Story of ECOT Fraud Becoming Political Issue for Ohio’s May 8 Primary Election

This week here in Ohio we had one more confirmation that the notorious Electronic Classroom of Tomorrow (ECOT), which was shut down by the state at the end of January, has been intentionally defrauding the state of hundreds of millions of dollars by inflating its attendance figures.

The Associated Press‘s Julie Carr Smyth reported: “Education regulators are reviewing a whistleblower’s claim that Ohio’s then-largest online charter school intentionally inflated attendance figures tied to its state funding using software it purchased after previous allegations of attendance inflation… A former technology employee of the now-shuttered Electronic Classroom of Tomorrow said he told the Ohio Department of Education last year that school officials ordered staff to manipulate student data with software obtained following the state’s demand that it return $60 million in overpayments for the 2015-2016 school year… His concerns were first raised in an Aug. 3, e-mail to the state….”

It isn’t as though ECOT’s fraudulent ripoff of tax dollars is new information, and it isn’t as though anybody imagined ECOT’s  overinflated attendance figures were anything but fraudulently manipulated. We have all been aware that  ECOT’s ripoff of public education dollars was not accidental, after all.  For the 2015-16 school year alone, the state found ECOT over-reported its attendance by 60 percent. The state paid ECOT on a per-pupil basis, and for two years the Ohio Department of Education has been trying to claw back $60 million for that school year alone—and now an additional $20 million overpaid by the state for the 2016-2017 school year.

My clipping file on the Electronic Classroom of Tomorrow is two and a half inches thick.  For years, the state did not even require careful record keeping of student attendance by the state’s online charter schools.  But when the legislature strengthened the law to clamp down on suspected fraud in 2015, the Electronic Classroom of Tomorrow fought back against any kind of reasonable oversight. The press has been tracking the ongoing fight ever since with relentless reporting by the Cleveland Plain Dealer‘s Patrick O’Donnell and the Columbus Dispatch‘s Jim Siegel and Catherine Candisky. These people deserve credit for the fact that ECOT has now been put out of business.

The most significant story was Catherine Candisky and Jim Siegel’s July 30, 2017, interview with a waitress at a Columbus Waffle House where Bill Lager and a business partner cooked up the idea of ECOT as a business venture to try to help Lager recover from a personal bankruptcy. Candisky and Siegel traced ECOT’s fraudulent exaggeration of student attendance way back to 2001, at the end of the school’s first year of operation, when then state Auditor Jim Petro, “found the school in its first year had no policies for processing student enrollment or withdrawals, and the state paid $1.9 million over two months for students with no documented hours of instruction.”

The editorial boards of the state’s major newspapers have relentlessly traced a narrative of fraud by ECOT along with massive payoffs to Ohio’s mostly Republican politicians by William Lager, owner of the two for-profit companies that ran the online school and provided its curriculum.  Ohio’s newspapers have persisted all the while ECOT and Bill Lager tied up any state crackdown on the school’s fraud by filing lawsuits against the state along with masses of appeals when lower courts denied ECOT’s claims. Here is a sampling of editorial condemnation of ECOT’s fight to continue ripping off the state:

  • Back in September of 2016, the retired editorial page director of the Plain Dealer, Brent Larkin began his column: “The biggest scandal in Ohio history is knocking on the Statehouse door. This isn’t about then-Gov. Bob Taft failing to disclose a few rounds of golf. It’s about pouring hundreds of millions of dollars a year down a rat hole and selling out tens of thousands of children… The villains who want to perpetuate this swindle are the Republicans who run the Ohio General Assembly… In March, an initial ODE review of ECOT’s records determined that most students log into ECOT’s online platform only about an hour a day…  So when the state asked a Franklin County court to order ECOT to turn over attendance records as part of an effort to determine whether students are actually receiving the 920 annual hours of education that the state requires, ECOT fought back—with a vengeance.”
  • In October of 2016, the Akron Beacon Journal editorialized: “What is the misspending of hundreds of millions of public dollars?  The word ‘scandal’ comes to mind, and it describes the misdeeds of the Electronic Classroom of Tomorrow and its many Republican enablers at the statehouse.”
  • A year ago, the Columbus Dispatch commented: “For sheer audacity, there is no precedent for the claims to Ohio taxpayer money being made by the Electronic Classroom of Tomorrow. The state’s largest online school, ECOT demands more than $100 million per year from the treasury, while claiming the state—on behalf of taxpayers—has no right to document that students are actually logging in.  ECOT argues its contract with the Ohio Department of Education allows it to teach to an empty classroom, while continuing annual collections of hundreds of millions of taxpayer dollars.”
  • In late January of this year as the state shut ECOT down, the Plain Dealer‘s editorial board spoke out: “While the debate continues over the way in which the online charter school Electronic Classroom of Tomorrow squandered Ohio taxpayer money and failed the young Ohioans it was supposed to be teaching, there can’t be any debate over what the ECOT mess has taught Ohio’s taxpayers: Money talks at the Statehouse. At every turn in the regulatory road, ECOT’s mainly Republican enablers looked the other way because, in effect, that’s what they were paid to do—legally, through campaign donations.”

Although this week’s new Associated Press report about the ECOT whistleblower doesn’t say anything really new about ECOT’s failure accurately to count its students, and even though nobody has imagined that ECOT mis-reported student attendance by accident, the new story is accomplishing something important. Suddenly politicians in the race for governor, state auditor, and state attorney general are accusing incumbents of failure to pay attention and to respond immediately last summer to a whistleblower’s  account of what was surely criminal fraud on ECOT’s part.  And the incumbents are all scurrying around saying that they paid more attention than anybody knew.  Suddenly the ECOT scandal—which died down for a couple of months after the school was shut down in January—is a major topic in the political campaigns for statewide offices in the May 8, primary election.

In Ohio, where the Governor is a Republican and the state House of Representatives is dominated by a 66:33 Republican majority and the state Senate by a 33:9 Republican majority, we don’t have any checks and balances.  It is essential that the over-fifteen-year ECOT ripoff  will remain in the news and that candidates running for office demand that voters hold Ohio’s politicians accountable.

ECOT is now closed, a school in bankruptcy with its affairs being managed by a receiver, but ECOT’s owners are still trying to resurrect the school through the appeal of its case against the state, a case heard finally in February by the Ohio Supreme Court. We await the Court’s decision. Once again, during oral arguments, the press played its essential role.  The Dispatch‘s Jim Siegel described the final interchange between ECOT’s attorney and Ohio’s Chief Justice Maureen 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 long in once a month and do no work, Chief Justice Maureen O’Connor interjected. ‘How is that not absurd?’ she asked.”

We shall see how the Ohio Supreme Court eventually decides the case. Ohio’s supreme court is elected, and like the legislature, it is majority-Republican. But the persistent coverage by the press has kept pressure on the Court just as it has on the staff at the Ohio Department of Education and on ECOT’s sponsor, The Educational Service Center of Lake Erie West.  After all, unless the Supreme Court saves it, ECOT is now closed.  It is no longer receiving Ohio tax dollars, even though it still owes the state millions of dollars that had not yet been clawed back prior to the date of its closure.