Who’s on hook if charter school closes?

If ECOT closes before repaying all money owed to the state, the online charter school would be turned over to the attorney general’s office for collection, state officials say.

Beth Gianforcaro, spokeswoman for state Auditor Dave Yost, said he thinks at least some of the money could be recovered from Altair Learning Management and IQuity, companies owned by ECOT founder Bill Lager that got millions from the school, or from Lager personally.

In recent years ECOT has paid more than $20 million annually to the software and management companies owned by Lager.

The Electronic Classroom of Tomorrow said in a court filing it won’t survive past January unless the Ohio Supreme Court halts the state’s effort to recoup money for unverified enrollment at the online school.

The Ohio Department of Education is in the process of reclaiming $60 million from the state’s largest charter school after its enrollment review found that ECOT 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 million more, 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 for an injunction to at least temporarily block the state from recouping funds until its appeal is heard. Two lower state courts also have ruled against the school, even as ECOT said 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 includes an additional 12 percent subtracted from ECOT’s state funding based on the state’s expectation that current-year enrollment would not total what ECOT claimed from the prior year, the school says it will run out of funds even faster, resulting in the loss of 800 jobs and forcing 12,000 students to find a new school or “potentially drop out altogether.”

“This newly increased funding reduction will have 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 clawbacks are unlawful, 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.”