Judge orders quick mediation to get ECOT takeover settled
A hearing Friday COLUMBUS — on whether to appoint a receiver to take over the now-closed Electronic Classroom of Tomorrow took an unusual turn in an effort to get the issue resolved quickly.
The Educational Service Center of Lake Erie West, ECOT’s sponsor, voted Thursday to shut down the financially troubled school. On Friday, the two sides were in court as Lake Erie West attempted to get a court-appointed receiver to operate, manage and wind down school operations, such as ensuring student records are properly transferred.
But before that is decided, Franklin County Common Pleas Court Judge Judge Michael Holbrook called on a fellow judge who just happened to be sitting in the audience to immediately do a mediation session between ECOT and Lake Erie West.
ECOT legal counsel Marion Little argued that Holbrook could not appoint a receiver at this time because the school’s contract with Lake Erie West requires mediation to work out disputes.
“They asked for a receiver because apparently they don’t think they can do their job,” Little said. “They’ve been paid substantial fees ... and they don’t need a receiver to tell them how to do their job.”
John Borell, legal counsel for Lake Erie West, argued there was not time to do mediation, considering that 12,000 ECOT students needed their records organized and transferred, among other issues.
So Holbrook spotted Judge Mark Serrott in the audience and asked him to do an instant mediation session. Serrott agreed and took the two sides behind closed doors.
“Sometimes you have to think outside the box to accomplish things,” Holbrook said. “The chief interest for me is the kids.”
If the mediation fails, Holbrook will continue with the hearing to decide on appointing a receiver — a person who reports directly to the judge and performs whatever duties the judge assigns.
Legal counsel for state Auditor Dave Yost said the office supports the assignment of a receiver.
Doug Cole, counsel for the Ohio Department of Education, told Holbrook that the department was staying out of it.
Lake Erie West says it had no choice but to suspend its sponsorship of ECOT based on the school’s financial situation, which had the school running out of money in March.
The financial trouble is a result of the Ohio Department of Education ordering the school to repay $80 million for students who were fully funded but did not meet the state’s minimum 920 hours of annual instruction.
According to a review by Yost, ECOT still owes $42.7 million of the initial $60 million repayment to the state for the 2015-16 school year. The Department of Education had been subtracting $2.5 million per month from the school’s state funding payments to repay the amount.
The school also owes nearly $20 million for the 2016-17 school year. Yost noted that the Department of Education has withheld another $8.3 million from ECOT’s payments, but that relates to an expectation that ECOT submitted inflated enrollment figures for the current school year.
ECOT sued to block the state from recovering the funding, arguing it illegally changed the rules on how to audit enrollment.
Two courts have ruled against the school, and the Ohio Supreme Court is set to hear the case in mid-February.
If the high court rules against ECOT, Yost said two for-profit companies run by ECOT founder Bill Lager, Altair Management and IQ Innovations, are responsible for $10.7 million of the total owed by the school, while Lake Erie West owes $804,560.
ECOT officials said they tried to work out a different repayment schedule with the Department of Education in an effort to stay open through the end of the school year.