Ohio's Virtual School Scandal is a Warning to the Nation

The Right Wing

When unscrupulous operators reap huge profits from charter schools—and then invest their profits in political contributions to the state legislators who are supposed to regulate those same charter schools—taxpayers are bound to lose.

Once the money begins to flow, legislative oversight becomes difficult.

With Betsy DeVos, a long-committed charter school proponent, in charge of the U.S. Department of Education, the country should look to recent goings-on in Ohio as a warning sign of what can happen when public institutions are privatized and an example of why a moratorium on more of these schools is necessary.

In 2000, Bill Lager founded the Electronic Classroom of Tomorrow and the two privately held, for-profit companies that operate the school—IQ Innovations, which provides ECOT’s curriculum, and Altair Learning Management, which manages the school’s operations. According to an old 2003, Ohio Department of Education policy, online charter schools were paid a per-pupil amount from the state for every student enrolled. Until 2015, there was not a requirement that virtual academies demonstrated actual daily participation.

Once the Legislature began demanding proof that students were regularly logging on to their computers, Lager and his attorneys have blamed the state for suddenly and unfairly changing the rules. In the 2015-2016 school year, ECOT was paid $106 million in public tax dollars for the more than 15,000 students it said were enrolled, but the state was able to verify the active participation  of only 6,300 students.

The state has demanded that ECOT pay back $60 million the school was over-paid for the 2015-2016 school year, but Lager has used his connections to the state’s biggest lobbyists and key Republican friends in the legislature to pressure lawmakers, even creating attack ads on TV aimed at the Department of Education.

Thanks to relentless exposure of the scandal by the state’s major newspapers, it appears, finally, that Ohio may claw back some of the tax dollars Lager has stolen. But the state and a lot of local school districts are still owed $60 million for the 2015-2016 school year. 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.

Lager has been in court all year to block the state from making ECOT repay the money. In mid-June, the Ohio State Board of Education voted almost unanimously 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.”

After the appeals court ruled on June 29 against ECOT, Lager filed an immediate appeal to the Ohio Supreme Court. The Columbus Dispatch reminded readers, “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.”

Lager has also worked to drum up sympathy.. First, ECOT said the investigations would mean the loss of jobs for 350 employees, a quarter of its staff. Its lobbyist also warned that should the state succeed, the school would have to close, ruining the future of its students. (The Plain Dealer reported on July 12, however, that ECOT’s cash reserves total $17 million, and the school pays $21 million every year to Bill Lager’s two privately-held companies.)

Lager has also invested lavishly to block the state’s crackdown. In late June, the school began running a TV ad, which ECOT later admitted was paid for with tax dollars. The ad is narrated by a 2017 ECOT graduate who says in the ad, “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 end of the ad is signed “Ohio’s children.”

The TV ad became too much for Ohio’s loyal Republican state auditor, Dave Yost, who felt called to step in. Yost sent Lager a cease-and-desist order, telling the Columbus Dispatch, “This is a very dangerous precedent—where money can be taken by force from taxpayers to tell the legislature what to do.”

In mid-June, as ECOT’s attorneys prepared for an appeal to the Ohio Supreme Court, State Representative Bill Seitz introduced a bill in the Ohio House to allow ECOT to delay payment of the money it owes, if its appeal to block the repayment were to fail.  The Akron Beacon Journal editorial board commented on the significance of Bill Seitz’s proposed legislation: “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.”

Seitz’s bill was never enacted.

If the Ohio Legislature finally stops ECOT’s theft of tax dollars, it will be due only to relentless press coverage. As Brent Larkin commented in the ClevelandPlain Dealer:

“For years, one of the worst-kept secrets in the nation's public education community was that Ohio was a state where legislators would gladly sell out children in return for sizable campaign contributions from charter schools run by for-profit management firms….Reporting by newspapers throughout Ohio… exposed this state as the poster child for corruption and failure in its halfhearted attempts to require that for-profit charter schools actually educate children.”

Telling the truth about Ohio's charter school corruption is only a start. As lawmakers sort out ways to effectively address the political cronyism behind these schools, what should be abundantly clear to the state and the nation is that continuing to expand charters will only worsen the problem.

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