Ohio’s Notorious ECOT Tries to Make Its Case In Court

Attorneys for the Ohio Department of Education and Ohio’s largest and most notorious online charter school, the Electronic Classroom of Tomorrow, have been in court all this week tussling, as the Columbus Dispatch‘s Jim Siegel explains, “over ECOT’s lawsuit to block the state from using new attendance standards to impact funding….”  “As the state’s biggest online school, ECOT has taken the lead in fighting efforts by the Ohio Department of Education and Gov. John Kasich to use log-in durations to determine whether students are getting state-minimum ‘learning opportunities.’  ECOT, which has claimed the state requires it to provide 920 hours of (annual) curriculum but not prove that students are actually participating in ECOT’s education program, could lose $80 million or more based on an initial attendance audit in March, which found students were logging in for only about an hour per day.”

The problem across Ohio’s very large on-line sector is that the schools—and there are several operated by specific school districts as well as the huge ECOT and the Ohio Virtual Academy, an affiliate of K12, Inc.—have not been keeping careful records to confirm full-time participation. Ohio, which says students at e-schools ought to be online for five hours per day, pays the schools over $6,000 every year for each full-time student. In the past, the state has not pressed this matter, but last fall the legislature enacted House Bill 2, a very basic law to begin to regulate charter schools. ECOT’s lawsuit claims that the state is applying the new HB2 retroactively and without sufficient warning.

Widespread press coverage of the scandal at ECOT has put pressure on the all Republican legislature that has, in the past, been more lenient. Siegel quotes the chair of the Ohio Senate’s Education Committee, Peggy Lehner commenting on this week’s trial: “This is obviously a significant problem with online schools that we’re going to have to resolve. Clearly we have an obligation both to the students and the taxpayers that they are taking advantage of the learning opportunities for which we are paying.””

The Associated Press quotes the common sense of the attorney for the state, Douglas Cole: “Students deserve to actually receive an education, not merely be offered the possibility of one. ECOT is claiming it is entitled to a money tree that never stops growing and never stops bearing fruit.”

Plain Dealer reporter, Patrick O’Donnell describes how ECOT’s attorney, Marion Little, framed ECOT’s case to avoid oversight: “In opening arguments… lawyer Marion Little said the state rules and a 2003 contract with ODE only require the Electronic Classroom of Tomorrow to prove that students are enrolled, not that they are engaged in their lessons.  Little said that e-school funding is set by enrollment but the state this year has tried to ‘merge’ the ‘distinct’ and separate ideas of participation with enrollment to audit the school and put its funding at risk… He said that having to prove that students are participating is a much higher standard than traditional schools have to follow. Those schools receive state aid, he noted, even if students skip class.”

In a later report, Patrick O’Donnell describes the stonewalling of ECOT’s superintendent Rick Teeters, who “testified that the school has never tracked how many hours students spend on their lessons because it has never had to. ‘To my knowledge, we don’t have a tool to do that. We haven’t needed to. We haven’t been told that was something we needed to keep.’ ”

O’Donnell describes the response of Douglas Cole, the attorney for the state, who said ECOT should have noticed “at least three warnings before this year that the state could seek this ‘durational’ documentation: (1) The state’s funding manual for last year that said the state could seek it… (2) The school’s contract with its oversight agency known as a sponsor requires ECOT to itemize and record attendance daily… (3) House Bill 2, the charter school reform law passed last fall, requires participation of online classes to be documented in detail.  That law took effect Feb. 1.”

Mysteriously, when asked about the application of the legislature’s new law, HB 2, to ECOT, Teeters replied: “My view is that HB2 had no impact on ECOT.”

Teeters’ primary worry seems to be the penalty for ECOT if it is eventually required by the state to count its students accurately: “If the state requires ECOT to pay money back to the state—a ‘clawback’ of as much as 80% of its funding, by some estimates—the school would likely never be able to pay it back.  Even paying it back over time, he (Teeters) said, would put it in a financial ‘death spiral.’ ”

In a follow-up report Jim Siegel explains that on Tuesday, Aaron Rausch, director of the Ohio Department of Education’s Office of Budget and School Funding, spent five hours on the stand: Rausch said department officials initially got the idea to ask for detailed records of student participation in 2013, when state reviewers visited four charter schools and found the buildings void of students.  Each was operating as a correspondence school—a surprise to state officials. Schools showed no proof of student attendance, and each was ordered to repay a portion of its funding. Then in 2014, the state found that online Provost Academy had an operating manual that said students get five hours of credit for one hour of log-in time. When the problem was not fixed a year later, the state asked for log-in durations and eventually ordered the school to repay about 75 percent of its funding for that school year… Eight other online charter schools this year failed to document student attendance, putting portions of their funding at risk. Rausch said a number of the schools supplied additional data to the state last week.”

The ECOT case is important because ECOT has been receiving over $100 million each year in tax dollars—money coming from state and local public school budgets. In his court testimony Teeters pegged the money due to ECOT this year at $106 million. Much of this money has accrued in profits to William Lager, who owns the two privately held corporations that provide curriculum and operational services for ECOT.  Lager is deriving these profits from fees ECOT is collecting for phantom students.

Why do ECOT’s operators imagine they can win in court when other online charter schools have been capitulating by correcting their attendance figures and playing back money to the state?  Catherine Candisky and and Jim Siegel reported in February that: “William Lager, ECOT founder and operator, was the second-largest individual donor to legislative Republicans in the last election cycle, giving $393,500, plus another $202,000 in 2015.”  (This blog has covered the ECOT scandal here.)