The Electronic Classroom of Tomorrow (ECOT) is the largest charter school in the state of Ohio.  The online school is larger than the vast majority of Ohio’s traditional school districts and received over $88 million in state funding last school year.  This year that amount is expected to jump to over $92 million.

On the latest report cards released by the Ohio Department of Education, ECOT continues to rank below all of the 8 large urban schools that are often-criticized by legislators and in the media for their “sub-par” performance.

ECOT’s Performance Index Score of 68.1 earned them an F grade in that category while the urban districts all received C’s and D’s.

For graduation rate, a key indicator for the long-term success of a school/district, ECOT’s 5-year graduation rate of 37.8% was over 25 points worse than the lowest urban, Cleveland, who checked in at 63.3%.

And while the data on performance for this school of 13,836 students (11th largest “district” in the Ohio) is bad enough, the financial games played by the school’s owner/operator are even worse.  We wrote a comprehensive piece about ECOT back in 2011, but since then the school has continued to grow and continued to siphon ever larger sums of money away from higher-performing schools.

As was the case in 2011, that money is STILL not going to educate the students enrolled at ECOT, but instead is lining the pockets of owner/operator William Lager, massive donor to the Ohio Republican Party.  In 2010, Lager donated $220,795 to Ohio’s lawmakers.  In 2011, the yearly donations dropped to $83,500.00, but he rebounded in 2012 with $201,537.40 in donations and $196,878.06 in only the first half of 2013.  While much of this money was directed toward specific candidates, $64,000 was donated to the Republican House and Senate Campaign committees (file that away for later).

William Lager is connected to ECOT in three different ways.  First, he is the school’s CEO, for which he receives an undisclosed amount of pay.  For some of his political donations, Lager identified himself as the ECOT CEO.

Second, William Lager is also the CEO of Altair Learning Management Company (as self-identified on numerous political contributions listed on the Ohio Secretary of State website).  Altair is a company that is paid by ECOT as this listing from their most recent state audit details:

ECOT contracts with Altair Learning Management I, Inc. (Altair) for a variety of services including management of personnel and human resources, the program of instruction, purchasing, strategic planning, public relations, financial reporting, recruiting, compliance issues, budgets, contracts, and equipment and facilities. Per the management agreement with ECOT, Altair is entitled to 4% of all revenues received except federal funding. Altair is also entitled to .5% interest on any outstanding balance. The management fee for the fiscal year ended 2012 was $3,157,964. As of June 30, 2012, all fees had been paid to Altair.

And third, William Lager is the CEO of IQ Innovations (again, self-identified on some of his political contributions).  IQ Innovations also receives payments from ECOT.  From the same 2012 state audit:

ECOT contracts with IQ Innovations, LLC for the purchase of curriculum services for ECOT students. The cost of services for fiscal year ended 2012 was $12,631,856. As of June 30, 2012, $0 was outstanding and payable. IQ Innovations, LLC and ECOT’s management company, Altair Learning Management I, Inc., have the same principal owner.

And if there was any question about Lager’s status with those companies, that last sentence spells it out clearly: ” IQ Innovations, LLC and ECOT’s management company, Altair Learning Management I, Inc., have the same principal owner.

In total, that means that Lager’s school, ECOT, is paying Lager’s other two companies, Altair and IQ Innovations, over $15.7 million annually.

Apparently that wasn’t enough to keep ECOT performing at their current level, so ECOT submitted a request for funding to Ohio’s new Straight A Fund, a competitive application process for a piece of $250 million in state funding created by John Kasich and passed by the Republican legislature.

Surprise!  ECOT was recently awarded their full request of an additional $2,951,755 in state aid by the Straight A Fund’s Governing Board led by Kasich education czar and now state superintendent Dick Ross, Republican Representatives Gerald Stebelton (whose campaign received $5,000 from Lager in 2010) and Andrew Brenner, and Republican State Senator Peggy Lehner (received $2,000 from Lager in 2008).

So, what is ECOT doing with that bonus check for proposing an innovative program that will transform their school?  They are developing an online math tool for students in grades 6-12 in partnership with…wait for it…William Lager’s very own IQ Innovations.

According to ECOT’s proposal (view it here), the project budget includes:

  • The cost of development for creation of Knowledge Precedence Mapping specific to grades 6-­12 math and creation of high quality math aligned content that will be made available to ECOT and ultimately to all educators in the state through the ilearnOhio platform. This cost is estimated at $527,250.
  • Costs include services of subject matter experts and HTML editors provided by IQ Innovations. Assessment items are included at a cost of $210,000.
  • Additionally, IQ Innovations will be responsible for securing the services of a nationally recognized content alignment service provider at an expected cost of $140,000.
  • IQ Innovations will provide infrastructure planning at $190,000, programming and development for delivery of the assessments and the methodology to provide teachers with suggested curriculum through the iQity LMS at an estimated cost of $1,603,000.
  • Provision has been made for a skilled trainer for a 3 month period at $35,000.
  • Production costs for online resources are budgeted at $14,000.
  • IQ Innovations will provide assistance to ECOT staff with program evaluation. Contracted rate for this portion of the project is $6,000

To summarize this plan, ECOT is being given an additional $2,951,755 by the state (legislature), of which $2,725,250, or a whopping 92%, is going directly into Lager’s IQ Innovations company.

That means that next year, William Lager, as CEO of ECOT, will be funneling over $18.5 million dollars in state funding directly to his own private companies.

But Lager’s questionable practices don’t stop there as the very same Straight A Fund proposal explains more about IQ Innovations’ business practices:

IQ Innovations is ECOT’s partner for the grant. In addition to providing ECOT’s LMS, IQ has led statewide tech initiatives in California (CaliQity), Ohio (ilearnOhio), and South Carolina to enhance online and blended learning. Greg Dye, Vice President, Operations, has 20 years of experience in IT systems development and implementation, business management, operations, quality assurance, customer service and project management. He has a proven ability to select, train and lead cross­functional teams to achieve goals on time and on budget from large scale enterprise­wide ERP builds and implementations to small business 3rd party software configurations.

IQ Innovations is a for-profit company that will take this state school funding from ECOT, develop a product that they will then own, and will then turn around and sell that product to their other consumers.  And the best news of all can be found on their company website:

** We have recently begun to accept credit cards on content orders!! Please call our sales team at 877-474-8966 x200 to place an order with your credit card, or email us at purchase (at) iq-ity.com to get the ball rolling on your content purchase using a credit card. Please also note that content orders for 5 licenses or fewer require a credit card to purchase.

Finally, it’s important to note one last piece from ECOT’s state audit (Auditor Dave Yost’s campaign received $13,895 from Lager in 2010):

ECOT is approved under Section 501(c)(3) of the Internal Revenue Code as a tax exempt organization.

Of course, section 501(c)(3) organizations are prohibited from supporting political candidates, and are subject to limits on lobbying. They risk loss of tax exempt status if these rules are violated.

So I guess it’s all just (education) business as usual in Ohio…

 

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