Electronic Classroom of Tomorrow (ECOT) Reaches the End of the Line

This post is an obituary, but it will not celebrate the life of the deceased.  Ohio’s Electronic Classroom of Tomorrow (ECOT) finally died yesterday morning when it exhausted its final appeal—this time in a 4-2 decision by the Ohio Supreme Court.

The Plain Dealer‘s Patrick O’Donnell describes the decision: “The ECOT online charter school has lost its appeal to the Ohio Supreme Court and its main chance at avoiding having to pay back $80 million it received for students it couldn’t prove had participated enough in their online classes.  With a 4-2 vote, the court backed the state school board and Ohio Department of Education’s decision to require e-schools to show student participation in classes to justify state funding, not just student enrollment. The ruling reinforces findings that the Electronic Classroom of Tomorrow (ECOT) was overpaid $60 million one year and $20 the next and leaves the now-closed school—and potentially ECOT founder William Lager—still on the hook for the overpayments.”

The school has not been providing services for any students since it was shut down by its sponsor, the Educational Service Center of Lake Erie West, on January 18th. Its assets were all sold off at auction during May and June. But William Lager, its founder and the man who profited grandly from the companies he owned that provided all of ECOT’s services, said he would resurrect the school if the Ohio Supreme Court ruled in his favor. Fortunately yesterday, four of the justices ruled to uphold the state’s effort to recoup $60 million, which the state has not yet been able to recover.

There is a lesson to be learned from ECOT’s survival for nearly two decades—from 2001-2018:  In Ohio, it is virtually impossible to regulate charter schools to protect their students and the public’s investment of tax dollars. Money speaks in a state where profits are to be made even from not-for-profit charter schools—because the nonprofit schools can hire for-profit companies owned by school officials. Then the people making all the money off the charters can invest their profits right back into campaign contributions to the legislators and gubernatorial candidates and elected state supreme court justices who then neglect to impose oversight. In these conditions, it is virtually impossible to protect the public.

The ECOT lesson also involves noticing today’s absence of checks and balances in Ohio’s government. Ohio is a super-SUPER-majority Republican state. The Ohio Senate and House are controlled by two-thirds Republican majorities; Governor John Kasich is a Republican; and the elected Ohio Supreme Court is all-Republican.

The problem is perfectly clear in yesterday’s 4-2 decision of the Ohio Supreme Court. During oral arguments in February, when ECOT’s attorney argued that Ohio law requires online charter schools to document a student’s enrollment in a school but the law does not require the school to document the student’s active participation, Chief Justice Maureen O’Connor rose to the occasion.  Noticing something was wrong with the logic, she wondered aloud, “How is that not absurd?” Yesterday, O’Connor and three other justices upheld the state’s right to crack down on faulty attendance reporting by the online school.

But two of the Court’s justices decided against the state and for ECOT. One of the dissenters is Terrence O’Donnell, who had been reported to have a conflict of interest due to political contributions from ECOT. The Toledo Blade‘s Mark Reiter explained in February, just before oral arguments in the case: “Two groups are seeking the removal of Ohio Supreme Court Justice Terrence O’Donnell from hearing a case involving the Electronic Classroom of Tomorrow because of political contributions he received from the founder of the defunct charter school. Common Cause Ohio and Progress Ohio filed a complaint with the Office of Disciplinary Counsel to investigate Justice O’Donnell’s relationship with ECOT’s founder William Lager and his ability to remain impartial. The complaint calls into question Mr. Lager’s campaign donation of $3,450 in 2012 to Justice O’Donnell and the speech he gave for the online charter school’s commencement in June, 2013.”

Sure enough, the dissent parrots the argument of ECOT’s attorney. The Columbus Dispatch‘s Catherine Candisky and Jim Siegel report: “The dissenting O’Donnell and Kennedy wrote that no law ties online-school funding to student participation… ECOT attorneys (had) argued that the state illegally changed the rules on how to count students in the middle of a school year, and that state law did not require students to participate in class work in order to be counted for funding purposes.”

The school was finally shut down in January when the Ohio Department of Education documented $80 million the state had paid ECOT for students ECOT claimed were enrolled, but who were not participating for the required 20 hours per week (or 920 hours per year) in the online school’s program and curriculum. The state legislature began to strengthen charter school oversight in 2015, and the $80 million overpayment the state has been trying to claw back is for only the 2015-16 and 2016-17 school years.

In this 2018 election season, when current Attorney General Mike DeWine is running for governor and when current State Auditor Dave Yost is running for attorney general, there have been attempts to make it appear as though entrenched Republicans weren’t looking the other way for all these years since 2001.  Attorney General Mike DeWine has suddenly found a legal precedent to recover profits from ECOT founder William Lager’s privately held companies.

On July 27, the Plain Dealer‘s Patrick O’Donnell reported: “The school closed early this year with little money remaining, but about $60 million not recovered. Today’s filing expands DeWine’s… argument that ECOT profits for Lager and the two companies are forfeit because Lager, as an ECOT official, could not have the school hire companies he also owns. That’s a conflict of interest, DeWine says, and legally ‘corrupt.’  Combined, IQ Innovations and Altair Learning Management did about $200 million in business with the now-closed school over multiple years.”  O’Donnell adds: “ECOT founder William Lager’s multiple homes are in the crosshairs of the state, as it tries to recover $60 million in state aid overpayments the school still owes. Among them, a Key West vacation home Lager purchased for $3.7 million in 2014 and a waterside home on Seneca Lake he bought for $433,500.”

It will be interesting to see if DeWine’s recent filings against Lager are only election-year hype, or whether—after the November election—the state will continue seriously pursuing recovery of money stolen by ECOT.  Remember that Lager operated his scam for 17 years, and the state is merely trying to recover overpayments for the 2015-16 and the 2016-17 school years.

There is a second and more encouraging lesson from the ECOT scandal, however. Week after week, month after month, Ohio’s major newspapers have shamed the legislature and the Ohio Department of Education and have relentlessly demanded that someone hold William Lager and his e-school accountable. Those responsible for the demise of ECOT include the Cleveland Plain Dealer‘s Patrick O’Donnell, the Columbus Dispatch‘s Jim Siegel, Catherine Candisky, Randy Ludlow, and Darrel Rowland—and reporters at the state’s other newspapers. Finally we owe thanks to former Plain Dealer editorial page director, Brent Larkin, now a Sunday columnist who has penned a series of the most scathing columns I’ve ever read—month after month and year after year.

Most recently in early June, Larkin complained: “Legislators in Ohio have long stood accused of serving not their constituents, but the people who fund their campaigns. But in the last eight years, House Republicans seem to have reached new lows in their ethical depravity… In April, House Speaker Cliff Rosenberger resigned in the wake of revelations he may be the target of an FBI probe… including ties involving the insidious payday lending industry. Before that, the House was ruled by Bill Batchelder, who spent four years protecting some of the most unprincipled bottom-feeders ever to prowl Statehouse corridors. Then, lo and behold, some of those who received favorable treatment, including the now-shuttered Electronic Classroom of Tomorrow online charter school, became clients of the Batchelder lobbying firm… ECOT was once the nation’s largest online charter school. And arguably its worst… From 2001 to 2016, ECOT raked in more than $1 billion in taxpayer money.  In return, ECOT founder Bill Lager and his flunkies contributed more than $2 million to campaigns of Ohio politicians, a huge majority of that going to Republicans. That money seemed to buy protection from a legislature that required only token policing of online charters.”

This blog has tracked Ohio’s ECOT scandal here.