academy and Vilas Online.