Do as I Say, Not as I Do

By Scott Pullins


For over a year now, the Ohio Department of Education (ODE) has battled in courtrooms, the statehouse, and through the media with officials from Ohio’s largest online school, ECOT.  The gist of the disagreement comes down to this.  


In 2016, ODE officials, well after the school year had begun, issued new “guidance” on how online charter schools should calculate enrollment.  Using this new “guidance”, ODE conducted an audit and declared that ECOT had undocumented attendance by 9,000 students and thus owed the state approximately $60 million in repayments.


ECOT, along with every other online school in Ohio, relied upon the language of the statute, a 2003 written agreement with ODE, and their prior history with the auditors in determining how enrollment should be calculated.  The disagreement has spawned multiple lawsuits with the likely final litigation now pending in the Ohio Supreme Court.  


Surprisingly, Ohio has taken a diametrically opposite position on the issue of “guidance” and legislative intent as a result of an altogether different dispute with the federal government.


In November, the Office of Inspector General of the U.S. Department of Health and Human Services issued a report entitled Ohio Received Millions in Unallowable Bonus Payments.  The full 19 page report can be read here.


The gist of this argument will be familiar to readers of 3rd Rail Politics.  Essentially, the Federal Government is arguing that the State of Ohio owes a repayment of $29.5 million to them because Ohio overstated enrollment in a Medicaid bonus program.  Well before the bonuses were paid, the Federal Government issued “guidance” to state officials in the form of a 2009 18 page letter which explained the criteria and calculations.  Additional information and guidance was sent to the States via email on December 12, 2011. The email stated, “The same logic and basis that was used for developing the FY 2007 baseline should be used by each State for submitting the average monthly enrollment for children for the current fiscal year for which the bonus payment is being determined.”


In their response to the audit, the State of Ohio expressly acknowledged that it had failed to follow the criteria that it was given by the Federal government in 2009 to calculate enrollment.  Nonetheless, the State asserts that its position is correct anyway and bases its determination on their interpretation of the statute that authorizes the bonus program.  In fact, Michelle Horn, Chief Financial Officer of the Ohio Department of Medicaid writes that the Federal Government’s position “doesn’t seem correct for both the word and spirit of the statute.” The Federal Government, in rejecting this position, argues that it, not the State of Ohio, is to be deferred to in interpreting a federal statute.  


The difference here is that the State of Ohio was given specific instructions in 2009, prior to applying for and getting the bonuses, as to how to count enrollment.  They then consciously decided to disregard the instruction and attempted to obtain the money based upon their failure to follow the long established criteria.  


Meanwhile, ECOT was not given notice until nearly the end of the school year that ODE had changed the way it calculates enrollment.  In fact, ECOT had been calculating enrollment since 2003 and passed ODE attendance audits in 2002, 2003, 2004, 2005, 2006, and 2011 based upon the written instructions in the ECOT ODE 2003 Funding Agreement.  


Rick Teeters, the now retired Superintendent of ECOT said, “isn’t it amazing that for 13 years all eSchools followed ODE and the Auditor of State's office procedures and there were no issues, then suddenly in the summer of 2016 all the eSchools under review are required to repay millions.”  


According to an article published on September 4, 2016 in the Columbus Dispatch, Wayne Struble, then the acting Chief of Staff for Governor Kasich, made the final decision to proceed with the new criteria for calculating enrollment for ECOT.  3rd Rail Politics asked Mr. Struble, who still works for the Kasich administration as Director of Policy, whether this was a decision made ultimately by him or by the Governor.  Mr. Struble failed to respond by the time we published.


When it comes to calculating enrollment in government programs in Ohio, it's do as I say, not do as I do.