On Wednesday, June 6, Innovation Ohio was joined by local school officials to discuss the multi-year impact of state funding transfers to the Electronic Classroom of Tomorrow (ECOT), the former largest, now-closed online charter school found to have been vastly overstating its enrollment at taxpayer expense.
FOR IMMEDIATE RELEASE
Date: June 06, 2018
Contact: Katherine Liming – 419-956-8196, firstname.lastname@example.org
Nearly $600 Million Dollars Went from Local School Districts to ECOT
The Electronic Classroom of Tomorrow (ECOT) scandal grows bigger as new data shows that $591 million of taxpayer money went to the online charter school over local school districts. Today, Innovation Ohio (IO) released new data that shows the district-by-district breakdown of money each Ohio school district lost to ECOT since 2012.
“We are trying to figure out the scope and scale of this thing,” said Stephen Dyer, IO’s Education Policy Fellow, “and today we are releasing how much has been lost to ECOT in the past six years.”
This is another piece of the growing ECOT scandal that has effected taxpayers in every corner of the state. The numbers show that all but six of Ohio’s 613 school districts lost state funding to ECOT.
In a press conference, Dyer announced the launch of the website innovationohio.org/ecot, which aims to tell the full story of the ECOT scandal. On the website, viewers can see the taxpayer money their individual district lost to ECOT over the years.
Dyer was joined by local schools officials from across the state that gave testimony to the devastation ECOT has brought to their localities.
“Maple Heights has been able to stay away from asking for new tax dollars since 2003, but are rapidly approaching the time when we will have to go back to the tax payers,” said Robert Applebaum, treasurer of Maple Heights City Schools. “With an additional $3 million paid as restitution that ECOT owes us, we would be in a position not to go back to the tax payers for several more years.”
The press conference not only focused on ECOT’s impact on Ohio school districts, but also the impact it had on the children in these schools and ECOT’s own students.
“When the smoke cleared we were advised of half a dozen students that had still not come to us to register or registered in another school,” said George Wood, superintendent of Federal Hocking Local Schools. “In each case, after reaching out to the family, we found that these students had not been logged on to ECOT in recent memory and were vastly credit deficient. None of them returned to school.”
“Schools need to be for kids, not for profit,” said Richard Murray, executive director of Coalition of Rural and Appalachian Schools.
To see the money your school district lost to ECOT since 2012, visit innovationohio.org/ecot.
For more information:
Full press conference can be viewed on our Facebook page
Few individuals have been as involved in Ohio political giving than ECOT founder Bill Lager and his cohorts. Since 2000, over $2.8 million dollars in campaign contributions have flowed from ECOT-associated individuals to state and federal candidates and party committees. The overwhelming majority of these contributions went to Republicans. All this while more than $1 billion in taxpayer funds were funneled to the school over its 18-year existence. In the wake of these contributions, state officials essentially allowed the e-school to operate despite a record of poor performance.
As politicians scramble to unload this tainted money, fueled by reports the FBI is investigating a “straw-donor scheme” to exceed campaign contribution limits, the issue is not likely to go away soon.
As a convenience, we have summarized historical political contributions to state and federal candidates and party committees associated with ECOT.
For Immediate Release
April 30, 2018
COLUMBUS – The Electronic Classroom of Tomorrow’s decision to offer taxpayer-financed hush money to past employees prompted strong criticism from watchdogs – and calls for reform – during a Monday press conference.
News that several past employees were offered public money in exchange for agreeing not to disparage the Electronic Classroom of Tomorrow (ECOT) follows an Associated Press story that quoted a whistleblower saying the Department of Education was informed last August that ECOT manipulated software to garner unearned money from the state. The whistleblower also provided the information to Auditor David Yost last year.
“Charter schools are also public schools,’’ noted Common Cause Executive Director Catherine Turcer. “These non-disclosure agreements are an effort to circumvent transparency and accountability and they highlight the need for better transparency in all quasi-governmental bodies.”
The whistleblower turned down two weeks of severance pay by refusing to sign the agreement – a decision that freed him to tell the public about ECOT’s attendance padding.
The agreement included two signature lines, one for the whistleblower, the other for Brittny Pierson, Deputy Superintendent and Chief of Staff for ECOT.
The agreement includes these provisions:
- “Non-Disparagement. You agree that you have not and will not make statements to anyone that are in any way disparaging or negative toward ECOT, including disparaging remarks about individuals associated with ECOT or the services it provides.”
- “Waiver & Release of Employment Claims. You, for yourself and your successors, assigns, heirs, agents and legal representatives, knowingly and voluntarily agree to waive and release ECOT, including its directors, officers, employees, representatives and agents, and its related, affiliate, and associated companies (including without limitation the Educational Service Center of Lake Erie West and Altair Learning Management) (collectively, ‘Released Parties’), from any and all claims, causes of action, and liabilities of any kind, known or unknown, in law or in equity, that you had or have as of the effective date of this Agreement, and that are in any way connected with or arise out of your employment or the termination of your employment with ECOT, including but not limited to claims, causes of action and liabilities….”
Stephen Dyer, a lawyer and Education Fellow for Innovation Ohio, took issue with the release of claims provision.
“It’s truly stunning that the Educational Service Center of Lake Erie West would be included in this non-disclosure language,’’ Dyer said. “The ESC is supposed to be the public’s watchdog over ECOT, not its partner in silence and secrecy.”
It is unclear whether Lake Erie West knew that it was included in the agreement.
“If the ESC knew it was included in this provision, that’s a problem,” Dyer told the news conference. “And if they didn’t, then that indicates how lax their oversight has been.”
Sandy Theis, a member of Ohio’s Charter School Accountability Project, said she personally has spoken to six people offered hush money from ECOT. Two took the money, two did not.
Dyer and Turcer filed a public records request with the ESC seeking copies of all non-disclosure agreements offered to ECOT employees from 2012-2017 and the total amount paid.
Columbus lawyer Fred Gittes echoed concerns that it is inappropriate to use public money as hush money, and he called for improvements to Ohio’s whistleblower law.
“Ohio has one of the worst whistleblower laws in America,” Gittes said. “You can only be protected if you first report your concerns to your boss or someone with authority in the company. And you have to report it in writing.”
Gittes said he has counseled many people who have considered reporting crimes their employers have committed.
“When I tell them about Ohio’s whistleblower law, most of them choose not to blow the whistle,’’Gittes said. “The heroes here are the whistleblowers.”
Today, I was honored to be part of a news conference with my colleagues from Progress Ohio and Common Cause to discuss the latest ECOT outrage — that the school had a practice of paying hush money to former employees so they wouldn’t say anything bad about them. And in a further outrage, the agreement also protected the school’s sponsor — the Educational Service Center of Lake Erie West.
I’m frankly disgusted that the ESC was included. As sponsor, this is the entity that is supposed to oversee the school on our behalf. Instead, they are joining the school as their partner in secrecy. Either the ESC knowingly was included in the secrecy agreements, or ECOT included them without their knowledge. Both outcomes are problematic and deserve scrutiny of the ESC’s ability to effectively perform its oversight function.
It is time for the legislature to ban these kinds of non-disclosure agreements for public entities except in very rare circumstances. Allowing ECOT and their sponsor to pay taxpayer money to employees to ensure their silence about potential criminal activity is an affront to public policy and the idea of open government and democracy.
Read the Press Release: ECOT’s Offer of Hush Money to Employees Prompts Call for Reform
News coverage: Toledo Blade: Groups explore extent of ECOT ‘hush money’
ECOT Chickens Come Home to Roost
Now that a courageous whistleblower has come forward to reveal compelling evidence that the Electronic Classroom of Tomorrow engaged in a scheme to defraud Ohio taxpayers out of millions of dollars to educate children they never really had, it’s clear the rats are running fast from the former e-school giant.
However, their past is riddled with examples of protection granted by powerful Ohio politicians, including ones now talking “tough” about ECOT. The issue has been bounced upon by statewide candidates, while those who benefited from millions of dollars worth of ECOT-related campaign contributions are ducking for cover.
The reason is because now that it’s pretty clear that ECOT officials tried to subvert the system to keep getting paid for kids they didn’t really educate, criminal investigations may soon begin. And that’s bad for many politicians because this same whistleblower contacted them on several occasions and was met with inaction.
This issue is dangerous for so many politicians because so many politicians took so many greenbacks from ECOT officials, especially the school’s founder, William Lager. Now that Lager may be facing serious legal entanglements, politicians who spoke at their graduations, or took honorary degrees from school officials are paying for their unwillingness to hold this school to account for 18 years.
ECOT was caught overcharging the state in its first year of existence. Only 109 of more than 3,700 graduates from 2010 have college degrees today. But ECOT was allowed to continue defrauding taxpayers and, worst of all, the children and parents who were fooled into thinking ECOT was an educational operation rather than what it really was: A $1 billion taxpayer boondoggle.
And now newspaper editorial boards are pointing out the obvious: ECOT is now politically radioactive. As the Toledo Blade said this morning:
Ohio’s student reimbursement money is as sacred as any taxpayer money can be. It is a duty of lawmakers to make sure that it is distributed scandal-free and with strict regard to fairness and honesty.
The state of Ohio failed miserably in that regard with ECOT, and the children of Ohio are the victims.
A whistleblower is accusing officials of the Electronic Classroom of Tomorrow of intentionally inflating the school’s enrollment to keep receiving $100 million from the state. And this happened after the school was fined $60 million for … inflating the school’s enrollment.
So why are there now calls for criminal investigations? Because the whistleblower’s claims show a pretty clear intent to defraud taxpayers. But how would a software switch show that intent?
Here’s how. The way ECOT and other charter schools are paid by the state is the school submits student ID numbers of students the schools claim are attending the school. The Ohio Department of Education then pays them out of the state aid meant to go to the school district in which the student resides.
Occasionally, the state will do detailed accounting to verify the attendance records. When it did that for ECOT after the 2015-2016 school year, the department found that ECOT could only demonstrate it had about 40 percent of the students it billed the state for educating. Hence the $60 million fine.
What did ECOT do in response? According to the whistleblower, the school purchased software that would allow the school to more easily claim that they should be paid, even if the student never engaged in any learning. ECOT would thus continue to take more state aid away from school districts — every one of whom outperformed ECOT on state report cards.
So after the state nailed ECOT for inflating enrollment — and getting paid $60 million more than it should — ECOT’s remedy was to game the system so they could more easily justify full state payments for kids who never engaged in learning. They didn’t change their actions; they simply changed software so they could hide them better.
Hence the calls for criminal probes.
The next question is whether the state officials who have received $1.8 million from ECOT officials over the years (with another $1 million to political parties) will undertake the necessary oversight to hold ECOT accountable for the taxpayer money lost to this school. Here is a list of all the politicians and parties who have received campaign contributions from all ECOT employees and just ECOT founder William Lager, who now lives in a multi-million dollar Key West mansion.
Given that the whistleblower reached out to the head of the State Board of Education, who punted the issue to the department’s legal team in August, who then sat on the allegations until reporters started asking about them, perhaps more people should keep demanding justice for the students and taxpayers who have been victimized by ECOT’s money making scheme?
Connecting Education with Work
Effective policies that work and don’t eliminate the voice of the people like HB 512
House Bill 512, the pending GOP legislative proposal to radically reorganize agencies that oversee education and workforce programs statewide has been a lightning rod for opposition (read our earlier coverage here and here) . From home school parents who believe the creation of HB 512’s new, mega-bureaucracy will infringe on their educational rights, to public school advocates who believe that undermining the authority of a publicly accountable Board of Education will harm democracy–folks on all sides of the education policy debate have been unified about one thing: HB 512 must be stopped.
However, the question HB 512 seeks to answer–better connecting education and training with workforce needs–is an essential one about the relevance of education for our state’s kids and students.
We offer here several ways to better connect education with work that don’t involve a wholesale takeover of the state’s elected Board of Education by an unaccountable, gubernatorially-appointed board overseeing a new, mega-bureaucracy. These are listed in no particular order.
Free, or greatly reduced Community College tuition
More than 30,000 students in Tennessee and 7,000 in Oregon have attended free community college in those states, which are two of four that offer free community college to students of various ages. Other states like Arkansas and Louisiana have grant programs that assist with students seeking specific degrees or perform well academically.
Generally, these programs are grants that are so-called “last in” grants, meaning it requires students to apply for all other needs-based grants. Some have income caps. But in Tennessee, which has about half of Ohio’s population, the program cost $12 million a year to cover new high school graduates. This year, they added all adults to the grant program at a cost of $10 million. Even doubling that amount would mean the cost to Ohio would be less than what the state spends on printing services at the Department of Administrative Services.
Ohio already has STEM schools, which are funded like charter schools, but which focus on the technology-related fields people who support HB 512 claim Ohio is lacking. Investing in more STEM schools, but with an eye toward partnering with certain industries, could be replicated around the state. Though their funding model would have to change so it wouldn’t have a detrimental impact on local school districts.
In Arkansas, one of that state’s high schools started a Power Business Academy, which partnered with local businesses to teach skills necessary for workforce success. The result was a much better relationship between the education and business sectors in Ozark City, as well as better opportunities for their graduates. Upscaling similar opportunities in our state could help accelerate the partnerships necessary for similar success.
Breaking down silos
One of the familiar refrains from HB 512 supporters is there are too many silos among the Department of Education, Department of High Education and Governor’s Office of Workforce Development. And the only way to break them down is to merge them into one, unaccountable mega-bureaucracy.
However, breaking down silos doesn’t require such a radical change in the way Ohio delivers education and training. For example, a representative of the Board of Regents and Office of Workforce Development could take part in standards writing at ODE.
Likewise, ODE representatives could be in on any changes the Board of Regents wants to make in curriculum or degree requirements. And the Office of Workforce Development could assist ODE’s development of vocational education options, as well as BOR’s curriculum and degree development. None of these options would require a radical restructuring that robs millions of Ohioans of their voices in education policy development. Yet it would lead to better, more coordinated approaches to improving college workforce readiness of Ohio students.
There are certainly many ideas about achieving HB 512’s goals without continuing down its democratically destructive path. These are three that represent a good step forward. Nobody wants HB 512. But they do recognize that our students deserve to be as prepared for the workforce as possible. That begins with a strong education system that encourages critical thinking, creativity and broad competence in many subjects and skills. HB 512 proponents have yet to explain how any of their radical changes will ensure that for our students. While it would ensure better outcomes for the adults who want to take over Ohio education, the kids who would bear the brunt of this obvious power grab would not benefit.
However, investments in these three ideas would have profound impacts on our students and young people. Instead of figuring out how to give more power to unaccountable bureaucrats, Ohio’s legislature should adopt these common sense solutions that wouldn’t represent a radical power grab by truculent politicians.
This morning, IO’s Education Policy Fellow, Stephen Dyer, will testify in a House committee about HB512, a sweeping proposal to reorganize the state agencies responsible for education and workforce development. The 2600+ page bill, which we wrote about earlier, would eliminate most of the oversight responsibility of the State Board of Education, a body made up of appointees and regional elected members. The measure would leave that body with few responsibilities other than teacher licensure, a move that seems coincidentally timed in the wake of its role in demanding accountability from ECOT, Ohio’s scandal-plagued online charter school (see our earlier post on that).
In Dyer’s words: “it’s hard to see how eliminating 80 percent of the department’s policymaking and accountability functions ensures Ohio’s children are better prepared for the 21st Century workforce.”
All of the testimony for today’s committee hearing can be found on the committee website, listed under “March 7: HB512”.