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.

Advertisements

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.

No Shame: ECOT Continues to Cheat Ohio Taxpayers Even While Awaiting Final Court Decision

Two prominent and long-experienced national organizations, the NAACP and the National Education Association, have passed resolutions demanding a moratorium on the authorization of new charter schools until some kind of oversight can be put in place to protect students and the investment of tax dollars. Charter schools are being authorized under the laws of 43 states, with an outrageous lack of public oversight in some states.

Ohio and the Electronic Classroom of Tomorrow provide the very definition of the problem. ECOT, as the giant online school is known, awaits a final decision from the Ohio Supreme Court that would permit the state to claw back $60 million in overpayments from the taxpayers to the school for the 2015-16 school year alone. During that school year, ECOT claimed it was serving 15,322 full-time students, but the state has been able to verify only 6,800.

Thanks to Ohio’s major newspapers, the scandal continues to be exposed as each new chapter unfolds.

Here is how the Columbus Dispatch began its editorial on Sunday: “ECOT’s brazen plundering of the Ohio treasury continues to set a new bottom for shameless. The state’s largest online school, told to repay $60.4 million overbilled in a previous school year for students who were MIA, appears to be inflating current enrollment—overcharging the state to raise money to repay its debt. The fear is that Ohio taxpayers will never see a dime of what ECOT owes. The enterprise is employing the time-honored strategy of ‘extend and pretend’: Ignore state orders on how to properly count enrollment for reimbursement.  Appeal the Ohio Department of Education’s orders, upheld by a succession of Ohio courts, while continuing to claim that the state has no right to document that students actually are logging in and getting educated. Drag out the legal fight, a no brainer since the school is paying its legal bills with taxpayer dollars.  And before the Ohio Supreme Court rules, grab as much state cash as possible.”

In Cleveland, the Plain Dealer also editorialized on Sunday: “Ohio Auditor Dave Yost recently sent a letter to the Ohio Department of Education advising it to ‘impound a significant portion of any further funding’ to the Electronic Classroom of Tomorrow until the state can verify the online charter school’s student attendance numbers for the upcoming school year. There are good reasons for this: ECOT has not repaid Ohio the $60 million in reimbursements it owes for what the state determined was ECOT’s 59 percent overstatement of student attendance figures for the 2015-16 school year.  ECOT is arguing its student numbers were correct but, so far, the courts have sided with ODE.  ECOT’s appeal to the Ohio Supreme Court is pending… Yost is right. ECOT claimed 15,300 online students two years ago but could only provide evidence to verify 6,300, according to ODE.  Why take at face value its estimate of 14,000 students this coming academic year?”

On Sunday, the Dispatch also published an extraordinary investigation—by reporters Catherine Candisky and Jim Siegel—of ECOT’s history.  They remind us that besides donating huge political contributions that have endeared ECOT to Ohio’s legislators, William Lager, ECOT’s founder and the owner of the two privately held companies that provide the school’s curriculum and its operations, has featured those with political influence as the school’s annual commencement speakers including Ohio Auditor Dave Yost at three commencements, Governor John Kasich, and even Jeb Bush, a national leader promoting school privatization.

But Yost has now come to understand that Lager and ECOT are trying to cheat Ohio’s taxpayers.  On July 21, Patrick O’Donnell reported for the Plain Dealer: “The state needs to send less money to the Electronic Classroom of Tomorrow… state Auditor Dave Yost says, or it may never recover the $60 million the school already owes.”  In a letter to state education superintendent Paolo DeMaria, Yost asked the state to escrow part of the state’s funding for ECOT for the upcoming school year until ECOT’s enrollment figures can be verified. According to Yost’s request, the state has begun deducting $2.5 million each month from ongoing payments for 2017-18. “Instead of receiving a little over $8.1 million in state tax dollars toward opening the school again this fall, ECOT received just under $5.6 million earlier this month. But that 5.6 million may be too much, Yost said. ECOT is claiming 14,000 students again, Yost noted, so the per-student payments to the school are possibly too high…”  Yost explains: “It is virtually the same number of students ECOT claimed for the 2016-17 school year, and far in excess of the audited number your department found supported for the 2015-16 school year.”  “I am concerned that ECOT is overstating its FTE (attendance) for cash-flow purposes, and the state may not be able to claw back any funds that are improperly distributed to ECOT.”

Yesterday O’Donnell added that the Department of Education has decided to withhold 12 percent of ECOT’s funding for the upcoming school year until the state’s audit of active participation by ECOT’s students is complete: “These cuts would be added to the $2.5 million monthly deductions the state is already taking from the school’s funding to cover the school’s past attendance issues.”

From Candisky and Siegel’s investigation we also learn that ECOT was always envisioned primarily as a money-making scheme, not an experiment in education reform. The idea was not hatched by people with a background in pedagogy, school psychology or educational philosophy: “After making and losing his first fortune in the office supply business, William Lager hatched a plan for Ohio’s first online charter school on the back of napkins over countless cups of coffee at a West Side (Columbus) Waffle House. ‘He was flat busted broke, worse than we were. He would sit there all day long drawing on napkins,’  said Chandra Filichia, a former waitress at the Waffle House on Wilson Road who was tapped to help recruit Electronic Classroom of Tomorrow’s first class of students and worked 16 years for Lager… Lager, Filichia recalled, would photocopy $5 coffee cards—each good for 10 cups of coffee—to save money while working on his business plan with longtime friend and ECOT co-founder Kim Hardy.  The two of them attended state-run classes on how to start a charter school, where they met Coletta Musick.  The former principal brought an actual education background to the team.  Lager already had connections for obtaining computers and office equipment. David Brailsford, a Toledo ticket broker, provided the early financing… But once Lager inked… (the) deal, his financial woes didn’t last long.  ECOT—and his affiliated for-profit companies that provide instructional materials, services and marketing—have brought Lager a fortune.”

Here is what ECOT has amassed—all from tax dollars: “From 2001 to 2016, ECOT took in more than $1 billion from Ohio taxpayers, and of that total paid more than $170 million to Lager’s companies to run the day-to-day operations of the school and provide it with educational software.”

In the fifteen years from 2001-2016, Lager bought a $300,000 condo in downtown Columbus, a $433,500 vacation house on a lake, a $995,000 house in a Columbus suburb, and a $3.7 million house in Key West, Florida. He has also donated $2.1 million in political contributions to Ohio Republicans.

In 2015 the Ohio legislature strengthened the charter school law to prevent conflicts of interest and double dealing, but by that time, ECOT was well established.  In 2001, report Candisky and Siegel, “Lager and Hardy hand-picked the ECOT board that employed their company. In fact, the man who signed the school’s agreement with Lager’s Altair management, ECOT’s board chairman Donald Wihl, was a friend who owned the condo where Lager was staying.  Wihl’s daughter was employed as the ECOT board’s secretary.”  Once then-state auditor Jim Petro began investigating the school back in 2001, three board members resigned along with the director of educational services, and the director of academic affairs. In that same year, Lager’s partner Hardy also resigned.

Petro discovered that the state had, in 2001, paid ECOT $1.9 million during a two month period for students for whom the school could not document any hours of instruction: “An April 2002 audit said the school was overpaid $1.7 million in 2001 after ECOT ‘did not utilize an internal audit function to monitor the hours of educational opportunity. Petro also found the school had no procedures for withdrawing students and no policy on how enrollment would be counted, nor was information available on whether all students got appropriate computer equipment.”

Candisky and Siegel continue: “Petro, who later became a Lager ally and spoke at ECOT’s 2006 commencement, wrote to the Department of Education in March 2000 that… (charter) school boards are made up primarily of employees and board members from management companies and are not representative of the particular community.’… But the legislature wouldn’t take action to significantly limit conflicts of interest and provide stricter oversight of school operations and sponsors for 13 more years.  Meanwhile, two things grew: Ohio’s poor reputation among national education experts as the Wild West of charter schools, and political contributions from for-profit school operators, particularly Lager and David Brennan, founder of another charter school operation, White Hat Management.”

Once a charter school scam is well established—especially an operation where profits are involved and are being strategically invested in campaign contributions to the legislators who would have to do the regulating, it is virtually impossible to protect the taxpayers and the children. Ohio’s ECOT perfectly exemplifies why a national moratorium is needed on the authorization of new charter schools until oversight can be imposed.

ECOT Appeals to OH Supreme Court after Trial Court, Appeals Court and OH Dept. of Ed. Reject Excuses

The serialized saga of the years-long theft of tax dollars by Ohio’s Electronic Classroom of Tomorrow (ECOT) has been exciting. It seems, however, that the story may be ending. And while Ohio’s out-of-control charter sector rip-off will continue, in the specific story of ECOT, at least, it appears there is hope that the good will win out.

All the signs point to a fall for the notorious Bill Lager, the founder of ECOT and the guy whose private management and curriculum companies have amassed a profit of $200 million over the years. Although it seems the end is near, the state and a lot of local school districts are still owed $60 million in funds over-paid to ECOT for the 2015-2016 school year alone. And the Columbus Dispatch reports that the Ohio Department of Education has not released results of a new attendance audit for the 2016-2017 school year. Assuming the state can claw back what ECOT owes, the remaining question is whether local school districts will be able to recoup what they have paid, or whether the state will keep the money.

Here is a plot summary, according to the editorial board of the Akron Beacon Journal: “So far, a Franklin County trial court, the Education Department, a separate hearing officer and now the appeals court have rejected the ECOT case. Next, the school heads to the Ohio Supreme Court, where it has already asked the justices to block the state from retrieving that $60 million.” “ECOT argues that state law requires the school to provide the mere opportunity for a minimum 920 hours of learning per year. The appeals court found the obligation is much greater. It reminded that though enrollment is key, student participation drives the level of public money the school receives. Thus, education officials rightly requested log-on and log-off data showing when students engaged in learning online. If the state failed for years to enforce the necessary standard, that doesn’t mean it must hold to a neglectful course.”

In mid-June, the Ohio State Board of Education voted almost unanimously to require ECOT to re-pay the state $60 million dollars the school had charged the state for the phantom students it said were enrolled but whose participation could never be documented. The State Board voted to accept the ruling of a hearing officer from the Ohio Department of education, who is reported by the Columbus Dispatch to have declared that no school’s intent is to “teach to what could be the equivalent of an empty classroom.”

Then on June 29, after the appeals court ruled against ECOT’s claim that the state has been treating the school unfairly, ECOT filed an immediate appeal to the Ohio Supreme Court. Here is the Columbus Dispatch: “The appeal filed Thursday questions whether a state ‘by bureaucratic fiat, may take unilateral action that has the effect of destroying an entire system of schools of last resort for thousands of Ohio students—a system expressly established by the General Assembly.'”  Alan Johnson, the Dispatch reporter, reminds readers, however: “So far, the charter school giant has not won any legal challenges filed against a state hearing officer, the State Board of Education, and courts at two different levels.”

As this saga winds down, ECOT has kept up the pressure. In mid-June, Bill Seitz introduced a bill into the Ohio House to allow ECOT to delay payment of the money it owes, if its appeal to block the repayment fails.  The Akron Beacon Journal Editorial Board explains: “William Lager has been generous to Republicans at the Statehouse. The founder of the Electronic Classroom of Tomorrow has routed hundreds of thousands of dollars to their political coffers. That is the backdrop for an expedient bill proposed last week after the giant online charter school suffered a deserved setback at the State Board of Education. The legislation, sponsored by state Rep. Bill Seitz, would permit ECOT to delay repaying the state $60 million for students whose attendance the school could not verify. The school would be required to post a 10 percent bond.  Seitz told the Columbus Dispatch he just wants to ensure due process for the school.” Seitz’s bill was never enacted, however, and it does not appear that it was secretly sneaked into the state budget, as many feared.

Finally ECOT made a couple of pleas for pity. First ECOT threatened to lay off 350 employees, a quarter of its staff if the state Supreme Court finds against the school. Its lobbyist has continued to threaten that the school will have to close and ruin the future of its students, should the state succeed.

Then right at the end of June, the school began running a TV ad in Columbus, which ECOT admitted was paid for with tax dollars. The Dispatch describes the ad, which is narrated by Lionel Morales, a 2017 ECOT graduate: “The Ohio Department of Education wants to end school choice and stop parents from deciding what’s best for their children. That’s why I and the over 36,000 students and alumni of ECOT are hoping our elected leaders fix what’s broken and save our school… Sadly, the Ohio Department of Education says many of us don’t count.”   The Dispatch article describing the ad explains: “The end of the ad is signed ‘Ohio’s children.'”

The egregious expenditure of Ohio tax dollars to run an ad that castigates the Ohio Department of Education finally motivated Ohio’s state auditor, Dave Yost, to step in.  The Dispatch reports: “Yost, who has been an ECOT supporter, spoke Thursday morning with Attorney General Mike DeWine and senior staff about going to court to stop the school from continuing a blitz of television ads paid for with taxpayer money. The ads have attacked the Department of Education and tried to put pressure on lawmakers. Yost, who sent ECOT a cease-and-desist order… said that if ECOT were allowed to continue the ads, it would signal to other state agencies that they could use taxpayer dollars on political campaigns. ‘This is a very dangerous precedent—where money can be taken by force from taxpayers to tell the legislature what to do,’ Yost said.”

Ohio State Board of Education Demands that ECOT Return $60 Million It Overcharged the State

Yesterday afternoon, members of the Ohio State Board of Education voted 16-1 to demand that the Electronic Classroom of Tomorrow (ECOT), Ohio’s large and notorious cyber charter school, pay back $60 million it overcharged the state last year for students who were not participating full-time in its educational program. The Plain Dealer‘s Patrick O’Donnell reminds readers that ECOT has claimed an enrollment of 15,300 full-time students, while log-in data for the 2015-16 school year confirms the enrollment of only 6,300 students participating as state law requires: 5 hours-per-day (or 20 hours-per-week) (or 920 hours-per- year).

Today’s 16-1 vote margin among members of the State School Board demonstrates that opposition to ECOT’s theft of tax dollars has become bipartisan. After all, Ohio is an all-Republican state with both houses of the legislature and the governor’s mansion controlled by Republicans. The State Board of Education—part-appointed and part-elected—is also dominated by Republicans.

ECOT has taken the state to court to try to block the state’s claw-back of $60 million paid to the school last year for phantom students. O’Donnell fills in the legal background. Last September, Franklin County Common Pleas Court Judge Jenifer French upheld the Ohio Department of Education’s finding that many students have been logging in only about an hour per day. ECOT appealed Judge French’s decision, and it is expected that the Franklin County Court of Appeals will rule on ECOT’s appeal later this summer. To block yesterday’s vote by the State School Board to uphold the findings of a hearing officer at the Ohio Department of Education, however, ECOT had filed an emergency injunction in the Franklin County Court of Appeals. Last Wednesday, however, ECOT lost its bid to prevent yesterday’s vote.

Catherine Candisky of the Columbus Dispatch quotes Neil Clark, ECOT’s lobbyist, responding to yesterday’s overwhelming vote against ECOT by the State School Board’: “Any order (to repay the money) is irresponsible, premature, and vindictive until the court appeals are exhausted.” Unfortunately the matter will not be resolved quickly.  Clark declared that the school—founded by William Lager, a major Ohio Republican political donor, and operated by Lager-owned privately held management companies—will appeal to the Ohio Supreme Court.

Candisky describes ECOT’s plea for mercy after yesterday’s overwhelming vote to demand the $60 million repayment to the state: “The decision, ECOT officials say, is a death blow to the school; they claim it will have to close if forced to repay the money.”

The ECOT scandal has been long running. (See this blog’s coverage here.)  Karen Kasler commented late yesterday for the Statehouse News Bureau: “Simply put, ECOT is paid by the state for the number of full time students enrolled, as all traditional and charter schools are. And a 165-page report from an Ohio Department of Education hearing officer determined ECOT counted 9,000 more full time students than it actually had last year, inflating its full time enrollment by 60% to receive $108 million in state funding.”  Kasler also comments on Rep. Andrew Brenner, chair of the House Education Committee and a non-voting member of the State Board, who was present at yesterday’s meeting: “He’s also a supporter of ECOT. And though the battle between ECOT and the Department of Education has been going on for a year, Brenner said he thinks the board could have held off on its vote to allow time to look for more data to show what’s happening at the online school.”

The press has doggedly kept up the pressure on the legislature, the Department of Education, and the State Board of Education to stop the ECOT scandal.  Here is the most recent example, an editorial from yesterday morning’s Akron Beacon Journal warning members of the State Board of Education about what would be at stake in their vote yesterday afternoon: “The State Board of Education meets today, and the members have an opportunity to strike a blow for accountability and quality in the funding of public schools. A month ago, a state hearing officer ruled that the Electronic Classroom of Tomorrow failed to justify roughly 60 percent of its enrollment.  Now is the moment for the board to order that the online school pay back the money it claimed under false pretenses… The on-line school has been nothing if not brazen. It has argued for months, through its lobbyists and in court, that it does not have an obligation to ensure that students actually participate in learning… The State Board of Education has good reason to accept the findings and recommendation of the hearing officer. Collecting the money the state overpaid isn’t about shutting down ECOT. It’s about accountability and quality, ensuring that public dollars serve the intended purpose.”

Ohio’s Notorious E-Charters Evade Regulation: ECOT Saga Drags On and On and On

Ohio’s biggest charter school, the notorious e-school, the Electronic Classroom of Tomorrow (ECOT), held a big rally in Columbus early this week. Rick Teeters, ECOT’s superintendent, told all the school’s teachers and students to show up, even though the rally happened in the middle of the school day. Maybe everybody was expected to go home afterwards and study online until midnight.

ECOT’s founder, William Lager, made an emotional speech bragging that his school has provided more choices for those who have few. Lager didn’t mention, of course, the hundreds of millions of tax dollars the school has been receiving year after year from the state on a per-student basis. Neither did he say anything about the $60 million from last year alone that the Ohio Department of Education says ECOT fraudulently charged the state for students who did not really attend school at ECOT last year. ECOT is trying to avoid paying back the money.

In Ohio, pretty much everybody knows that ECOT is a huge scam, but because Ohio is an all-Republican state without any checks and balances at all, and because William Lager keeps on contributing to the campaign coffers of members of the legislature, no strong law has been passed to stop the ripoff.  And now, in the biennial budget bill the House passed on May 2, nobody will even claim the language that mysteriously appeared to undermine oversight of Ohio’s charter school sector.

Under enormous pressure from the press last year, the legislature did tighten the regulatory process to demand that the online academies must now provide documentation that students are at their computers doing 20 hours per week of work in order to be counted.  ECOT has continued to maintain that it has, as the law has specified for years, been providing 920 hours of curriculum for its students each year. But, says ECOT, the state never asked for attendance records in the past, and the state changed its demands suddenly and illegally.

ECOT has been in court trying to block the new regulations. However a Common Pleas Court rejected ECOT’s demand that the court block the state’s effort to claw back two-thirds of what ECOT was paid last year, when ECOT was able to document the participation of only 6,300 of the 15,300 students the school claimed were enrolled. After ECOT lost its case in Common Pleas Court, ECOT appealed the case.

Working assiduously to bog down the court proceedings, ECOT demanded the removal of appeals court Judge Gary Tyack because he made the mistake of telling the truth in a comment he made about ECOT.  Here’s what Tyack said: “The General Assembly cares more about what Mr. Lager (founder of ECOT) and David Brennan (founder of other large e-schools) think than about what I think, frankly.” “It’s hard to ignore the fact that between the two of them they’ve probably gotten a billion dollars worth of State funds that would have gone to public schools because of their clout. In Russia we call them oligarchs. Here, we don’t call them anything. We call them influential donors.”  Maureen O’Connor, the Chief Justice of the Ohio Supreme Court, refused this week to capitulate to ECOT’s demand that Judge Tyack be removed from the case. The case now moves forward; we must await the final decision of the Court of Appeals.

ECOT not only tried in court to block the state’s crackdown on e-school attendance reporting; it also filed an administrative appeal in the Ohio Department of Education itself. But this week ECOT lost that administrative appeal. On Wednesday, the Ohio Department of Education denied ECOT’s administrative appeal and demanded that that ECOT pay back $60 million in fees it overcharged the state last year. The decision of the Department of Education’s hearing officer is not final; the state school board  still needs to vote to seek recovery of the money. We’ll see how that goes; after all, the Ohio state board of education is dominated by a coalition of elected Republicans and members who have been appointed by Republican Governor John Kasich.

Then there are the mystery amendments that appeared in the fine print of the budget bill passed by the Ohio House on May 2.  Most of these last-minute amendments would weaken state oversight of the organizations that sponsor charter schools—sponsors who are paid by the state to provide oversight but who have no incentive to close the huge e-schools they supposedly oversee. The amendments are  pro-ECOT and anti-regulation.

Andrew Brenner, the chair of the House Education Committee, inserted a last minute amendment to change the way sponsors are rated. The state currently judges charter school sponsoring organizations by the quality of the schools they are supposed to oversee, but it weights the schools according to the number of students they serve. Here is the Akron Beacon Journal’s editorial board commenting on the change proposed by Andy Brenner to weight every school—no matter its size—equally in a sponsor’s evaluation: “For instance, ECOT has 15,000 students, or nearly one-half of those enrolled in the 59 schools sponsored by the Educational Service Center of Lake Erie West. Treat the academically challenged ECOT as one school, and it would rate as a tiny fraction of its sponsor’s portfolio.  The sponsor would receive a higher rating, assuming its other schools perform well enough… In the case of ECOT…. with those numbers in mind, the re-weighting, as proposed by Andy Brenner, diminishes the commitment to students, or what charter schools claim as their first purpose. ECOT would be better off. So would the sponsor.”

Nobody knows who added other language to the House budget to protect the organizations that sponsor the huge and notorious online charter schools. Some legislators are even blaming the Legislative Service Commission, the agency that crafts the language of bills, for adding the language that favors ECOT and its sponsor. The mysterious amendment to the House budget, explains Patrick O’Donnell of the Plain Dealer, “would prevent certain ESCs that take on online charter schools from losing oversight and income from the schools, regardless of their (the schools’) ratings in the future.”

Doug Livingston of the Akron Beacon Journal provides important background about the incentive the Ohio’s legislature has provided for  years encouraging the Education Service Centers to sponsor the giant online academies: “Sponsoring large e-schools is a money-maker for educational service centers….  For each student enrolled in one of their charter schools, the sponsor gets 3 percent of the state funding that follows the students from the local school district where he or she would otherwise attend. At e-schools with more than $100 million (every year) in state revenue, the sponsor fee can be worth millions.” Now the mysterious new budget amendment further protects the Education Service Centers—letting them off the hook when the schools, which they are being paid huge sums to oversee, fail to perform.

Even the pro-charter Thomas B. Fordham Institute wants better oversight of Ohio’s e-charters and wants the mystery amendment removed from the fine print of the state budget.  Livingston quotes Chad Aldis of the Fordham Institute explaining what is wrong with the mystery amendment: “The change would allow an educational service center that sponsors charter schools to bring on a statewide online charter school and maintain sponsorship of it even if the academic outcomes were poor… Essentially, the sponsor would have an exemption from the academic accountability portion of the state’s sponsor evaluation system.”

The ECOT saga drags on and on in Ohio, where it would seem money and state politics make charter school regulation impossible.  Here, summarizing the current operation of Ohio’s super-majority, one-party, Republican legislature, is Columbus Dispatch columnist Darrel Rowland: “They didn’t teach this in ‘How a Bill Becomes a Law.’ A mysterious amendment makes its way into a state budget bill. One by one, lawmakers, including the speaker of the House, express surprise that the three-paragraph provision was part of the measure they just approved, and all deny knowing how it got there. A Legislative Service Commission staffer eventually gets the blame.”

This blog has covered the long-running ECOT saga here.

Powerful ECOT Blocks Crackdown on Inflated Attendance Reports from Several Ohio Online Schools

For years and years, Ohio has negligently failed to demand that online charter schools submit accurate attendance records. In the meantime the state has kept on paying the schools for the students they claim to serve. While the state has continued to say it would crack down, oversight has been blocked by power and money.

More specifically, in 2016, the Ohio Department of Education began asking for attendance records, but the largest of the schools, the Electronic Classroom of Tomorrow (ECOT), said it hadn’t been collecting the information because the state had never asked the school to document that students were spending time online at the e-schools. The state, it said, had required the school to provide 920 hours of curriculum for its students every year, but not to prove the students were actually sitting at their computers using the materials. It seems clear that political contributions to Ohio’s legislators from William Lager, ECOT’s founder and for-profit operator, ensured that the legislature avoided consideration of any kind of law to demand the submission of an accurate student count.

A year ago, the legislature changed the rules and asked the Ohio Department of Education to begin collecting the data.  And the Department conducted a preliminary analysis that showed that ECOT, which collected $109 million for educating the 15,300 students it says it serves, must return $64 million for the 2015-2016 school year alone. ECOT went to court, and after a judge ruled that ECOT must pay back the money and start submitting accurate numbers, ECOT appealed the decision. This blog has been tracking the ECOT scandal.

Patrick O’Donnell reports for the Plain Dealer that, “ECOT lost its first challenge in Franklin County Common Pleas Court and is now appealing its case to the 10th Ohio District Court of Appeals. That court had its hearing on the case earlier this month and a ruling could come in the next couple of months. A dispute over one of the judges on the three-judge panel comparing ECOT founder William Lager, a major donor to Ohio Republicans, to a Russian oligarch could delay that ruling.”

O’Donnell explains that other online schools in the state have also been found inflating their students’ numbers, but as ECOT’s lawsuit drags on, the state education department has been unable to crack down on the smaller virtual academies: “Ohio’s attempts to recover about $20 million in state tax funding from eight online charter schools has stalled for more than six months while a much larger battle over more than $60 million from e-school giant ECOT lingers in appeals court.  The year-long fight between the Ohio Department of Education and ECOT… has also delayed the state legislature from sorting out how to avoid e-school funding controversies in the future.  Eight months after Ohio Auditor Dave Yost called on legislators to find a better way to measure how well online schools educate students and a better way for Ohio to fund the schools, legislators have not acted.  Despite many agreeing that Ohio needs to overhaul its funding of online schools, no one has suggested a single bill, held a single hearing or publicly called for any research.”

Actually Andrew Brenner, the chair of the Ohio House Education Committee, has now proposed a change in the e-school evaluation process.  But it is a change that would relax state oversight instead of strengthening it.  Today, in the way Ohio oversees the many nonprofit organizations that are permitted to sponsor charter schools, there is a requirement, “that the academic performance of the multiple charter schools in each overseer’s portfolio of schools be weighted by the number of students in each school… As the evaluation ratings stand now, the state report card grades for a 10,000-student online school count 50 times as much as grades for a small, 200-student neighborhood charter school.  If the big school has great state grades under current rules, the (sponsor’s) entire portfolio  of schools looks good when results are averaged together. But if the bigger schools have poor grades, as some large online schools do, the entire collection of schools looks bad.” In fact the huge online academies are notorious for their dismal ratings.  O’Donnell quotes Stephen Dyer, a former legislator and journalist describing Andrew Brenner: “He’s doing the ECOT fix. Wonderful.” O’Donnell confirms Dyer’s suspicion: “ECOT and its supporters backed a similar proposal two years ago, but failed to gain legislative support.”

Joe Schiavoni, the minority leader of the Ohio Senate, who has repeatedly proposed a bill to crack down on lax attendance reporting by the e-schools, believes the proposed change is aimed at relaxing standards for the all-powerful virtual academies: “This would be a break for them. The cynic in me says they are looking for a break.”  The bill Schiavoni has introduced in at least two different legislative sessions to regulate collection of attendance records at the e-schools has never made it out of committee in Ohio’s all-Republican dominated legislature.

Despite that many people across the country seem to believe it is possible to regulate charter schools to stamp out fraud and corruption, watching Ohio’s ECOT scandal has convinced me that money and power will render significant oversight impossible. However, in the past week there has been one small bright spot.  Paolo Demaria, Ohio’s relatively new Superintendent of Public Instruction, just turned back $22 million in federal Charter Schools Program funds to the U.S. Department of Education. The federal Charter Schools Program invests in new charter school startups, and to his credit, Demaria says Ohio can’t use all the money because there are not enough quality applicants.

Here is the back story, in case you have forgotten. In the summer of 2015, a huge public outcry arose over $71 million granted to Ohio from the federal Charter Schools Program. David Hansen, the man who wrote the federal grant proposal, was fired because his proposal was based on the false promise that our legislature had cracked down on sponsors of charter schools. But the U.S. Department of Education made the grant anyway. Ohio’s Congressional delegation and especially Senator Sherrod Brown demanded that the U.S. Department of Education provide extra oversight of Ohio’s grant because our state’s regulations have been notoriously weak.

Now Superintendent Demaria explains that Ohio has cracked down—at least somewhat—and due to stronger oversight, the state does not have enough strong applicants to use all the grant money. Again, here is Patrick O’Donnell: “In a letter sent last week, Demaria said the state will use $49 (million) of the $71 million over five years, not the full amount. He said the lower amount ‘more accurately reflects our eligible pool of prospective community school grantees based on our shared priorities’ of only giving money to strong schools.”  Big problems remain with state oversight of the sponsors.  O’Donnell reminds us: “Only five of the more than 60 sponsors in Ohio earned ‘effective’ ratings and none were rated ‘exemplary’ in the fall. The vast majority were rated as ‘ineffective’ or worse… The state is looking to shut down five charter school sponsor authorizers it rated as ‘poor’… as part of a plan to improve charter schools across the state.”

Superintendent Demaria deserves credit for his integrity.  We shouldn’t hold our collective breath, however, about the capacity of Ohio’s legislators to create regulations that might turn off the flow of political contributions.