Monday, July 24, 2017

Even with layoffs and fines, ECOT will make a killing.

Recently it was reported that Ohio virtual school giant the Electronic Classroom of Tomorrow (ECOT) was laying off 350 staff members so the school could pay back the $60 million it owes taxpayers for kids it couldn't demonstrate it actually educated.

ECOT shills have said the state's decision to have the school pay back the fine over two years (at $30 million a year) by removing about $2.5 million a month from its payment schedule has threatened the school's financial viability.

Only if you think at least a 30 percent profit is untenable. I guess compared with the 40-45 percent profit they're used to receiving,30 percent a pittance. But what business wouldn't kill for 30 percent margins?

Oh, and it's probably more -- a lot more -- than that.

Here's how I calculated it. According to the latest data available, ECOT had 607 teachers in the 2014-2015 school year who were paid, on average, $36,038. Assuming that 300 of the 350 layoffs were teachers, that means there are now 307 teachers for the school's 14,207 students -- a roughly 47:1 student-teacher ratio.

However, that means ECOT -- a school without buses, lunch ladies, custodians, or myriad other traditional education costs and expenses, will only spend $11 million of the $73 million the state's preparing to pay the school this coming school year on teachers. So ECOT could give every kid a brand new, $2,000 laptop and still clear 30 percent.

For the record, ECOT kids are definitely NOT receiving $2,000 laptops and the 30 percent calculation doesn't include the 50 additional lost staff, many of whom could be making more than the teachers.

So the margin is probably larger than 30 percent. In fact, it's so large (even with $30 million fewer over the year, ECOT's per pupil state funding of $5,192 is more than what kids in 56 percent of local school districts received from the state last year) that ECOT could still pay politically connected founder William Lager his $20 million a year to "manage" and provide the software for the school and still have about $8 million to pay for its servers, administrators, etc. To give you an idea of what $8 million gets you, that's about what Lancaster Local or Brunswick City schools spend annually on administration.

In other words, Bill Lager can still clean up and the school can still run.

Of course, the school could have paid Lager a mere $10 million and kept all of its teachers, but as with nearly everything else about ECOT, profits trump kids.

No surprise there.

1 comment:

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