ECOT’s first payment from the state for the new school year puts the online charter on a course to collect $103.6 million, even though a just-resolved state Department of Education attendance audit found it was owed only $44.6 million for the 2015-16 school year.
That means even as Ohio starts to recoup the $60.35 million in overpayments from ECOT, the online giant continues to bill the state using the same enrollment system that resulted in the inflated bill to begin with.
The state might be throwing good money after bad, state Auditor Dave Yost said, adding he will ask the Education Department to withhold a portion of ECOT’s monthly payments in an escrow account.
“Frankly, I’m concerned that they may be submitting inflated student numbers to try to maximize their cash flow, and that money will not be recoverable later,” Yost said.
Yost said ECOT recently told the Ohio Supreme Court that uncertainty surrounding the school’s financial viability has led to unprecedented enrollment losses. However, the school’s bills to the state do not reflect any enrollment loss over the previous year, Yost said.
The school is either lying to the justices, Yost said, or lying to the Education Department.
“The number reported accurately reflects ECOT’s enrollment,” ECOT spokesman and lobbyist Neil Clark said in an email. “It does not, however, take into account the ‘percent of time’ factor, which, as part of ODE’s effort to fit a round peg into a square hole, is supposed to account for the new ‘durational’ standard.
“That standard, of course, is at the heart of the case currently on appeal to the Supreme Court. Any adjustments based on that disputed factor will have to be made later because ODE does not even have a system in place by which e-schools, like ECOT, can even make such adjustments.”
ECOT’s most-recent bill reports enrollment of 14,200 students, up from the audited figure of about 6,800 students in 2015-16. In reality, about 26,000 students spent at least some portion of the year with ECOT, but many stay only days or weeks, often logging in for class infrequently, resulting in a much lower full-time student enrollment.
The department’s plan is to recoup the $60 million overpayment by deducting $2.5 million a month from the $8.63 million a month it is currently paying ECOT. Based on the state’s audit of the 2015-16 school year, ECOT would receive $3.7 million per month total and would net $1.2 million after making its repayment.
If ECOT is repaying the state by continuing to inflate its bills, it’s “really not paying anything,” said Columbus Board of Education President Gary Baker.
“I think that should concern all taxpayers and all school districts, and the state department (of Education) as well,” Baker said. “I hope the state is watching (ECOT’s) enrollment closely.”
Department of Education spokeswoman Brittany Halpin said the July payment is based on the claimed enrollment at the end of the last school year, 2016-17. That enrollment is also being audited.
In other words, the 2016-17 ECOT audit might add tens of millions of dollars to what the school owes taxpayers. Meanwhile, it continues to bill using methods that don’t take into account how much time students participate in online classwork.
ECOT failed to show through computer log-in records or offline documentation that many students were getting anywhere near the 920 hours of annual “educational opportunities” required by state law. The school has argued for a literal interpretation of the word opportunities, claiming that as long as it offers students the ability to work online, state law doesn’t require them to actually do so.
A string of court decisions against ECOT have refuted that notion, but the Ohio Supreme Court has yet to conclude whether the state or ECOT is correct.
Asked whether he thought the Department of Education had the legal tools under state law to withhold ECOT’s claimed payments, Yost responded: “Grab them by the dollars, and their hearts and minds will follow.”