ECOT Case Will Determine the Fate of All of Ohio’s Charter Schools

By Scott Pullins


In 2001 a group of public school employee unions brought litigation against the State of Ohio, various charter schools including ECOT, and their management companies.  


Their contention?  


That the state’s charter school legislation which permitted privately operated schools to receive public money was unconstitutional.


The 2005 oral arguments are strikingly similar to the issues now being debated.  Those archived oral arguments can be viewed here.


Fortunately, the Ohio Supreme Court, by a narrow 4-3 majority, upheld the constitutionality of this system.  


Unfortunately, those that want to shut down every charter school in Ohio haven’t given up.  They are now trying to overturn this seminal 2006 decision through a series of backdoor legal actions tied to the current ECOT litigation.  


Let me explain:


In 2016 during the midst of the presidential primaries, a group of school choice opponents within the Ohio Department of Education, along with the Governor’s office, discovered a way to go after online charter schools.   As a result of their actions, the largest online school, ECOT, was closed. 3rd Rail Politics has extensively covered this issue.  


Additionally, six other smaller online schools have closed while three are struggling on repayment plans.  


Those efforts were just the beginning.  

Now, unless the Ohio Supreme Court overturns the lower courts and find those efforts unlawful, the path will be clear for bureaucrats and ambitious politicians to eliminate all of Ohio’s charter schools.  


Yes.  I said all.


Let me explain further:


In a draft complaint that the Ohio Attorney General seeks to file in Franklin County, the state is attempting to declare that how charter schools have lawfully operated in Ohio for nearly 20 years is now somehow inherently fraudulent and unlawful.  And in doing so they are seeking to recover funds personally from charter school management companies, their owners, and individuals that authorized those expenditures.  


Here are some of the factors that they argue prove that the management company (operator) behaved fraudulently and unlawfully:


  • They developed the concept of delivering K-12 educational services throughout the state via the internet.


  • They developed the charter school’s name.


  • They identified the type of students the charter school would appeal to.


  • They formulated the business plan for the charter school, including sources of capitalization.


  • They pursued a charter for the charter school, first with ODE and ultimately received a charter through their sponsor.


  • They recruited the members of the charter school’s governing authority.


  • They recruited and supervised the charter school’s key staff.


  • They selected and/or developed curricular materials for the charter school.


  • They searched for and negotiated with vendors who would provide necessary goods and services to the charter school.


  • They represented the charter school in interactions with the press and the general public.


If these actions prove that ECOT, their officers, their management companies, and their officers are guilty of fraudulent and unlawful actions, then so is every other charter school and management company in Ohio.  


Here’s why.


In Ohio a charter school can operate in just one of three different ways:


  1. The charter school board can hire a director and employees and directly operate the school.


  1. The charter school board can hire a for-profit management company to help them operate the school.


  1. The charter school board can hire a non-profit management company to help them operate the school.


In almost every case in Ohio, charter school boards elect to operate under either scenario two or three.  Why? Because of the great capital investment required to open a new charter school.


In most cases a new charter school begins with no money and must rely upon a management company to fund the costs of leasing, purchasing, renovating, or otherwise acquiring a building, desks, books, computers, software, curriculum, staff and so on.  Most banks are simply not willing to loan hundreds of thousands if not millions of dollars to a brand-new nonprofit organization with exactly zero assets.


As a result, typically a charter school board contracts with one of these companies or groups and borrows lots of money that will be paid back in later years through lease payments and management fees.  That’s how the process has worked, successfully, for over twenty years.


Until now.


Opponents of charter schools in Ohio have not been able to shutter these schools directly through either the legislature or the courts.  Instead, they were able to persuade the Ohio Department of Education to issue retroactive rules that opened the door to indirectly do the same thing.


If the now six members of the Ohio Supreme Court find that the actions by the Ohio Department of Education were lawful, then Ohio charter schools are done.  Maybe not today and maybe not tomorrow, but still very soon.


Why would charter school board members, management companies, employees and investors want to operate in a system where normal, everyday actions could someday put them in personal, financial jeopardy by out of control government bureaucrats?


They simply wouldn’t and the opponents of charter schools will have won.  


I simply cannot state this more plainly.  The fate of every charter school in Ohio now rests in the hands of six members of the Ohio Supreme Court.