Innovation Ohio’s half truths about ECOT and school funding

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Over the past month, local newspapers across Ohio have blasted headlines such as “Local schools lost millions to ECOT” and “Study: Now-defunct ECOT siphoned $2.6 million from Athens-area schools.” Taking a statewide view, the Columbus Dispatch ran a piece titled “Liberal group says ECOT diverted $591M from public schools in 6 years.” These news articles are all based on an analysis by Innovation Ohio—an anti-charter school group—that calculates the amount of state money that transferred from local districts to the Electronic Classroom of Tomorrow (ECOT) from 2012–13 to 2017–18, the year in which the behemoth online charter school closed.

First off, ECOT’s shameless political self-dealings were outrageous and have harmed the reputation of responsible charter public schools in Ohio. Its academic results were astonishingly bad, with abysmal value-added scores—estimates of its impact on student growth over time—being the clearest signs of educational dysfunction. (No, its low graduation rates are not compelling evidence as some claim; the school likely enrolled significant numbers of credit-deficient students, artificially “deflating” their graduation rate.)

All in all, count me sympathetic to those who are outraged and indignant at the school. But ECOT’s wrongs don’t make it right to distort how school funding works, and should work, in Ohio. Let’s review the ways in which Innovation Ohio, and the media that amplified its analysis, erred.

First off, ECOT didn’t nefariously “siphon” or “divert” funds from school districts. The online school was paid based on its student enrollment and in accordance with state laws and regulations (its legal and financial woes are based on alleged inabilities to report enrollment properly). Though ECOT may or may not have provided sufficient documentation—a question that remains in court—the districts that supposedly lost millions to the school surely did not enroll or educate ECOT students. As such, they have no rightful claim on the funds that were transferred to that school. So we arrive at a half-truth: Yes, districts saw their state funding reduced, but that’s because they lost students to ECOT—not because it somehow siphoned money from districts. Unfortunately, the fact that districts’ funding reductions are directly tied to losses in enrollment is conveniently omitted—as if dollars and cents are all that matter and students are not to be mentioned. A fairer headline would have read: “Thousands of students opted for ECOT, with millions in state aid following them.”  

Bear in mind three other critical points, often overlooked, about districts’ funding “losses.” First, although they forfeit state funding when students transfer, they don’t lose a dime in local tax revenue, since the latter amount depends not on enrollment but on property values and tax rates approved by district voters. Second, districts can lose state aid for any number of reasons, including when families decide to move. Yet we rarely, if ever, see headlines like: “Suburban districts have siphoned millions from Youngstown schools” or “Ohio districts lose funds as residents move to California.” Third, although uncomfortable, districts should work to reduce their costs in proportion to their revenue declines, as any other organization is expected to do.

Perhaps most troubling of all, Innovation Ohio’s distorted view of school funding reinforces a fundamentally misguided notion that funding policies should be tailored to the needs and wants of school districts, rather than those of parents and children. Speaking to the Athens News, the comments of congressional candidate Rick Neal are a perfect example: “That money [the funds transferred to ECOT] could have gone toward textbooks and supplies, school infrastructure, and teacher salaries—instead it went to line the pockets of ECOT scam artists." Setting aside the “scam artists” swipe—that’s an accountability matter—it’s flawed to think that districts’ purchasing desires or staffing wishes ought to drive funding policy. That line of thought places institutional interests at the forefront, with parents, students, and the broader taxpaying public pushed to the background.

In contrast, the smartest thinking on school funding puts families and students at the front of the line, under the notion that public dollars should be used to meet their needs and support their educational choices. When this lens is applied, we see that it’s appropriate to transfer funds from districts when students attend a school of their choice—and of course hold those schools accountable. Although we at Fordham would much prefer a “direct funding” method for charters (instead of state dollars passing through districts), it’s not wrong in principle to deduct money when students choose schools such as ECOT instead of a district school.

In the end, ECOT’s harshest critics are both right about the incompetence of the school and wrong on school funding policy. So here’s my concluding take on the whole debacle: Did state taxpayers get a return on their hard-earned dollars to educate ECOT students? In all likelihood, no. The costs of funding students who enrolled in ECOT probably outweighed the cumulative benefits of pupils attending that school. The school has already paid the penalty of closure—and further consequences may ensue. But let’s be frank: Ohio taxpayers continue to get a raw deal when they lavish tens of millions of dollars in public funding on inept schools. Ohio has any number of low-performing public schools, including dozens run by big-city districts, where students receive too little benefit for the price of public education.

If we as a state want to “get serious” about cracking down on lousy public schools, district or charter—or heck even trying to root out ineffective administrators and teachers, including those with tenure—in efforts to raise achievement and protect taxpayer money, count me in. What about groups like Innovation Ohio and others on the ECOT-bashing bandwagon: Are you game?

Aaron Churchill
Aaron Churchill is the Ohio Research Director of the Thomas B. Fordham Institute.