COLUMBUS — Both sides agreed on Friday to have a court-appointed interim master to watch over the winding down of Ohio’s largest online charter school and keep its creditors at bay.
Franklin County Common Pleas Judge Michael J. Holbrook drafted on the spot his colleague in the audience — Judge Mark Serrott — to act as a mediator as the Electronic Classroom of Tomorrow and its sponsor, the Toledo-based Educational Service Center of Lake Erie West, worked out the agreement.
The boards of both are expected to vote on the agreement next week. If they approve, the judge would appoint the master who would be answerable to him.
Lake Erie West on Thursday voted to shut the school down and urged the court to appoint a receiver on an emergency basis to make sure the school meets its immediate obligations of winding down operations.
The school's attorney, Marion Little, objected to appointment of a receiver, saying the contract between the school and its sponsor requires all such disputes to be resolved through nonbinding resolution.
“What do I do about 12,000 students who do not have a school?” Judge Holbrook asked.
Mr. Little suggested that mediation could resolve the issue as soon as early next week.
“The school is closed as of today,” he said. “Irrespective of whether there's a receiver or not, the 12,000 students will migrate to other schools, your honor.”
The school has begun notifying the students, he added.
Judge Holbrook immediately pulled the parties into chambers with Judge Serrott to immediately hammer out an agreement.
“Sometimes you have to think outside the box to accomplish something,” he said.
The interim master would secure the school’s assets for which many creditors, including the state, may be in line to seize.
The sponsor permanently revoked its sponsorship of the controversial school amid court and Department of Education decisions that it had been overpaid in state aid to the tune of $80 million over two years.
Thursday marked the end of ECOT’s final semester as a functioning Internet-based school. Its sponsor asked the court to appoint the receiver.
“The state is taking money back from ECOT right now ...,” said the sponsor's Toledo attorney, John Borrell. “Not only are they insolvent, they were going to have no cash starting in January or March.”
The Department of Education had been withholding $2.5 million a month from ECOT’s funding to claw back what it says were past overpayments to the school based on the true amount of time students were actually logging in to take courses as opposed to enrollment numbers submitted by the school.
It had also been withholding 18.5 percent of the current year’s funding based on the adjusted enrollment numbers.
Although its appeal of the decision to take back the money will be heard next month by the Ohio Supreme Court, the school has maintained it would have a negative cash balance by March.
Its teaching days are over, but the school has to maintain enough staff to process and transfer the records of its 12,000 students to their respective school districts, distribute and sell off property, pay bills, make its contributions to the pensions of its 1,000 teachers and other employees, and secure staff, administrative, and financial records.
Mr. Little said it could take 50,000 employee work hours to carry out the duties.
Paolo De Maria, Ohio’s superintendent of public education, said schools and districts have streamlined their enrollment processes to accommodate students seeking immediate transfers.
“We know the entire education community will come together with care and compassion in the best interest of these students,” he said.
He suggested affected families visit the department’s website, education.ohio.gov, and click on the “Find a school” button to help in their search. They may also call 877-644-6338 or email FindASchool@education.ohio.gov.
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