Ohio Auditor: Withhold funding for giant online school

State Auditor Dave Yost has asked the Ohio Department of Education to withhold “a significant portion” 2017-18 funding for the Electronic Classroom of Tomorrow (ECOT), the embattled online school at the center of multiple lawsuits over how many students attended the school.

Yost doesn’t want the money paid until ECOT’s enrollment can be verified.

ECOT has received more than $100 million in state funding each of the past two years. But the Ohio Department of Education just started “clawing back” $60 million it paid the school in 2015-2016 because it found the school’s enrollment that year was closer to 6,000 students. The school had claimed it had 15,000 students that year. That clawback amounts to $2.5 million per month for 24 months.

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Ohio Department of Education spokeswoman Brittany Halpin said ODE is in the process of reviewing ECOT’s claimed 2016-17 enrollment of 14,200 online students to see if the same problem existed last school year.

But in the meantime, 2017-18 funding has begun, and July-September monthly payments are always based on previous year enrollment. Since ODE’s review of that enrollment is not finished, that means ECOT just received a July 13 payment of $8.1 million (before clawback), as if it had 14,200 full-time equivalent students.

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That would put it on target for another year of roughly $100 million in funding. And that’s what triggered Yost’s letter to state Superintendent Paolo DeMaria.

“While I recognize your standard practice is to fund charter schools in advance of the school year commencing, facts unique to ECOT’s situation warrant a different approach at this time,” Yost wrote.

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Asked for an ODE response to Yost’s request, Halpin said only, “We’ve received Auditor Yost’s letter and we’re reviewing it.”

The enrollment spat centered on whether ECOT merely had to “present” 920 hours of “learning opportunities” for students, or whether its students had to be logged on and engaged in school activities. ECOT offers classes online which students may take from home.

ECOT fought and lost multiple court challenges, but it still has appeals pending with the state Supreme Court. ECOT spokesman Neil Clark did not return messages seeking comment.

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Based on the 14,200 enrollment number, ECOT had thousands of students in southwest Ohio, including 627 living in the Dayton school district, 168 in Hamilton, and 94 in Springfield.

Yost said there is “no way to reconcile” ECOT still having the same 14,200 students it claimed for funding purposes last year. He cited a statement from ECOT’s July 6 legal brief to the Supreme Court, in which the school said the ongoing legal battle led to “unprecedented enrollment losses.”

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ECOT Superintendent Rick Teeters has testified that being forced to pay back the $60 million would put the school into a “death spiral.” Yost cited that quote as a reason not to send ECOT full funding this year, arguing that the state may find it ever harder to reclaim that money.

“It defies logic that there would not have been some out-migration from ECOT to traditional schools or other charters,” Yost wrote, in making his case to impound funding. “If the ECOT enrollment (turns out to be) accurate, the money can be released.”

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