Among the most important questions this election cycle is one asked by the Columbus Dispatch last month: Which side is right in the political battle over ECOT blame?
In this piece, let’s take a look at the major-party candidates running for governor, Republican Mike DeWine – who has been Ohio’s attorney general for more than 7 years; and Democrat Richard Cordray, who became director of the federal Consumer Financial Protection Bureau after a two-year stint as Ohio Attorney General.
Here is what the Dispatch said about DeWine:
“Talking in May about holding ECOT accountable, DeWine campaign spokesman Joshua Eck made a debatable claim to the Wheeling, W.Va., Intelligencer: ‘Mike DeWine is the only elected official who has made real progress in this case.’
Asked to clarify, DeWine’s office emphasized that he had hired the special counsel in the ECOT lawsuit that was trying to block the state from using log-in data as a basis for funding.
To be clear, as attorney general, DeWine is required to provide representation for the Department of Education.
That said, DeWine is praised by some observers for hiring Doug Cole, a former state solicitor, as special counsel. Cole, who has argued about 20 cases before the Ohio Supreme Court, proved to be a skilled litigator who knew the value of highlighting that ECOT wanted full state funding for students even if they rarely logged in.
But Democrats say DeWine, who recently donated $12,533 in Lager contributions to charity, shares responsibility for allowing ECOT to continue operating the way it did for so long.”
One of DeWine’s main arguments for letting ECOT continue: He lacked authority to go after ECOT until recently and only had authority to go after the money once the school closed. Auditor David Yost, a Republican running for Attorney General, said that ECOT’s finances and troubles were not made clear until the Ohio Department of Education changed how it reviews funding in 2016. Comments from both were reported in The Plain Dealer.
Cordray supporters say both men are wrong.
In 2010, the Ohio Supreme Court ruled that “an officer, employee, or duly authorized representative or agent of a community school is a public official and may be held strictly liable to the state for the loss of public funds.’’ In other words, eight years ago Ohio’s highest court agreed that officers, directors and others controlling charter schools are public officials who are liable if they misuse public funds. (The ruling says nothing about tolerating abuse of public money until the school is closed.)
In the same Plain Dealer analysis that is referenced above, DeWine cites the case of the Value Learning & Teaching Academy (VLT), a Cincinnati charter that was forced to close, as proof that his delayed action on ECOT was justified.
Soon after VLT closed, the school’s landlord sued over back rent and future rent. DeWine responded with a 2014 motion to intervene in the case and sought to recover “more than $1,343,000 of public funds’ that the school transferred “to family members of VLT’s insiders in ways that appear to violate Ohio’s fiduciary and ethics laws…”
Four years ago, Mike DeWine’s office filed a motion to intervene in the VLT charter school case and said the state auditor found the school transferred public funds to “insiders in ways that appear to violate Ohio’s fiduciary and ethics law….”
Four years later – three months before the election – DeWine is making similar arguments about ECOT insiders.
The same Plain Dealer article says, “Yost, a Republican who is running for attorney general, agreed with DeWine that it took recent court rulings to establish the fiduciary duty that DeWine has now highlighted.’’
That duty was established in 2010 – in a case filed by then-Ohio Attorney General Richard Cordray against the International Preparatory School in Cleveland. The duty was reinforced by DeWine when he intervened in VLT case in 2014.
Since Cordray spent two years as attorney general, DeWine has been asking why Cordray didn’t do more to crack down on ECOT when he had the chance. Cordray responded by citing the VLT case as proof that he gave DeWine the tools needed to go after ECOT much sooner.
In the most recent debate, DeWine went after Cordray with a new attack, and the Dispatch did some fact-checking:
“ECOT was something that you (Cordray) could’ve taken action on. There was an auditor’s report which clearly showed that there was a problem, and you did absolutely nothing at the time,” according to the Columbus Dispatch.
Wait — there was a state audit that “clearly” showing ECOT’s ripoff way back when Cordray was attorney general in 2009-10?
When asked to elaborate after the debate, the DeWine campaign cited a December 2009 audit under then-Auditor and Republican Mary Taylor. Note 18 on Page 30 of the 81-page document contains this line: “IQ Innovations, LLC and Altair Learning Management I Inc. have the same principal owner.” State audits list these under the healing “Related Party Transactions.”
If that is the standard, why hasn’t DeWine sued the chronically failing Imagine schools that stick taxpayers with the cost of ridiculously high leases that benefit their for-profit real estate arm?
State audits of each Ohio Imagine school, under the headline “Related Party Transactions,” point out that “Imagine Schools, Inc. and Schoolhouse Finance, LLC are both subsidiaries of Imagine Schools Non-Profit, Inc.”
In the ECOT case filings, DeWine accuses Lager of violating his fiduciary duty to ECOT.
The federal judge who slapped an Imagine school in Missouri with a million-dollar fine said Imagine violated its fiduciary duty to the school by saddling it with excessively high rent paid to a subsidiary, SchoolHouse Finance. The lease arrangement is nearly identical to those found in Ohio.
The Missouri judge said:
“The duty of loyalty required Imagine Schools to put the interest of Renaissance (Academy) first – above the interest of Imagine Schools and anyone else….”
Ohio is home to several imagine schools with leases that have made news.
The most recent Imagine expose was in the Dispatch:
Ohio taxpayers paid nearly $8 million to renovate Imagine Schools’ Great Western Academy – renovations worth more than 3 times the charter school’s value.
Unlike traditional public-school buildings that are paid for with public money and owned by the public, this one was paid for with public money but owned by an out-of-state private company more interested in making a profit than educating kids. This school, like most other Ohio-based Imagine schools, gets mostly Ds and Fs on it state report card.
Regardless of who becomes Ohio’s next governor, the race has spotlighted serious problems with Ohio’s system of paying for and policing charter schools.