Will Any K-12 Funders Still Back Virtual Charter Schools After This Scandal?

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Plagued by scandal, Ohio's largest online charter school appears to be on the verge of closure if the state's highest court upholds an order for the school to repay millions in state funds that were granted for attendance numbers subsequently found to be inflated. Education news site The 74 reported recently on the latest troubles facing the school.

The current crisis surrounding the Electronic Classroom of Tomorrow (ECOT) charter school became headlines in Ohio just over a year ago, but its underlying problems are years in the making—and have brought more negative attention to the broader idea of online charter schools, an idea once championed by many school choice advocates and funders, but from which many have since distanced themselves.

Founded in 2000, ECOT, with more than 15,000 students in grades K-12 across Ohio, is that state's largest charter school—and one of the state's worst-performing schools, charter or otherwise. In 2014, the school had a high school graduation rate of only 39 percent, less than half the statewide graduation rate. Yet, as ECOT's enrollment soared over the years, so did the amount of state dollars flowing to the school and its for-profit operators. 

Repeated negative press about low academic performance at ECOT triggered audits over the past two school years—2015-16 and 2016-17—by the Ohio Department of Education (ODE). State auditors found that despite an enrollment of more than 15,000 students, the school could document consistent attendance for fewer than half.

In an online charter school such as ECOT, where students take classes via computer, logging in to the school's site constitutes attendance. ODE lawyers estimated that to be considered full-time students, students at ECOT would have to receive more than 900 hours of instruction. However, the state's lawyers reported that many ECOT students logged in for only about an hour each day. At a brick-and-mortar school, there is a term for being in school for only an hour a day and away the rest of the time: chronically absent.

The lack of attendance meant that ECOT had overbilled the state, and in June of this year, the Ohio Board of Education voted 16-1 to order the school to repay $60 million. ECOT protested that the decision would ruin the school financially and claimed that the state changed the criteria for online school enrollment, and applied the changes retroactively. A later audit found that ECOT had overcharged the state an additional $19 million.

Ohio courts have supported the decision of state educational authorities. ECOT has appealed to the Ohio Supreme Court. If this final appeal fails, ECOT will be forced to close, according to the school's administrators. Over the summer, ECOT cut spending by millions and laid off more than 200 staff members.

Some have blamed the fallout from ECOT for the disbanding of Ohio's largest charter school advocacy organization. In December 2016, the Ohio Alliance for Public Charter Schools announced it would close at the end of 2016, after more than a decade in which it was an influential player in the state's charter school policy. Critics say poor performance by Ohio charter schools—80 percent of which received an "F" in the state's report card system—caused funder support for the alliance to dry up. In years past, the Ohio organization had counted the Gates Foundation, the Thomas B. Fordham Foundation, and the Walton Family Foundation among its supporters, but by the end of 2016, none of those organizations were listed on the alliance website as current funders, according to the Columbus Dispatch.

The storm over e-schools that deliver all of their instruction online is not limited to ECOT or to Ohio. In Pennsylvania, where more than 30,000 students log in to online charter schools, none of the schools meet that state's benchmark for passing, and the graduation rate is only 48 percent, according to a report by Politico. Pennsylvania, Ohio and California account for more than half of the nation's online charter school enrollment, according to Politico, which cited the National Alliance of Public Charter Schools.

Walton, one of the biggest supporters of charter schools in the funder community, became decidedly unenthusiastic about online charters in 2016. A Walton-commissioned study by Stanford found dismal academic performance, with many students failing to learn even the basics. In an Education Week column that year, two Walton officials stated that if virtual charters were grouped into a single district, it would be the country's ninth-largest and one of the worst performing.

Online charters still have their defenders, though, including a powerful one in Education Secretary Betsy DeVos. Politico reported that DeVos has touted online charter schools as a way to expand school choice in rural areas, where few alternatives to the local public school district exist. DeVos' key message point as secretary has been that parents intuitively know what good schools look like and will select the best schools for their children if given a variety of choices. As a school choice advocate and philanthropist in her home state of Michigan, DeVos and her husband invested in online learning.

The crisis at ECOT, however, and the diminished support among funders for this type of schooling has the potential to change more attitudes toward e-charters. While many ECOT parents may have chosen the school because their children were not succeeding in traditional settings, they may be forced to reevaluate their options if ECOT closes. Bad publicity surrounding ECOT and other online schools prompted Ohio lawmakers to cap enrollment growth at such schools, meaning other online schools will not automatically be able to absorb ECOT students displaced if the school is forced to close.