Recently, several school districts asked to be repaid a chunk of the money that the state of Ohio is attempting to recover from the Electronic Classroom of Tomorrow (ECOT); House Bill 87, currently pending in the General Assembly, would grant them their wish. ECOT is the largest virtual school in Ohio and is notorious both for its political clout as well as its poor performance. It’s been embroiled in a lawsuit with the Ohio Department of Education and was recently ordered by the State Board of Education to return $60 million for being unable to prove all of its 15,000-plus students were logged in and adequately participating in learning last year. ECOT is fighting this decision and related issues in court.

ECOT’s track record may be poor, but there is something alarming in this discussion about the “lost money” that Ohio districts are now seeking. Regardless of whether ECOT could document their students’ attendance, these children were not being educated by their home districts either—because they didn’t attend their schools. That much is indisputable.

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The question at the heart of the entire ECOT case—how is it justifiable to pay a school for students they didn’t educate? —should apply to districts as well. Suggesting that students’ resident schools receive the cash anyway defies logic. It also illustrates broad misunderstandings about Ohio’s funding system for charters, as well as longstanding philosophical beliefs that K-12 dollars belong to districts rather than being paid to districts (or charters) to support children it serves.

Consider applying the same logic to entities serving slightly younger children. Let’s say I move my daughter from Off the Wall Daycare to Oak Meadow because Off the Wall was not serving her well and Oak Meadow better matches my parenting philosophy. After several months at her new daycare, it becomes clear that Oak Meadow isn’t delivering, either. My daughter isn’t receiving a key part of the program that was promised to us (there are no meadows), so I pull her out of the center. Oak Meadow did such a poor job that I’d like a partial refund. Off the Wall Daycare, after six months of my daughter not attending there, says the refund really belongs to them. They say they could use the money to purchase extra snacks for the other children or a new slide.

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In this example, it’s obvious that the dollars don’t belong to Off the Wall; a refund (if awarded) should belong entirely to the entity that paid—i.e., my family.

Ohio’s school funding system—and its pass-through formula for schools of choice—is far more complicated than my family’s personal budget. But a few things are clear and unambiguous.  For starters, districts don’t fund charter schools. The state of Ohio does, and thus the money belongs to them.

It’s hardly surprising to see local districts clamoring for a piece of the repayment pie, but they are playing on the common misconception that districts help to fund charter schools. Ohio’s convoluted funding system doesn’t help matters. The reality is that charters receive state, not local, taxpayer funding. Charter students who leave their home district take a prescribed amount of state foundation dollars with them to their new school. For an average charter student, that’s just over $6,000. These state funds are then subtracted from the home district’s state share—as it should be, since the district is no longer educating that child.

However, districts keep all locally raised funds for students they no longer educate. So, while the districts do indeed lose about $6,000 in state aid per charter pupil (sometimes a greater per-student amount than they receive from the state, especially among Ohio’s wealthier districts), they retain all local funding, which is then spread among fewer remaining students, boosting their local revenue per-pupil. (This is how it works in most states, though Colorado and Florida just enacted bills that require local school districts to share property tax revenues with charters.)

All of this is to say: there is no bottom-dollar amount that should be “refunded” to districts, despite what some would suggest by a one-page invoice. By virtue of having students leave for charters, districts have already retained those students’ local funds. And the state money that follows them to their new school should not return unless they do—regardless of how well served they are, or aren’t. Under any other circumstance (like the daycare example above) it would be preposterous to refund money to an entity that didn’t actually provide any services. If ECOT is forced to pay up, the money should go to the state and remain there.

We’ve argued before that Ohio’s funding system is way too complicated, and that charter schools and programs of choice should be funded directly from the state. This would dissolve some of the animosity between districts and charter schools and end the misperception that local taxes are funding charters. It would also make it much clearer in any investigation for the recovery of charter funding that state funds are at stake, not local dollars.

A direct funding system for charters would also challenge the disturbing notion that public school districts “own” the taxpayer dollars designated for students’ education. The victims in all of this, of course, are the students who’ve been ill-served, sometimes by several schools in a row—kids who are too often viewed by their home districts as a “drain” on school finances, rather than as children struggling academically or socially and in desperate search of a better fit.

Policy Priority:
Jamie is the former Senior Ohio Policy Analyst for the Thomas B. Fordham Institute. She has authored hundreds of articles for the Ohio Education Gadfly, and has published op-eds in the Columbus Dispatch, Cleveland Plain Dealer, Akron Beacon Journal, Dayton Daily News, and Cincinnati Enquirer. She also works with a network of high-quality charter schools who are preparing low-income Ohio students for success in high…
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