Ohio court to hear online charter school's funding case

The survival of one of the nation's largest virtual charter schools is on the line as the Ohio Supreme Court hears arguments Tuesday in a case that could have broader impact on accountability for other e-schools.

The now-closed Electronic Classroom of Tomorrow is challenging how the state tallied students' participation to determine the online school should repay tens of millions of dollars.

It's a case study of friction over how virtual schools are regulated compared with their brick-and-mortar counterparts and how each is held accountable for spending public dollars and ensuring their students get a real education. A look at the case and why it matters:


The issue before the court is basically a fight about whether the state changed the rules in the middle of the game without permission.

The Ohio Department of Education requested data from ECOT to verify students' participation in online learning, and it determined the school couldn't justify about $60 million of its funding for the 2015-16 school year. A department spokeswoman has suggested that an accurate accounting of students' participation "would have shown that students were not getting the education taxpayers paid for."

ECOT argues that Ohio law calls for calculating charter-school funding based on enrollment and "learning opportunities" offered, not participation, and that the Ohio Department of Education abruptly adjusted that process without legal authority.


ECOT officials contend that triggered ECOT's "death spiral" as the state started recouping disputed funding. The e-school serving some 12,000 students from all over the state started running out of money and was closed suddenly last month, sending families scrambling for alternatives mid-school-year.

Some said they had turned to ECOT for quality education because of illnesses, disabilities, bullying or other struggles that made traditional school environments challenging, and they refused to return to brick-and-mortar public schools, looking instead to other e-schools or homeschooling.

The Department of Education says it's helping ECOT students shift to other schools. Meanwhile, a court-supervised lawyer is overseeing the complicated redistribution of students and transcripts, along with ECOT's finances.


Ohio already started recouping $60 million from ECOT for the 2015-16 school year. The Department of Education concluded ECOT was overpaid by $19 million for 2016-17, and the state school board voted Monday to try to get that back, too.

Some supporters hope the school could restore its funding and reopen if it wins the court case. A loss might give way to another question already raised by some critics: How could the state recover much from a cash-strapped, closed school?

Aside from ECOT's existing assets, one possibility suggested by the two candidates for state attorney general, Democrat Steve Dettelbach and Republican Dave Yost, is that the state might try to recover funds from two companies paid by ECOT that were launched by ECOT's founder.


ECOT's case could affect possible repayments from smaller e-schools that were found by the state to have lesser amounts of unjustified funding. It also could have ripple effects in the national discussion about accountability practices in online learning.

The case could have implications for policy and politics, too. It already popped up as a point of discussion in this year's race for Ohio governor, and it's sure to inform future conversations at the Legislature as lawmakers consider whether changes are needed in the state's school funding rules.


Two good-government groups have urged Justice Terrence O'Donnell to recuse himself from the case, noting that he spoke at an ECOT commencement and received a financial contribution from ECOT founder William Lager's company several years ago.

A message inquiring about whether O'Donnell would hear the case was left Monday with a spokeswoman.


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