Ohio’s Electronic Classroom of Tomorrow Has Its Day in Court; Chief Justice Calls ECOT’s Claim Absurd

After a lengthy legal case in which Ohio’s biggest charter school, the Electronic Classroom of Tomorrow (ECOT) has challenged the Ohio Department of Education’s attempt to crack down on what appears to be ECOT’s outrageous over-reporting of student attendance, ECOT had its final day in court. The Ohio Supreme Court heard ECOT’s appeal yesterday morning.

For about an hour the attorneys for ECOT and for the Ohio Department of Education presented their arguments, and the justices peppered them with questions.  ECOT’s attorney, Marion Little argued that Ohio law requires only that online e-schools document students’ formal enrollment and provide 920 hours of curriculum annually. Whether or not students actually participate in the school’s online education is, according to Little, not covered by Ohio law as a condition for the state’s per pupil funding of the school. Chief Justice Maureen O’Connor expressed skepticism.

Here is the Plain Dealer‘s Patrick O’Donnell on the argument made by the attorney for the Ohio Department of Education: “Department lawyer Douglas Cole repeatedly blasted ECOT’s position that it should be paid for every student enrolled at the school, regardless of how long they spend working on their online classes. ‘The department says that’s an absurd result and the court should be leery about reading that intent (into the law),’ Cole said.”

The Columbus Dispatch‘s Jim Siegel describes the final interchange between ECOT’s attorney and Chief Justice O’Connor:  “As ECOT attorney Marion Little finished his arguments for why, under the law, the online school should get full funding for students even if they only log in once a month and do no work, Chief Justice Maureen O’Connor interjected. ‘How is that not absurd?’ she asked.”

Verification of e-school attendance has become a serious issue in Ohio, particularly for ECOT—Ohio’s largest charter school, which has been collecting tens of millions of tax dollars every year in per-pupil reimbursements. The Plain Dealer‘s Patrick O’Donnell explained in a background piece in Sunday’s Plain Dealer: “ECOT is the biggest charter school in Ohio—bigger than all but 13 school districts in the state—and was once the largest online school in the nation. ECOT received more than $100 million in state tax dollars each year until the recent funding dispute, while drawing students and funding from 95 percent of the school districts in Ohio.  Those include more than 800 from Cleveland, more than 200 from Akron and about 120 from districts like Parma and Elyria.”

In the 2015-16 school year when the state instituted a requirement for more rigorous documentation that students were actually participating in the school’s electronic program, there was a gaping disparity between the number of students ECOT claimed were enrolled and the number of students whose active participation the state could verify.  The Columbus Dispatch‘s Siegel reminds us that, “The department found ECOT was unable to verify about 60 percent of its enrollment for the 2015-16 school year, and more than 18 percent of its enrollment for the 2016-17 year.”

Here are the exact numbers, according to the Plain Dealer’s O’Donnell: “Under the new requirements, ECOT could document class participation of only 6,300 of its 15,300 students for the 2015-16 school year—a 59% gap—leading the state school board to demand that ECOT repay $60 million.  Then again last September, the state found that for the 2016-17 school year, ECOT can properly document about 11,700 of the 14,200 students it claims.”  Based on the disparity in enrollment figures, the state school board last week voted to recover $19.2 million for the 2016-17 school year. For these two school years the state is now trying to recover a total of $80 million.

The Ohio Supreme Court’s decision on ECOT’s appeal is vitally important to ECOT’s founder William Lager and supporters of the school.  The Dispatch‘s  Siegel reminds us: “Electronic Classroom of Tomorrow’s attorneys were literally fighting for the school’s life in front of the Ohio Supreme Court… The state’s largest charter school shut its doors three weeks ago when its sponsor, the Educational Service Center of Lake Erie West, suspended operations because the school was set to run out of money in March… It appears the only way those doors reopen next year is through a favorable Ohio Supreme Court ruling that says the department illegally imposed a retroactive rule change that led to the ECOT owing the state about $80 million for unverified enrollment… The Department of Education in 2016 beefed up its oversight and started requiring online schools to show through log-in durations and offline documentation that students were actually participating in minimum hours of ‘educational opportunities.'”

In an article written on Monday, prior to ECOT’s hearing at the Ohio Supreme Court, the Dispatch‘s Catherine Candisky and Jim Siegel described the history of the case: “(T)he two-year fight between ECOT and the Department of Education has been unusually ugly.  Using television ads (which the state auditor is investigating for possible illegal use of state funds) and media spokesman Neil Clark, a grizzled Statehouse lobbyist, ECOT harshly attacked the department, its leadership, and more recently through an affiliated blog, Gov. John Kasich… Clark accused the department of ‘trying to eliminate school choice in Ohio through illegal actions,’ and he also has accused the courts of playing politics. Publicly, the Department of Education did not swing back much until a few weeks ago, when, in the wake of ECOT’s closure, a spokeswoman said, ‘The department has no confidence that ECOT intends to follow the law… We’re disappointed that ECOT and its for-profit vendors, IQ Innovations and Altair Learning Management, continue to prioritize their monetary gain over the best interests of 12,000 students.’ Since 2000, these companies, run by ECOT founder Bill Lager, have collected about $200 million in state funding.”

A huge issue prior to yesterday’s Supreme Court hearing was whether justices on the Ohio Supreme Court with a potential conflict of interest in the case ought to recuse themselves.  Ohio’s justices are elected and, therefore, depend on political contributions. Justice Terrence O’Donnell, for example, has been closely tied to ECOT and William Lager, ECOT’s founder and the owner of the two for-profit companies that provide ECOT’s curriculum and management. Here is the Plain Dealer‘s editorial, published yesterday to coincide with the Supreme Court’s hearing on the ECOT case: “In 2012, the last time O’Donnell ran for re-election, his campaign received $3,450 from Lager, as well as another $4,450 from employees of Lager’s Altair Management. O’Donnell then agreed after receiving a personal call from Lager, to speak at the 2013 ECOT graduation.”

When the Plain Dealer‘s O’Donnell described the Court proceedings yesterday morning, he confirmed that Justice Terrence O’Donnell’s questioning helped ECOT’s attorney Marion Little by leading Little to lay out ECOT’s justification for its theory of counting student attendance: “Justice Terrence O’Donnell had a different approach in his questions for Little and Cole. One sequence of questions allowed Little to affirm key points of the school’s argument that charter schools were always paid on the number of  students (who enroll without considering their participation) until the state changed its method in 2016.”

I encourage you to watch the archived footage of the February 13, Ohio Supreme Court hearing on ECOT’s case. Having watched the hearing myself, I’ll guess that the decision of the Ohio Supreme Court will fall on the side of Chief Justice Maureen O’Connor’s point that ECOT’s argument is absurd. I am assuming the court majority will decide not to to protect William Lager and his outrageous profits based on charging Ohio’s taxpayers tens of millions of dollars for students who have not really been actively engaging with ECOT’s curriculum despite that the students may have formally enrolled and received a laptop computer.


ECOT’s Sponsor Asks Judge to Appoint Receiver for the School, But ECOT Presents Plan to Keep Going

Well… today is the day the Educational Service Center of Lake Erie West has said it will terminate its sponsorship and end the operation of Ohio’s giant, notorious online charter school scam, the Electronic Classroom of Tomorrow.

Last night the Columbus Dispatch reported that ECOT held an emergency board meeting yesterday, after which the school announced it had made a “final offer” to the Ohio Department of Education, that would include an agreement that William Lager, ECOT’s founder, would step down from Altair Learning, the private company he owns that manages ECOT. The plan would also, according to the Dispatch, “allow the state to continue recouping $80 million in overpayments of state aid,” and would allow the school to remain open through graduation this spring. Brittny Pierson, ECOT’s superintendent announced: “While we would have liked to remain open indefinitely, it’s clear the department will not accept a payback plan that would allow for that. Thus, we are left fighting to remain open until the end of the year to allow our students the opportunity to finish their school year….”

A final decision about the school’s future will perhaps be decided late this afternoon at a board meeting of the Educational Service Center of Lake Erie West, ECOT’s sponsor.

A Plain Dealer report added further detail about the school’s proposal:  if the Ohio Department of Education accepts the school’s offer, William Lager will no longer have any operational control of Altair Management, and no further fees will be paid to Altair Management. Neil Clark, ECOT’s lobbyist and spokesperson is quoted: “In negotiations with the Department, it became clear that they wanted concessions from Bill Lager personally… So we gave them what they wanted in order to stay open a few more months and not close our doors on our students suddenly.”

ECOT is one of the nation’s largest online schools, and a school with a terrible academic record along with the financial scam that has dominated its operation. Yesterday an Associated Press wire story described the possible closure of ECOT is a tragedy: “Many of the roughly 12,000 students turned to the Electronic Classroom of Tomorrow because of illnesses, disabilities, bullying or other struggles that made traditional school environments challenging or impossible.  The uncertainty over the school’s future amid a dispute with the state has added adversity as students, parents and teachers try to make backup plans halfway through the school year… The state of Ohio says ECOT didn’t sufficiently document student participation, but ECOT says officials wrongly changed criteria to adjust funding.”

But before you worry too much about the potential closure of the school, consider a contrasting point of view in this in-depth May 2016 report from Motoko Rich in the NY Times:  “(M)ore students drop out of the Electronic Classroom or fail to finish high school within four years than at any other school in the country… For every 100 students who graduate on time, 80 do not… When students enroll in the Electronic Classroom or in other online charters, a proportion of the state money allotted for each pupil is redirected from traditional school districts to the cyberschools. At the Electronic Classroom, which Mr. Lager founded in 2000, the money has been used to help enrich for-profit companies he leads. Those companies provide school services, including instructional materials and public relations.”  Rich quoted Ohio State Senator Peggy Lehner, a Republican who chairs the Senate Education Committee: “When you take on a difficult student, you’re basically saying, ‘We feel that our model can help this child be successful.’… And if you can’t help them be successful, at some point you have to say your model isn’t working, and if your model is not working, perhaps public dollars shouldn’t be going to pay for it.”

People in-the-know in Columbus have warned ECOT’s critics not to be overly hopeful about ECOT’s pending demise.  They have suggested that Bill Lager is so powerful that he’ll pull some kind of rabbit out of a hat. Lager is ECOT’s founder and the owner of the privately held, for-profit corporations that oversee ECOT’s operations (Altair Management) and create its online curriculum (IQ Innovations).

The two companies have been paid hundreds of millions in tax dollars since the school opened in 2000. Over that time, the state and local school districts have together paid ECOT $1 billion in per-pupil reimbursements for the students ECOT has claimed it has served. ECOT has insisted that a 2003 agreement meant it had only to document the school was providing 920 hours of curriculum annually for the students it has claimed without providing evidence they were logging in to use the materials.

Although many have predicted William Lager will still find a way to save ECOT, a Tuesday evening report by the Columbus Dispatch‘s Catherine Candisky made ECOT’s end appear increasingly likely. On Tuesday, ECOT’s sponsor, the Educational Service Center of Lake Erie West asked a Franklin County judge to appoint a receiver to take over the school. Judge Michael Holbrook has scheduled a hearing tomorrow in Franklin County Common Pleas Court.

In the affidavit filed with the court, ECOT’s sponsoring agency declared: “Given the lack of bond of the fiscal officer and ECOT’s financial position, there are no remedies ECOT will propose that will be adequate to Educational Service Center and it intends to suspend the operation of ECOT as soon as permitted.” “Because of requirements imposed on ECOT and the necessity to transition ECOT’s students to new schools forthwith, it is imperative that a receiver be immediately appointed to take control of ECOT, including its operations, records, assets and finances. If a receiver is not immediately appointed, it is unlikely ECOT will be able to comply with the statutory requirements, causing irreparable harm to ECOT’s ability to comply with winding up requirements.”

Apryl Morin, Director of Community Schools for the Educational Service Center of Lake Erie West, is reported to have explained: “State law… allows a sponsor to suspend operations of a community school and terminate its contract if the school fails to meet generally accepted standards of fiscal management, or violates terms of the contract or state or federal laws.” Under Ohio law, “community school” is the term the state uses for what is known elsewhere as a “charter school.”

Whether or not the school is permitted to remain open through the spring semester, what will undoubtedly drag on will be fighting about money paid to ECOT for students the school said were enrolled.  ECOT has not been able to document the attendance of thousands of students because the school has refused to maintain comprehensive log-in data. A 2015 law by which the legislature increased oversight of charter schools made it possible—beginning that year—for the state to demand documentation of student participation and to begin clawing back $60 million the state says was overpaid to ECOT for the 2015-16 school year and $20 million more for the 2016-17 school year.  In 2015, the state has alleged, ECOT over-reported its enrollment by nearly 60 percent.

A big question in Ohio is whether Lager can protect the money already paid to his private companies and thereby protect his personal profits.  In a second Dispatch story late Tuesday, Jim Siegel reported that Steve Dettelbach, the Democratic candidate for Ohio Attorney General and formerly the U.S. Attorney for the Northern District of Ohio, says the Ohio Attorney General must go after Lager’s companies: “There clearly, in this case, are facts that seem on their face to indicate there was misrepresentation, deceit and fraud.”

Last July, Dave Yost, Ohio’s state auditor and currently the Republican candidate for Ohio Attorney General, began escrowing $2.5 million every month from the funds being paid by the state for ECOT’s 2017-2018 operations because Yost said he worried about the eventuality we are watching this week: that ECOT would face bankruptcy and be let off the hook for paying back the money it is expected to return to state coffers.  Yost has said he believes ECOT should be held accountable, and his comments to the Dispatch indicate that he believes Lager may unscrupulously have used his private corporations “to limit the liability that stems from doing business.” Yost has expressed hope for recovering some if the money because, he explains, in 2008 the Ohio Supreme Court expanded the standard by which corporations can be held accountable.

The Dispatch reported that according to State Auditor Yost, “The state cannot go after the money it is owed until the Oho Supreme Court rules in ECOT’s ongoing legal challenge of the Education Department’s actions.”  Oral arguments in the case are scheduled for February 13. Yost added that based on a series of lower-court decisions against ECOT, he does not expect the Ohio Supreme Court to rule in ECOT’s favor.  “A very significant portion of the money that passed through ECOT ended up with Bill Lager… The Supreme Court ruling allows at least the potential for him to be personally liable for it.”

We’ll see if Bill Lager is ever held fully accountable. It will be a surprise if the state of Ohio and the local school districts from which charter tuition for ECOT has been extracted ever see much of the money.  The state’s attempt to recapture and protect tax dollars—at a rate of $2.5 million escrowed every month, has been going on for only six or seven months, which adds up to less than $20 million.

It is time Ohio’s taxpayers stop generating private profits for Bill Lager via the online Electronic Classroom of Tomorrow. (This blog has tracked the ECOT scandal here.)

Ohio’s Legislative Democrats Challenge ECOT’s Claims in Amicus Brief Filed with Ohio Supreme Court

At the end of last week, explains Jim Siegel of the Columbus Dispatch, all nine Democrats serving in the Ohio Senate along with 30 of the 33 House Democrats signed an amicus brief urging the Ohio Supreme Court to find for the state and against the notorious Electronic Classroom of Tomorrow (ECOT), the state’s biggest charter school. ECOT has been challenging the state all year to let it collect state per-pupil funding without documenting that students are actually attending school.

The Ohio Department of Education has been trying to claw back $60 million over-paid to ECOT for the 2015-16 school year and another $19 million for 2016-17.  ECOT has continued to claim that state law does not require the school to document that students are actually logged in for 920 hours each year—working with the curriculum the school provides—but merely that the school provides the curriculum to the students it claims are enrolled.

ECOT has challenged in court the state’s demand that the school document attendance records if it intends to collect payments from the state. ECOT’s appeal is currently being considered by the Ohio Supreme Court. Plunderbund summarizes the history of the case: “ECOT filed the lawsuit more than a year ago claiming it is not required to document how many hours its students (are) engaged in learning…  After losing in Franklin County Common Pleas Court and the 10th Circuit Court of Appeals, ECOT has appealed to the Supreme Court of Ohio.”

The amicus brief filed last week by legislative Democrats follows the filing of another amicus brief in late October. The Columbus Dispatch reported that Bill Batchelder, the now-retired Speaker of the Ohio House, and four other former Republican legislators filed their own amicus brief with the Ohio Supreme Court. They claimed that the Ohio Department of Education “is violating legislative intent by requiring ECOT to verify its enrollment with log-in duration.” If you are having trouble parsing that outrageous nonsense (which seems to mean that the legislators intended for ECOT to amass tax dollars for students the school cannot prove are enrolled full time), it may help if you remember that only months after retiring from a career in the legislature including serving as Ohio’s House Speaker, Bill Batchelder opened a lobbying firm, The Batchelder Company, which represented ECOT’s founder William Lager until July, 2017.

In the introduction to their amicus brief, Ohio’s legislative Democrats expose ECOT’s bizarre argument: “The issue… before the Court is whether the Ohio Revised Code Chapter 3314 allows the Ohio Department of Education (ODE) the ability to use durational evidence of student participation to determine funding for internet- or computer-based community schools (e-schools).  Revised Code section 3314.08 and its subsections plainly incorporate durational requirements as part of the review of student participation meant to determine the amount of funding an e-school is entitled to receive from the state.  It is incontrovertible that ODE has the right… to use a durational element in a review of e-school funding claims.  It is incontrovertible as well that the legislative history of chapter 3314… shows that the legislature routinely amended the code to make enforcement and oversight of e-schools more thorough…  Finally, the Court cannot find in favor of the Appellant.  To do so leaves an absurd hole in Ohio’s constitutional guarantee to teach its children in free, publicly funded schools.  A decision that finds for the Appellant creates a void in which to take and squander taxpayer dollars without allowing any government oversight for the stewardship of those dollars…  The Ohio Constitution demands the state educate its children.  It cannot be Ohio’s founders and successive caretakers’ hope that those children would never be brought to a classroom (electronic or otherwise) yet the school and its administrators would reap lavish financial rewards.”

Toward the end of their amicus brief, Ohio’s legislative Democrats declare: “The entire system of public school regulation is geared toward ensuring children receive an education.  The record in this case reflects that ECOT and other e-school amici failed in this obligation and are callous toward that failure.  The state should not have to withhold funding to guarantee those who purport to be educators take basic steps to teach children in their charge, but this case shows they must.  The state does not seek this level of regulation for its own sake or to target e-schools, but to avoid the tragic reality we are confronting in which thousands of students have not received education for which their alleged school was paid.”

The attorney of record on the legislative Democrats’ amicus brief is Joe Schiavoni, the former Senate minority leader and an announced candidate for governor. Schiavoni, who represents the Youngstown area, has twice introduced bills to regulate attendance reporting by ECOT and Ohio’s online charter schools. Describing his proposed legislation, which has never been brought to a vote, Schiavoni commented:  “We need to make sure that online schools are accurately reporting attendance and not collecting tax dollars for students who never log in to take classes. Online schools must be held accountable for lax attendance policies. Without strong oversight, these schools could be collecting millions of dollars while failing to educate Ohio’s school children.”

This blog has tracked the long ECOT scandal.


Another Chapter in the Saga of Ohio’s Electronic Classroom of Tomorrow

The Columbus Dispatch reminds us where we are in the story of ECOT, Ohio’s online charter school, the Electronic Classroom of Tomorrow. Currently the Ohio Supreme Court is considering ECOT’s “lawsuit fighting the state’s requirement that the online charter school repay $60 million for unverified enrollment for the 2015-16 school year. The state says the school owes another $19 million for the same reason in 2016-17.”

In an editorial last Friday, the Dispatch describes what seems to be the unraveling of the scam William Lager has been running for years with the support of Ohio legislators to whom Lager has generously contributed: “Overall, it has been a trying year for ECOT.  What was for years a smoothly operating business plan—signing up students in droves and billing taxpayers for their education, regardless of whether the students actually logged in to get one—was interrupted by state officials demanding accountability for all that money. Instead of taking the school’s word on attendance, the Department of Education demanded to see ECOT log-in records.  That led to a finding that ECOT had overbilled taxpayers by 143 percent, and an order to repay $60 million for the 2015-16 school year.  That was just for starters; the department is auditing ECOT for other school years. In September, it said the school owes another $19 million in overpayments, for the 2016-17 school year.  As ECOT is laying off employees and slashing its budget to cope with the clawback, Yost (Dave Yost, Ohio’s state auditor) has said that a proportional share of the repayment should come from the for-profit companies, owned by ECOT founder Bill Lager, with which ECOT contracts for services.”

It appears that ECOT officials launched a new strategy last week: blame ECOT’s attendance officer, who had complained all along that the school was not providing the adequate computer software for him to do his job. The Dispatch reports that, as of last Friday, ECOT’s truancy administrator, Patrick Tingler, has resigned. Tingler had testified last year in a deposition that ECOT’s software left him unable to add up the total number of days students were absent without an excuse. He had complained that he had to compute such records manually. The Dispatch adds: “Tingler’s truancy software did track consecutive days students missed, but ECOT crafted a more-relaxed truancy rule for itself than the one called for in the Ohio Revised Code. Instead of missing five or seven consecutive days to be considered truant, ECOT used 30 days, Tingler testified. This truancy measure appears nowhere in state law… After students log in, Tingler testified, he didn’t track whether they participated in any classwork, which is at the heart of the state funding lawsuit.”

ECOT’s other recently exposed strategy has been to rally powerful friends and endorsers behind its lawsuit challenging the Ohio Department of Education’s effort to claw back overpayments to the school.  Steve Dyer of Innovation Ohio reports that five former Republican state legislators filed an amicus brief supporting ECOT’s lawsuit. Together the five “have received more than $50,000 in campaign contributions from Electronic Classroom of Tomorrow founder William Lager, and nearly $135,000 total from Lager and David Brennan—Ohio’s charter school Godfather.”

The Columbus Dispatch explains that William Batchelder is among the five: “William G. Batchelder is described in the brief as the former House speaker, and a former common pleas and appeals court judge. It does not mention that, until late July, his lobbying firm, The Batchelder Company, represented ECOT founder Bill Lager.”

Steve Dyer adds: “In fact, the lead legislator on the filing is William Batchelder—one of the longest serving state legislators in history, who was Brennan’s bag man on Ohio’s school voucher legislation in the mid-1990s. Batchelder left the legislature in 2014. Shortly after that, he fell into a new job—lobbying for Bill Lager. Makes sense. Lager had paid him $45,000 (not to mention the tens of thousands he paid to the Ohio House Republican Caucus during Batchelder’s time as Speaker of the House). Batchelder collected $67,000 from Brennan, and even more if you include Brennan’s wife, Ann.”

Ohio awaits a decision from the Ohio Supreme Court.  Will the court permit the Ohio Department of Education to claw back millions in overpayments from taxpayers to the Electronic Classroom of Tomorrow?  Or will the Court back ECOT’s claim that Ohio law was unfairly updated without enough warning when the state began demanding accurate log-in records to document student participation at the online school?  Steve Dyer reminds his readers that four of the seven justices on Ohio’s elected Supreme Court have received campaign contributions from ECOT’s William Lager.

This blog has covered the ECOT scandal extensively.


Ohio’s Failure to Oversee Online and Dropout Recovery Schools Is Even Bigger Than ECOT Scandal

ECOT, the Electronic Classroom of Tomorrow, is the symbol of a much bigger problem in Ohio and across a number of states: an out-of-control sector of cyber schools and so-called “dropout recovery schools” whose savvy operators and owners have learned how to skirt and manipulate state laws that merely assumed entrepreneurs would run schools for the purpose of benefiting their students instead of lining their own pockets.  That was an incredibly naive assumption.

In her new expose of EdisonLearning’s Capital High School in Columbus, Ohio, For-Profit Schools Get State Dollars for Dropouts Who Rarely Drop In, Heather Vogell demonstrates that Ohio’s problem is much bigger than ECOT, and explores the outrageous scandal across several states of dropout recovery schools sucking profits from the scarce dollars in state education budgets: “Such schools aggressively recruit as many students as possible, and sometimes count them even after they stop showing up, a practice that can generate hundreds of thousands of dollars in taxpayer-paid revenue for empty desks. Auditors have accused for-profit dropout recovery schools in Ohio, Illinois and Florida of improperly collecting public money for vanished students… So-called ‘dropout recovery’ schools are increasingly popular, with many setting up shop in poverty-stricken city neighborhoods. In Chicago this past year, about 8,000 students attended such schools. In Ohio in the 2014-2015 school year, more than 16,000 students did, including some who attended online-only programs.”

Vogell examines the Ohio dropout recovery schools being sponsored by EdisonLearning—Capital High School in Columbus and a chain of 8 EdisonLearning dropout recovery schools across the state, the Magic Johnson Bridgescape Academies: “For-profit school management companies like Capital’s parent, EdisonLearning, have rushed into this niche, taking advantage of the combination of public funding, an available population of students and lax oversight… For EdisonLearning, the move to dropout recovery schools signaled a remarkable downshift in ambition. When launching the Edison Project 25 years before, media executive Chris Whittle and former Yale University President Benno Schmidt held out privatization as a fix for urban schools’ ills…. At its height, Edison managed dozens of schools in cities across the country, including Philadelphia and Baltimore. Whittle and Schmidt left their administrative roles in December 2006. Money troubles and controversies over test scores, staffing and safety forced the company to scale back… By 2013, the Bridgescape program had expanded to 17 schools in six states.”  Eventually Magic Johnson severed his ties with the schools: “In the summer of 2016, EdisonLearning ended its partnership with Magic Johnson and removed his name from schools’ signs… EdisonLearning—which sold off a chunk of its business in 2013—posted a significant loss in the 2016 fiscal year and has closed Bridgscapes in Illinois, Ohio and Virginia. But it is still bullish on dropout education.”

Capital High School, the dropout recovery school featured by Vogell, occupies a storefront in Columbus, Ohio, and although its student attendance ought to be able to be documented more easily than at an online school like ECOT, confirming students’ attendance has been a huge problem for the state of Ohio which pays the tuition: “Last school year, Ohio’s cash-strapped education department paid Capital High $1.4 million in taxpayer dollars to teach students on the verge of dropping out. But on a Thursday in May, students’ workstations in the storefront charter school… resembled place settings for a dinner party where most guests never arrived. In one room, empty chairs faced 25 blank computer monitors. Just three students sat in a science lab down the hall, and nine more in an unlit classroom, including one youth who sprawled out, head down, sleeping.  Only three of the more than 170 students on Capital’s rolls attended class the required five hours that day, records obtained by ProPublica show. Almost two-thirds of the school’s students never showed up; others left early.  Nearly a third of the roster failed to attend class all week. Some stay away even longer.  ProPublica reviewed 38 days of Capital High’s records from late March to late May and found six students skipped 22 or more days with no excused absences… Though the school is largely funded on a per-student basis, the no-shows didn’t hurt the school’s revenue stream. Capital billed and received payment from the state for teaching the equivalent of 171 students full time in May.”

Vogell describes aggressive efforts to recruit students. Some states provide an incentive for high school counselors to recommend that students move to a dropout recovery school: the students no longer count against the public high schools’ graduation rate if the students drop out into an alternative “dropout recovery” school. In other cases recruiters from the for-profit dropout recovery schools take coffee and donuts to meetings with high school counselors from whom they seek referrals. Vogell describes one Midwestern city where the dropout recovery schools engaged church pastors to help with recruitment. Vogell interviewed students’ probation officers who complained that dropout recovery programs with little structure are not helpful to the students they monitor.

This blog has been tracking the scandal at Ohio’s Electronic Classroom of Tomorrow.  Now suddenly in a new development, ECOT will become a new chapter in the story Vogell exposes: Ohio has now initially approved ECOT’s changing its designation to a “dropout recovery school.”

To review: ECOT’s best known problem is that the state has accused it of theft of tax dollars for students the school claims but who are not regularly participating.  We’ll see if the Ohio Supreme Court will uphold a lower court’s demand that ECOT return enormous overpayments, money ECOT has already turned over to the two privately held, for-profit companies that provide curriculum and management services. ECOT’s founder, William Lager, owns both companies and has been collecting sizeable profits which he has shared with Ohio legislators as political campaign contributions. ECOT sued to prevent the state’s clawing back $60 million overpaid to ECOT during the 2015-16 school year, when ECOT charged the state for educating 15,300 students. The state has been able to document only 6,300 students in school at ECOT that school year. Now the state is demanding that ECOT repay $19 million for the 2016-2017 school year.  Although ECOT claimed 14,200 students last school year, the state can document only 11,600.

In the newest development, ECOT has now been initially approved by the Ohio Department of Education as a dropout recovery school.  For years ECOT has been earning an F rating from the state for its students’ test scores and deplorable graduation rate—an F rating which, under a 2015 law, now threatens the survival of its nonprofit sponsor, the Educational Service Center of Lake Erie West. In late September, the Ohio Department of Education agreed to accommodate ECOT’s request that it be declared a “dropout recovery school” instead of a regular online school.  The new designation will automatically change the school’s overall grade from F to C without any added responsibility for ECOT to better serve its students. Ohio, we learn, has lower expectations for the students at dropout recovery schools and will change the school’s overall score, even if the students’ academic performance and graduation rate remain deplorable. All ECOT has to do is prove that the majority of its students are between the ages of 16 and 21 and are in need of special services for students at-risk. The Plain Dealer‘s Patrick O’Donnell adds: “The Ohio Department of Education…. does not audit that claim and leaves it to schools and their oversight organizations known as ‘sponsors’ to make that determination.”


Ohio Senate Committee Will Finally Hold a Hearing on Joe Schiavoni’s Bill to Regulate ECOT

Ohio State Senator Joe Schiavoni ought to be a hero to public school teachers and parents—and to citizens who support responsible stewardship of tax dollars.  Except that thanks to the power of the Republican leadership in the Ohio legislature, few people are really aware of Schiavoni’s heroic effort to put a stop to Bill Lager’s massive scam—the Electronic Classroom of Tomorrow.

Schiavoni is a Democrat and his bill to regulate online charter schools has been pushed aside for over a year now.  As Schiavoni explained in testimony last February, “Senate Bill 39 is the updated version of Senate Bill 298 from the last General Assembly.”  In March of 2016, Schiavoni first introduced a version of this bill—designed to reign in Bill Lager’s giant scam. ECOT was (and still is) charging the state, which pays charter schools on a per pupil basis, for students who have enrolled at ECOT but are not regularly logging onto their computers to participate in the educational program.

Here is how Schiavoni described the bill (then Senate Bill 298) at that time: “We need to make sure that online schools are accurately reporting attendance and not collecting tax dollars for students who never log in to take classes. Online schools must be held accountable for lax attendance policies. Without strong oversight, these schools could be collecting millions of dollars while failing to educate Ohio’s school children.” Schiavoni’s bill required e-schools to keep accurate records of the number of hours student spend doing coursework. It required online schools to notify the Ohio Department of Education (ODE) if a student failed to log-in for ten consecutive days. It required that a qualified teacher check in with each student once a month to monitor active participation. In the last legislative session, the bill was never fully debated and never brought to the Senate floor for a vote.

Schiavoni re-introduced the bill in February, and this afternoon at 3:15,  Peggy Lehner, the chair of the Senate Education Committee, is finally holding a hearing on Schiavoni’s bill.  When he testified in February about the bill he was introducing, Schiavoni explained why it is needed: “Other than the requirement that e-schools provide no less than 920 hours per year of learning opportunities, there are no specific statewide standards related to the number of hours per day or week that e-school students must be engaged in learning.  In an environment where a teacher is not physically able to see students in a classroom, this lack of accountability is very concerning.”

Schiavoni believes Senate Bill 39 will address the outrageous problems at Ohio’s on-line charter schools: “Senate Bill 39 requires each e-school to keep an accurate record of how long each individual student is actively participating in learning in every 24-hour period.  This information must be reported to ODE on a monthly basis, and ODE would be required to make this report available on their website. Senate Bill 39 would also require a teacher who is licensed by the Ohio Department of Education to certify the accuracy of student participation logs… on a monthly basis.”

Senate Bill 39 has some new provisions that were not in the original SB 298. To protect local  school districts, Schiavoni has added “a provision specifying that when the Auditor issues a Finding for Recovery from an audit of a… (charter) school, that money is returned to the school district.”  Serious questions have been raised about the $60 million clawback the Ohio Department of Education is currently trying to institute against ECOT, because ECOT has been robbing not only the state, but also local school districts.  Because of the way Ohio school finance works, a significant amount of the money redirected to charter schools comes out of the budget of the school district where each student resides.

As the ECOT scam has dragged on and mushroomed, the need for improved oversight by the state has become increasingly apparent as the press has exposed how millions of tax dollars are being diverted not only to Bill Lager but also to Lager’s privately owned, for-profit companies that manage the school and provide its curriculum.  We have also learned that sponsoring agencies are collecting very significant fees without providing any real oversight.

Schiavoni describes provisions in Senate Bill 39 to address these concerns:

  • “In the event that a student’s academic performance declines, the student’s parent/guardian, teachers, and principal must evaluate the student’s continued enrollment in the school;
  • “Requires e-school sponsors to report a school’s failure to comply with online learning standards to ODE;
  • “Requires e-schools to report their student mobility rate on their report cards…
  • “Creates a bipartisan ‘E-school Funding Commission’ to study what the actual costs are to run an e-school.”

Schiavoni describes why passage of his bill is so important: “While this bill focuses on strengthening the oversight of attendance policies and the accurate accounting of tax dollars, it’s also about ensuring our children receive a quality education. Unfortunately, the evidence is growing that some online schools are failing too many of our children.”

In the meantime, the Ohio Supreme Court has agreed to hear ECOT’s case against the state. Also, Dave Yost, Ohio’s auditor has begun escrowing a portion of ECOT’s state funding for the 2017-2018 school year to ensure that, if the court finds against the school for over-reporting its enrollment and if the school should declare bankruptcy as a result, the state could recapture at least some of the money Lager has stolen.

Bill Lager has kept ECOT open and kept on collecting public funding, much of it for phantom students—by looking for and continuing to find loopholes in Ohio’s notoriously weak charter school regulations. For example, on Monday, the Ohio Department of Education granted ECOT initial approval to switch its designation and become a Dropout Recovery School. ECOT, which has been chronically awarded F ratings by the state for its students’ deplorable graduation rate and test scores, will have its F rating automatically turned into a C, without any change in its academic performance because the state will understand the school to be educating students with greater educational challenges.  Its new rating as a Dropout Recovery School will save the life of its sponsor, the Education Service Center of Lake Erie West, whose existence has been threatened due to ECOT’s deplorable record. This blog has covered the ECOT scandal here.

It is time for the legislature to begin seriously cracking down.  A good start would be for the Legislature to pass Joe Schiavoni’s sensible law to protect our children and our tax dollars by requiring that e-schools accurately report the number of students they enroll.


Ohio Auditor Moves to Recapture Profits from ECOT’s Contractors and Overpayment to Sponsor

For years in Ohio all sorts of people have been siphoning off profits from online charter schools—the giants like ECOT, smaller online schools, and private companies with which the schools contract for management and curriculum. There have also been overpayments to nonprofit charter school sponsors, the organizations that Ohio pays as a percentage of any school’s enrollment to authorize the opening of the school and subsequently to oversee its operations.  Perhaps it is more accurate to say that the state pays the sponsors to pretend to oversee charter schools while they pad their operating budgets with state money.

Now, suddenly, Dave Yost, Ohio’s state auditor, has stopped looking the other way. In a story this blog has been tracking, the state has now halted a 2003 practice of paying online charter schools a per-pupil fee merely for providing 920 hours of curriculum per year.  Beginning in 2015, the state has instead demanded that the schools prove students are actually actively engaging with the online curriculum for 920 hours per year.  In other words, the state has begun to demand accurate attendance reporting. The ensuing scandal has primarily involved the giant Electronic Classroom of Tomorrow, ECOT, which has been over-reporting enrollment by 60 percent.  The state is trying to claw back $60 million in overpayments to ECOT for the 2015-16 school year alone, and is gathering data to bill ECOT for over-reporting its enrollment during 2016-17 as well.  ECOT has responded by trying to block the claw-back in court but has lost in a series of decisions. A final decision is pending from the Ohio Supreme Court.

In the meantime, Dave Yost, Ohio’s state auditor, once an ECOT supporter, has cracked down in an effort to protect what Ohio’s major newspapers have now established is a huge theft of Ohio tax dollars. Patrick O’Donnell of the Plain Dealer recently clarified what have become the stakes involved: “With ECOT cutting staff and losing students as a result of the state’s ‘clawback’ of funding, worries are growing that the school would declare bankruptcy to avoid repaying the money.”

Last week, Yost demanded that not only a charter school—in this case ECOT—must pay back the tax dollars it has overcharged the state, but also the private management companies with which the charter school has contracted must pay back any dollars they have collected due to the charter school’s misrepresentation of its enrollment. And the sponsoring agency which authorized the school and supposedly oversees it on behalf of the state must return funds it earned from the school’s misrepresentation of its enrollment.

Even while Ohio awaits a decision from the Ohio Supreme Court in ECOT’s case, Yost and the Ohio Department of Education have begun deducting into an escrow account a percentage of ECOT’s state reimbursement for the 2017-18 school year as a way for the state to recapture what ECOT owes taxpayers.

Here is Jim Siegel of the Columbus Dispatch explaining Yost’s demand that for-profit charter management companies and nonprofit charter school sponsors must also begin returning overpayments back into state coffers: “If a charter school must repay the state for unjustified enrollment figures, state Auditor Dave Yost wants the sponsor and for-profit companies that oversee and run the school to share the burden. Charter school boards… need to recoup payments made to management companies, software developers and sponsors that are paid based on a percentage of school revenue, he said.”

Siegel quotes Yost: “I understand that this may produce significant difficulty for some… (charter) schools, and for their management companies and sponsors… But if a school was over-funded, it must not result in a windfall profit for a private company, while the school itself suffers with reduced funding.”  Yost warns schools that they are responsible for going after the dollars overpaid to their sponsors and contractors: “(Y)ou have an obligation to go and retrieve a portion of that revenue… This isn’t an option, in our view.  You are a public entity, a public school.  You owe this to taxpayers, the state and to children to retrieve those resources.”  He continues: “I’m sure the private companies are not voluntarily going to write a check for several million dollars and send it back.”

Siegel adds that William Lager’s privately held companies, IQ Innovations (which provides curriculum for ECOT) and Altair Management (which operates the school), have profited, just as ECOT’s nonprofit sponsor has also over-collected from ECOT: “The state Board of Education this year, following a department attendance audit and a ruling from a state hearing officer, ordered ECOT to repay $60 million to the state after the school was unable to verify roughly 60 percent of its enrollment for 2015-16.  Yost said that means ECOT should recoup $9.6 million from IQ, $2.4 million from Altair and about $900,000 from the Educational Service Center of Lake Erie West in Toledo, the school’s sponsor, which gets 1.5 percent of its revenue each year.”

Is there reason to fear that ECOT will declare bankruptcy to avoid paying back the tax dollars the state has overpaid?  Siegel reports that in late July, “ECOT”s board voted to slash spending by $56 million for the coming school year, including the layoff of 250 employees.”  Then last Friday, ECOT’s superintendent, Rick Teeters announced that he will resign next month to spend more time with his family.  Dave Yost worries that William Lager, the owner of the private, for-profit companies that run ECOT, will try to protect his profits by having ECOT declare bankruptcy.  In the Plain Dealer, Patrick O’Donnell reports, “Yost… questioned whether ECOT has the ability to declare bankruptcy.  He called it a public entity subject to different bankruptcy rules that individuals or companies and said it would need permission from the state tax commissioner to do so.” O’Donnell speculates as well that, “Yost’s stance may give other boards legal cover to demand re-payment from contractors, since they have now been ordered to do it.”

Overpayments by the state to ECOT for the school’s apparent gross inflation of its enrollment figures are much larger than for smaller online charters, but Jim Siegel reported on Saturday that, “(O)ther online charter schools also face repayments, and a few others have shut down. One school, TRECA Digital Academy, recently reached a tentative settlement to repay $5 million, to be deducted over five years… The Department of Education also reached a smaller settlement with the Massillon Digital Academy… Akron Digital Academy is awaiting a decision from the hearing officer. Appeals are ongoing for Buckeye Online School for Success, Findlay Digital Academy, Quaker Digital Academy and Reynoldsburg-based Virtual Community School, which was just taken over by the state.”  Three online schools have closed—Provost Academy (which paid back the state in full), Marion Digital Academy, and Southwest Licking Digital Academy, which still owes $140,500 to the state for inflated enrollment figures it submitted.

The state’s overpayment to the Educational Service Center of Lake Erie West in Toledo—ECOT’s nonprofit sponsor—is only a tiny piece of the ECOT scandal. But Ohio’s reliance on nonprofit organizations as charter school sponsors—agencies often located across the state from the schools they supposedly oversee—agencies that frequently lack any experience in education—agencies poorly regulated by the state—is an enormous problem. In ECOT’s case, one can only imagine the sort of lax oversight imposed by the Educational Service Center of Lake Erie West when one observes the massive theft of state dollars paid to ECOT for phantom students. Last week this blog covered other serious problems with Ohio’s nonprofit charter school sponsors.