It was a stunning end to a charter school that enjoyed an 18-year run, built itself up as the largest online school in the nation.
“I think the story is going to keep coming on its own because it just keeps getting worse by the minute — whistle blowers, money used for advertising,” said Ohio Democratic Party Chairman David Pepper.
ECOT founder Bill Lager made $993,791 in campaign contributions to candidates and political parties, largely to Republicans, since 2012. The Columbus Dispatch, which looked back further and included other ECOT officials, tallied $2.5 million in political donations over the past two decades.
Shortly after the state audit came out, the ECOT political money became toxic for candidates running for statewide offices.
Yost gave to charity $29,395 in campaign money received from ECOT sources. Fellow Republican statewide candidates also rid their campaigns of ECOT money: gubernatorial candidate Mike DeWine, $12,532; state auditor candidate Keith Faber, $36,513; and secretary of state candidate Frank LaRose, $8,200. In August 2017, the Ohio Republican Party shed $78,000 in ECOT contributions.
While Democrats are trying to pin ECOT blame on Republicans, the GOP candidates are moving to recast themselves as heroes.
Faber, a current state representative who served as Ohio Senate president and is now running for state auditor, said: “Thanks to the strong charter school reforms put in place while I was Senate President” the online charter school ECOT “was caught and is out of business.”
Politifact, a Pulitzer Prize winning fact-checking effort service founded in 2007, rated Faber’s statement mostly false and found that the state education department started seeking student participation data before Faber’s Senate passed reform legislation. That data is what kicked off the end for ECOT.
Related: Ohio auditor candidate misleads about this role in online school ECOT shutting down
Political insiders know the ECOT issues inside and out. But for everyday Ohioans, ECOT may be more confusing.
Here are the nuts and bolts of the issue:
• Ohio law has allowed for charter schools since 1997. ECOT was founded in 2000 as an online charter school by Lager, who reportedly hashed out the business plan while at a Columbus area Waffle House.
• Between 2000 and 2018, the state paid ECOT $1.07 billion. ECOT paid Lager’s for-profit companies, Altair Learning Management Inc. and IQ Innovations LLC, 20 percent of its state funds for management and IT services.
• ECOT said its enrollment climbed from 2,300 in 2000 to more than 15,000 in recent years but the school’s four-year graduation rate ranked among the worst in the state, hovering between 30 and 40 percent. By comparison, Dayton Public Schools 4-year graduation rate is 75 percent.
• ECOT shut down in January 2018 after the state moved to recover $80 million in over-payments.
• Lager, who once had financial problems, became a millionaire. He bought multiple properties, including a $3.7 million home in Key West, Fla.
State audits showed problems years ago
In a 2001 special audit, then-state Auditor Jim Petro found the state overpaid $1.9 million for students who lacked documentation that they were actually logged on for instruction; student activity wasn’t accurately tracked; 106 students were reported as either younger than 5 or older than 21; and the school lacked procedures for enrolling students.
A financial audit released in 2002 by Petro said the state overpaid ECOT $1.65 million because the school didn’t record the number of hours students received in “educational opportunity.” Petro also dinged ECOT for not having procedures for students withdrawing from the school, resulting in the loss of $446,600 in equipment never returned.
State funding for schools hinges the number of students enrolled. The Department of Education reviewed ECOT’s enrollment claims in 2001, 2002, 2004, 2005, 2006, 2011 and 2016, according to court records.
ODE’s practice had been to largely accept ECOT’s enrollment claims — an approach critics say allowed online charter schools to get away with little oversight and accountability.
But in early 2016, ODE changed how it reviewed enrollment data and began demanding more information from online charter schools to document that students were receiving the required 920 hours of “learning opportunities.”
The state immediately found red flags: An initial review of 750 ECOT students for three days in March 2016 showed on average students logged on for an hour a day to ECOT’s educational platform.
ECOT immediately pushed back.
In July 2016, the school sued ODE to block the state’s demands for more data on how long students logged on. ECOT lost at the trial court and appeals court levels and is appealing the matter to the Ohio Supreme Court.
Meanwhile, the state moved to clawback $79.6 million that ODE determined ECOT was overpaid for inflated enrollment numbers in the 2015-16 and 2016-17 school years. ODE investigators calculated that ECOT’s true enrollment was about 60 percent less than ECOT’s claims.
ECOT argues that ODE demanding more data amounts to an administrative overreach, not authorized by state law.
The state argued in court filings that ODE’s change in practice is better late than never.
“Perhaps ODE should have been seeking such records sooner than it did, but it acted promptly upon learning of the problem,” the state’s brief to the Ohio Supreme Court says. “In not acting sooner, ODE certainly did not grant ECOT some kind of permanent and irrevocable license to continue fleecing Ohio’s taxpayers and shortchanging its students of an education.”
Democrat Richard Cordray, who is running to Ohio governor, and his running-mate Betty Sutton pin the blame on his opponent, DeWine, in the gubernatorial race.
“Our state was defrauded out of tens of millions of dollars and our children were failed with a poor education, even as the sham school’s founder made off with millions of dollars. In exchange for massive contributions from the ECOT CEO, Mike DeWine looked the other way when he was supposed to be protecting Ohioans and consumers. He and his running mate Jon Husted bear responsibility for students and taxpayers getting cheated.”
Earlier this month in a statement to 24 News in Toledo, DeWine’s campaign said “Mike DeWine and Jon Husted believe that every dollar we invest in education needs only one priority: Helping our kids get off to a great start in life. Anyone who tries to manipulate that system should be held to account.”