If ECOT Closes, It Will Be Because It Failed Accountants, Not Kids

There is certainly a buzz about the Electronic Classroom of Tomorrow now. The Columbus Dispatch reported late yesterday that ECOT’s sponsor – the Educational Service Center of Lake Erie West – has decided to drop the school from its portfolio, which means the school may close by next week.

And while I’ve seen this action hailed as an “about time” moment, I want to remind everyone why the ESC decided to drop the school. Is it because ECOT can’t graduate even 4 out of 10 kids and contributed more dropouts than any other school in the nation?

No.

Could it be because since Ohio went to an A-F report card 46 of the school’s 53 Ohio Report Card grades were Fs?

No.

According to the Dispatch story, it’s “due to the online school’s growing financial troubles.”

Frankly, I don’t get it. ECOT’s financial woes, I mean. 

Hear me out. 

Even after ECOT loses its monthly, $2.5 million repayment (because it billed taxpayers for $60 million more than it should have in the 2015-2016 school year), the state pays ECOT $4,831.30. That’s more than the state pays to educate kids in 265 of Ohio’s 613 school districts.

Yet ECOT is a virtual school. So no buses, janitors, lunch ladies, etc. So the school could pay the 597 teachers it had in the 2016-2017 school year their average $37,527 salary, provide brand-new MacBook Pros from Apple at $1,299 each and still clear about $20 million, or 34 percent.

So what’s the problem?

Especially since it was also reported that ECOT laid off about 350 staff this year. Assuming 300 of those were teachers, that would leave ECOT with a 53 percent margin after paying its teachers and providing new MacBook Pros to every one of its students (which it does NOT do, I might add).

Now, according to state audits, William Lager – ECOT’s founder, who runs the for-profit Altair Management, which runs the school – collects about 4 percent of the funding the school receives from the state. Even with the lower margins, though, that still leaves ECOT with about $16 million to pay its management and software people.

Whatever the case, it’s clear ECOT has utterly failed its kids for years. Yet only when it fails the bottom lines for the adults involved does the school sponsor care enough to shut down this operation.

But this isn’t unusual. Of the 260 closed charters in Ohio, most have closed for financial viability. Closures for academic reasons are relatively rare.

Perhaps they should become less so.

I guess, though, in a way, we’re seeing the free market answer to education with the ECOT situation. Just as when a restaurant can’t pay its bills, it shuts down, regardless of whether it's great or bad at preparing food. 

Likewise in the free market education world, a school’s success is predicated on its ability to pay adults. Not educate kids. While this is becoming less so around the country, and even in Ohio to some extent, the fundamental fact remains that in much of Ohio’s Charter School World, the adults are running an operation for the adults, not the kids.

And that, my friends, is a crime.

State Rep. Misleads on School Funding. Again.

It's not every day that my state Rep. Anthony DeVitis, R-Green, sends me a letter. Bu I received two at my home yesterday -- both addressed rather personally to "Edcuator". So, curiosity caused me to open them. It was a letter explaining what great things he and his colleagues are doing for education in the state's biennial budget.

The budget passed in June, so I'm not sure why I'm getting this a week before Christmas, but whatever.

Anyway, there were four bullet points he mentioned. The first was the removal of a provision that would have forced teachers to shadow a business leader. The second was the elimination of a provision that would have put business leaders on school boards as non-voting members.

Let's pause there.

These two provisions were never in state law. These provisions were proposed by Gov. John Kasich -- the same party as Rep. DeVitis. So he's claiming a victory for stopping a provision proposed by the governor of his own party.

Weird.

The final two are really misleading, though. He claims that the per-pupil funding for students was increased. Which is true. By $100. Now students get $6,000 per student. That's about $600 less than a simple inflationary increase would have provided over the last 10 years.

And one more thing: anytime an Ohio politician tells you the per pupil funding level increased, understand that means the only schools to which this means a definite increase in revenue is charter schools. That's because the small per pupil increase DeVitis touts will likely be offset by cuts to transportation or other areas. But charters never see cuts in those areas because they don't have to provide transportation. So what he's really trumpeting is an increase to funding for charter schools -- most of which do a worse job educating kids than the districts the kids leave -- and cost the state about twice as much per pupil to educate.

Yes, charters don't get local revenue, but they do get about twice as much per pupil funding from the state.

The fourth and final bullet point is that state foundation funding increased by $154 million in this school year and $120 million in the second year. What he and his colleagues never mention is that while the foundation line has increased, other lines that contributed significant revenue for kids in the past have been eliminated, or all but eliminated, by this legislature. For example, in 2009, the state provided about $1 billion in reimbursements for local tangible personal property tax payments the state eliminated in 2005. Now these schools get barely $100 million.

Also, in 2009, there was about $450 million coming annually to Ohio from State Fiscal Stabilization Funds that were intended to be replaced by state funding once the economy snapped back from the Great Recession. But DeVitis and his colleagues declined to replace that funding, effectively eliminating $450 million a year in education funding.

So overall funding since the Great Recession budget of 2009 is almost $900 million less over the course of this budget than districts received at the height of the Recession.

He continues to tout the benefits of HB 170 -- a bill he says (among other things) would "authorize" districts to set up a computer science and technology fund which he said could consist of district revenue, or privately raised money.

Notice the one pot of money he didn't mention? That's right. Not a single state dollar would be designated for these local tech funds. All the bill would do is let districts set aside some money and raise local money for a tech fund. But it's not important enough for the state to actually contribute even one penny.

Add this to the fact that the state is seriously considering spending at least $48 million on an unprecedented expansion of vouchers paid to private, mostly religious schools, and you start wondering if DeVitis and his colleagues are really concerned about the 1.6 million Ohio students in local public schools. If he's willing to drop $48 million or more on vouchers that we know hurt kids' education attainment, why won't he invest a single penny in establishing local tech funds?

I doubt that DeVitis did this independently. He's not on any education committees. I would assume all Republican members are sending around similar letters, trying desperately to explain away their terrible negligence of our state's kids.

But they're going to have to do better than that.

Ohio Charters More Segregated than School District Buildings. Is this the Real Charter School Civil Rights Issue?

A recent story in the Columbus Dispatch revealed that Ohio's charter schools mirror charter schools nationally in that they have been a major contributor to the re-segregation of the nation's public schools.

However, it appears that the Dispatch story was a localized version of a national Associated Press story that used federal data to reach their conclusions. Using that data, the Dispatch found that by 2015, 25 Ohio charters had 5,000 minority students without a single white student.

So, using a similar segregation standard, I decided to take a look at state-level data. And the results are striking.

Last year, in Ohio's brick and mortar charter schools (I excluded eSchools, as the AP did), 27,451 of 48,208 black students attended charter schools with fewer than 15 percent white student populations. That means about 6 in 10 black charter students attend schools with nearly every student being black.

Meanwhile, less than 35 percent of black students in Ohio's urban school buildings attend schools with fewer than 15 percent white student populations.

And outside of the big 8 urban districts (Akron, Canton, Cincinnati, Cleveland, Columbus, Dayton, Toledo and Youngstown), the desegregation is even more remarkable. Only 12.3 percent of Ohio's black students attend schools with less than 10 percent white students. Remember that last school year, about 1/2 of all Ohio charter school students do not come the state's Big 8 urban districts.

Meanwhile, Only 28 of 2484 district buildings fit this segregated definition, which is a stunning 1.1 percent of Ohio's non-Big 8 public school buildings. And only 23.3 percent of Ohio's Big 8 buildings fit this segregated definition.

Ohio's charter schools?

28.6 percent.

Finally, you can look at a simple line graph to see how the distribution of racial composition is much more uniform in Ohio's urban buildings than in charters. What does this mean? It means Ohio charters tend to be more frequently segregated and to a greater degree than their urban school building counterparts.

Look, it's bad enough that Ohio charter schools overall have a performance problem and a funding problem. Now it appears they have a serious racial segregation problem -- an issue that was deemed unconstitutional by the U.S. Supreme Court in the landmark Brown v. Board of Education case in 1954. It seems to me that allowing more students greater access to a more segregated school system would run afoul of that historic ruling.

Are there exceptions to this rule? Of course. But overall, the trend is clear.

Can we please address these serious and significant problems quickly and firmly, Ohio General Assembly and Gov. Kasich?

Anyone care to hold their breath while we and our kids wait?

Kids in 100 Ohio School Districts Lose Overall Funding to Charter Schools

One of the arguments pro-charter folks typically trot out to oppose the "charter schools cost students in local public schools money" argument is that while state funding drops, per pupil funding goes up because no local funding follows the charter school student to the charter school.

The way charters are funded Ohio is if a child decides to leave Columbus City Schools, the state removes at least $6,000 in state aid originally meant for Columbus to educate the student and sends it to the privately run charter school. The problem is that the state would have only given Columbus about half that amount if the students had stayed in Columbus. So it doesn't take long for that state funding loss to add up.

Columbus then has to fill in the state funding gap with money raised from local taxpayers. And while that will mean an overall per pupil increase for some districts, the reliance on locally raised property taxes jumps significantly, which is the exact opposite result the Ohio Supreme Court ordered the Ohio General Assembly to fix four different times.

Last school year, for example, several school districts saw their state-funded share of the education funding pie drop by as much as 27 percent. Here is a list of the top 25 percentage state funding share drops.

As you can see, the major urban school districts see the largest percentage of state aid cut from charter school deductions. So this means the state's unconstitutional funding system that relied too much on property taxes is exacerbated the worst in our urban core.

But there is also a phenomenon that pro-charter advocates rarely discuss: What about school districts that don't raise enough local revenue to make up for their huge state funding losses to charter schools?

Yes, there are school districts that fit this mold. In fact, about 15 percent of Ohio's school districts fit this bill as kids in 100 school districts lose overall funding to charter school deductions.

That's right. In 100 Ohio school districts, charter schools take so much of their state revenue that these districts can't raise enough property taxes to make up the difference.

Here are the top 25 overall, per pupil funding losses to charter schools. Remember that every kid in each of these districts lose overall funding because charter schools take so much local revenue the local districts can't raise enough property taxes to fill in the gap.

Now these per pupil funding losses are not enormous. But the fact is that they happen, and they do so fairly frequently. And even when they don't, the charter school funding system makes our state's unconstitutional, property tax overreliance worse, not better.

It would be one thing if charter schools were providing better educational options for our kids. But they, on the whole, are definitely not doing that.

So here's the result of more than $11 billion spent over 20 years on Ohio charter schools: schools that perform worse than the schools they were meant to compete with all while making Ohio's school funding system more unconstitutional.

Think we need some reform?

New Sponsor Ratings Reveal Flaws in Ohio Charter Reform

The latest Ohio Charter School Sponsor evaluations are out, and once again there are serious incongruities with overall and academic ratings. Some of the sponsors (non-profit organizations that oversee Ohio's charter schools) with the highest academic ratings may be forced to close as soon as next year because their overall rating is poor or ineffective.

Meanwhile, some sponsors with effective ratings -- meaning they can keep taking on more charter schools -- have D or F grades for academics.

This system comes from House Bill 2 -- Ohio's most far-reaching attempt to reform its nationally ridiculed charter school system. The goal of the evaluation system was to put the screws to the non-profit sponsors, which are supposed to ensure the academic performance of its charter schools, but had mostly just been interested in collecting their 3 percent fees from the schools and let the schools do whatever.

The evaluations rate sponsors on a four-tier scale. The tiers from top to bottom are: Exemplary, Effective, Ineffective and Poor. If they rate in the top two categories, they can keep running charter schools. Rate in the bottom two and they may be forced to shut down. But it looks like there remain kinks in the evaluation system -- kinks I was concerned about from the very beginning of the House Bill 2 debate, despite my overall support for the bill.

What you can see in the chart to the left is a couple things: 1) All the highest rated academic sponsors are public entities -- primarily school districts and 2) While 6 of the 9 highest rated academic performers received an effective or exemplary rating, 2 were deemed ineffective and one was rated poor, meaning it will be banned from operating anymore as a sponsor.

This outcome is not in the spirit of House Bill 2 -- the landmark charter school reform law that set up this system. However, it is in the actual law. Why? Because there are three elements to the sponsor rating -- academics, adherence to current Ohio regulations and compliance with national sponsor standards set by the national charter school sponsor lobbying organization.

Sounds fair, right? Except all three measures have to be weighed equally under the law. Quick, what's your GPA if you get an A and two Fs? Right. B-. But what if you're an English major and you get Fs in Shakespeare and Chaucer and your A is in Bowling? Shouldn't it matter that you're failing at your primary function? Likewise, what if you're getting an A in Shakespeare, but you get Fs in Calculus and Chemistry?

I see the state's charter school sponsors' primary job as ensuring the academic quality of the schools they oversee. If they can dot their bureaucratic i's and cross those t's, fine. But it doesn't matter nearly as much to me as whether their kids are learning.

This is why I've pushed for greater importance to be placed on the Academic portion of the evaluation than the other two, mostly bureaucratic, portions. This way, Scioto County Career Technical Center could still sponsor its school because the school is doing very well. The Department of Education could then work with the sponsor to help dot its i's a little better. But shutting down one of only 8 out of 45 Ohio charter sponsors to receive an A for academics seems misguided and prime bureaucratic bungling.

Likewise, I would like to see sponsors with D or F ratings not be able to be considered Effective, thereby being allowed to open more charter schools.

I understand that many of these poorly rated sponsors have far more schools than the ones with higher academic ratings. However, there is also an argument to be made that with more schools, there's more leeway for failure -- one school's failure shouldn't be as important if you have 20 others that don't. Sponsors with one school sink or swim with that one school's performance.

It is also remarkable that of the 17 sponsors with D or F academic ratings, only 7 are rated overall as ineffective or poor. So while the top end of the academic rating scale is primarily populated by the top two overall sponsor ratings, the bottom end of the academic rating scale is not likewise populated by poor overall ratings.

This tells me that academically poor performing sponsors have figured out the GPA conundrum I mentioned earlier, and that if they simply pay more attention to bureaucratic details, their academic performance won't matter. That's because academics are only 1/3 of your rating. Bureaucracy is worth 2/3 of your rating.

I have said and will continue to say that a sponsor's academic rating should count for 50 percent of a sponsor's grade, with the other two counting 25 percent each.

Until this adjustment (or something like it) is made, we will continue to put some of the best academic performing sponsors on notice and let slide many of the worst performers.

How Kids Not in Charters Are Hurt by Charter Funding System -- A Case Study

It's really easy to sit back and make esoteric arguments about how Ohio's charter school funding system hurts kids who are not in charter schools. And there's a recognition from leaders in the Ohio General Assembly that the funding system -- which diverts state funding meant for a district to a charter -- is a shell game that leave school districts with far less state revenue than the state says they need to effectively educate their students. This, in turn, forces school districts to use sometimes large segments of their locally raised revenue to make up the difference.

But what does that mean for a kid attending a local public school district?

As an example, I'm going to use a student in Columbus City Schools. Let's assume he or she started first grade in the 2005-2006 school year, which would make this student a senior this year (by the way, I was first elected to the Ohio House in 2006. Wow, does this make me feel old!)

Anyway, I looked at how much state funding this student lost each year of their career because charter schools receive so much more per pupil state funding than Columbus City Schools would have received for the same kids. (Looking at state funding reports here and doing addition and subtraction based on number of students in Columbus before and after charter students leave, as well as how much state funding comes to Columbus before and after charter students leave.)

Yes, I know charters can't raise local revenue. However, the legislature has chosen to not put its money where its school choice mouth is and create a separate fund to make charter schools whole. Instead, they make up a chunk of the local funding disparity by removing extra state funding from the local school district's bottom line, forcing local property taxpayers to do their work for them.

So, for every student who began their Columbus City Schools career in 2005-2006, they have received $10,548 fewer in state revenue, with another $1,142 set to be lost this, their senior year (charter enrollment is so volatile, this figure could change substantially during the year). To give you a sense of scale, that amount equals about the amount of state funding these Columbus students received their first three years of school -- in many ways the most important years.

So because of Ohio's charter school funding system, kids in Columbus essentially are fully locally funded for about 3 of their 12 years in Columbus City Schools. The state only gives them their state funding for about 75 percent of their academic careers. All so schools like the nation's largest dropout factory -- the Electronic Classroom of Tomorrow (which has received the most money from Columbus of any charter for several years) -- can keep collecting their money and failing to graduate even 4 out of 10 students.

Yes, there are high performing charter schools in Columbus (and elsewhere). I visited one on Monday -- United Preparatory Academy - State. And they are doing great work for many kids. But at what cost to the 90 percent of Ohio's kids who aren't attending charters?

Let me say this is not UPA's problem. It's a state leadership and legislative problem.

But is it worth the relatively small successes statewide in a handful of charter schools so every kid (let me repeat, every kid) in Columbus loses 1/4 of their state revenue over the course of their academic careers?

And what's the impact on local taxpayers?

Local Columbus taxpayers have had to subsidize charter schools to the tune of $556 million during our hypothetical student's career. In other words, more than 1 out of every 10 dollars raised locally during that time frame have gone to fill in the lost state revenue to Ohio charter schools, increasing the district's reliance on property taxes to pay for schools, which is the exact opposite of what the Ohio Supreme Court ordered the state legislature to do four different times.

The chart on the left shows you how many local property taxes were raised in Columbus since the 2005-2006 school year (from the Ohio Department of Taxation), and how many were left after the state funding lost to charters was taken out.

These results are repeated throughout Ohio. Urban. Suburban, Small Town, Rural districts. No type of district is immune from these charter funding problems.

Statewide, the average Ohio student who started first grade in the 2005-2006 school year has lost $2,332 in state funding during their academic careers to the charter school deduction, with another $242 expected to leave in this, their senior years. And local taxpayers have been forced to use roughly 4 percent of their property tax levies to make up for that loss -- money no voter ever approved for such a purpose (except, it could be argued, for a 15-mill levy in Cleveland that partially goes to charters).

The system has been broken since the beginning. Ohio needs to develop a funding system that accurately calculates the cost of education in charter schools and doesn't fundamentally hurt kids whose parents choose to keep them in local public schools. Lawmakers need to put their money where their mouths are and fund charters fairly using their own, committed state resources, not exacerbate an already unconstitutionally funded school system that's increasingly reliant upon local property taxes.

Our kids desperately need this system to change so it can work for all of them. For it currently works for none of them.

ECOT Enrollment Down 20 Percent. Charter Enrollment Down for 4th Consecutive School Year.

It appears that the Electronic Classroom of Tomorrow -- the state's first and (maybe) largest online school and nation's largest dropout factory -- has adjusted its enrollment figures to adapt to the Ohio Department of Education's newfound interest in verifying their students.

ECOT was found to have overinflated its student counts by 60 percent in the 2015-2016 school year and 20 percent last school year. The state now says ECOT owes taxpayers more than $80 million in back payments for those two school years.

However, it does appear that this year's enrollment drop, which came after after ECOT's annual October headcount performed by the Ohio Department of Education, matches up with what ODE determined was last year's enrollment inflation at ECOT.

Prior to October's count, ECOT was being funded for 14,209 students. After the October count, that number dropped to 11,382. ODE has not posted the detailed, grade-level October headcounts yet for this year.

These detailed data have increased importance this school year for ECOT because they have a preliminary "Dropout Recovery and Prevention" status, which grants them much easier accountability standards, allowing them and their sponsor -- the Educational Service Center of Lake Erie West -- to keep operating and collecting large sums of taxpayer funding with little consequence for the school's putrid performance.

However, the school has to show that more than half of their students are older than 16 and enrolled in a dropout prevention or recovery program or are in "crisis". Previous years' counts show that ECOT likely would not have met the requirement because it had too many students younger than 16. The October count could clarify whether the school would meet the requirements for the lower academic standards.

The enrollment drop means that ECOT, which was slated to receive $73.6 million after paying back taxpayers for the overbilling issue, will now receive $53.9 million.

In 2015-2016, ECOT received $109 million.

ECOT is suing the state to keep ODE from clawing back the $80 million it took from taxpayers for kids it couldn't prove were actually participating in education programs at ECOT. The school has said that if it is forced to make the payments, it will have to shut down in December.

In a side note, overall charter school enrollment is listed at 110,187, the sector's lowest level since the 2011-2012 school year and what would represent the fourth consecutive year of overall charter school enrollment has dropped from its high of 120,894 students in the 2013-2014 school year.