ECOT: State clawbacks couldforce closure
TheElectronic COLUMBUS— ClassroomofTomorrowsays it will close its doors by January unless the Ohio Supreme Court blocks the state’s effort to recoup money from the online school for unverified enrollment.
The Ohio Department of Education is in the process of reclaiming $60 million fromthe state’s largest charter school after its enrollmentreviewfoundthatECOT was unable to verify about 60 percent of its claimed full-time students for the 2015-16 school year. That money is being deducted at $2.5 million per month over two years.
The department also recently informed the school that, pending appeal, the state will seek to recoup about $19 millionmore, after a review of ECOT’s 2016-17 enrollment came up short by 18.5 percent.
The Supreme Court denied a previous request by ECOT to block the state from recouping funds until itsappeal isheard. Twolower state courts also have ruled against the school, even as ECOTsaid the state’s actions would put it into a death spiral and force it to close.
The school’s board voted in August to lay off 250 employees and slash $56 million from its budget.
With the latest reductions, which also includes an additional 12 percent subtracted from ECOT’s state funding based on the state’s belief that current-year enrollment would not total what ECOT claimed fromthe prior year, the school says it will run out of funds even faster, resulting in the loss of 800 jobs and force 12,000 students to find a new school or “potentially drop out altogether.”
“This newly-increased funding reduction willhave a fatal impact on ECOT’s continuing viability, in the short term,” the school wrote in its filing.
ECOT argues there is no harm in delaying the recovery of funds.
“If ECOT prevails, then (the department’s) unilateral funding clawbacksareunlawful, and thus, ECOT would be entitled to full funding for all school years in question,” the school argued. “But, even if (the department) prevails, its clawback of funds (at least until ECOT is forced to close) will simply be delayed.”
According to documents ECOT filed with the court thisweek, the school’s ending cash balance will go from $17 million in July to negative $302,000 by January.
The school in recent years has paid more than $20 million annually to software and management companiesownedbyECOTfounder Bill Lager.
Also lastweek, four other, smaller, online charter schools, including Newark DigitalAcademy, filed a brief in support of ECOT.
The brief argues that the law does not authorize the state to require that online schools verify their enrollment via log-in durations — a new standard that the Department of Education began employing in its enrollment reviews last year. Previously, the department did little to verify that students at online schools were participating in the 920 hours of annual “learning opportunities” required by the state.