Today’s story is about the 21st largest school district in the state of Ohio and how district leaders are working to attain financial success while being under attack on multiple fronts. I will not reveal the names of the district or the leadership until nearer the end of the story so as to try and avoid any bias. Please read with an open mind.

The 21st largest district in Ohio provided services to just over 9,000 students in grades K-12 in 2009-2010. Enrollment has increased 139% in the last five years, a rate slightly higher than the Olentangy Local Schools’ rate of 138%, a district frequently cited as experiencing “extreme” or “extraordinary” growth over that period. The district has not provided transportation for students for at least the last 10 years and does not have a food service program. As a result, the number of 633 overall employees is very low when compared to similarly-sized districts (e.g., Worthington City Schools has 1,412 employees).

The district has adopted an organizational structure that has a Chief Executive Officer in addition to a Superintendent, Assistant Superintendent, and the School Board. The CEO often takes the lead in making significant final decisions about the program, and also represents the district in interacting with legislative issues that impact the district.

In addition to receiving $59,978,866 in state funding in 2010, the district will receive combined Federal Funds of $13,491,027 in 2010 and, as a participating member of the Race to the Top program, $2,890,813 from 2010-2014.

The superintendent has been working for the district since 2002, after he retired with 35 years experience as a principal. As he collected his retirement pay, he received a salary of over $112,757 last year. And the superintendent has done so over these past 9-10 years without ever having an Ohio Superintendent’s license or certificate despite the clear violation of Ohio Revised Code 3319.01 which states “No person shall be appointed to the office of superintendent of a city, or exempted village school district or a service center who does not hold a license designated for being a superintendent issued under section 3319.22 of the Revised Code.”

The assistant superintendent, an elementary and special education teacher since 1978, allowed her superintendent certificate to expire in 2007, since it also apparently wasn’t necessary to receive her $135,000 salary from the district.

A glance down the list of administrators employed in the district will reveal the names of long-retired principals who are collecting their STRS benefits and a very nice salary from the district (the oft-criticized practice of double-dipping and targeted by Governor Kasich).

The district reports a wide disparity between average administrator pay and teacher pay.

36 administrators = $79,443

456 teachers = $34,455

The CEO for the district appears to technically work as a consultant, so his exact compensation is hidden. “Per the management agreement with the district, the consultant’s company is entitled to 4% of all revenues received except federal funding, and is also entitled to .5% interest on any outstanding balance. The management fee for the fiscal year ended 2010 was $2,392,656. As of June 30, 2010, all fees had been paid.” Therefore, we can be project the CEO’s salary as somewhere between $0 and $2,392,656.

The CEO apparently has an entrepreneurial spirit, however, and started up a web-based learning management system through a newly-created company that would be able to serve not just his district, but as a tool he could market to school districts around the country. Not coincidentally, his district was an early adopter and last year they “contracted for the purchase of curriculum services for students. The cost of services for fiscal year ended 2010 was $9,570,623. As of June 30, 2010, $0 was outstanding and payable.”

So that now puts our CEO’s unknown salary at somewhere between $0 and $11,964,279.

Financial numbers aside, how is the district performing in student achievement? Not so well, actually. Below is a chart showing some of the mystery district’s numbers compare to the oft-vilified Cleveland Schools.

State Indicators Met District Cleveland 2007-08 1 out of 30 2 out of 30 2008-09 5 out of 30 3 out of 30 2009-10 4 out of 26 2 out of 26 Graduation Rate 2006-07 25.8% 61.9% 2007-08 33.3% 53.7% 2008-09 35.0% 54.3% Attendance 2007-08 92.4 90.9 2008-09 93.2 90.7 2009-10 90.4 91.7

And even worse, the district is in “School Improvement Year 8,” a status no other district has attained. The State of Ohio Accountability Notebook only goes up to Year 5:

Status Consequences School Improvement year 1 Develop improvement plan.

Offer school choice [Title I funded only]. School Improvement year 2 Offer supplemental services and school choice [Title I funded only]. School Improvement year 3 Continue to offer school choice and supplemental services [Title I funded only].

District takes one of the following steps: Institute new curriculum

Decrease school management authority

Appoint an outside expert

Extend school year or day

Replace the principal and/or other key staff

Reorganize the administrative structure of the building School Improvement year 4 Continue to offer school choice and supplemental services [Title I funded only], and implement the steps initiated in Year 3 of School Improvement. Must develop a plan that includes at least one of the following. Replace staff

Reopen as a charter school

Contract with a nonprofit or for-profit entity to operate the building

Turn operations over to the Department of Education School Improvement year 5 Continue actions taken and implement plan developed in Year 4 of School Improvement.

Continue to offer school choice and supplemental services [Title I funded only].

At this point, what should the state do with this district? Or at least, what do you think the state’s plans are for the district? Some ideas from the chart would be to replace the staff, reopen the building as a charter, turn over the building to a for-profit entity, or even turn it over to the Department of Education.

The easy answer might seem to be a state takeover as suggested in December by Kasich as a solution for the Cleveland Schools.

“Kasich has not drafted a specific proposal but said Wednesday that he favors putting a “special master” in control of school districts like Cleveland with chronically low graduation rates and test scores. He did not set a deadline for improvements but said he wouldn’t wait four years, the length of an Ohio governor’s term. “Look, I’ve been thinking about this for 30 years,” said Kasich, who will take office in early January. “You cannot let kids sit in an environment where they are failing, where the system is failing them.”

While that might all seem logical and understandable given the strong words our legislators have for failing schools these days, that would be a wrong guess.

Instead, the legislature has included some different ideas to help our district in the state budget (as explained by the LSC):

Requires ODE to pay [the district] for serving children with disabilities regardless of whether a child enrolls . . . after the federal reporting date of December 1.

Exempted from student immunization requirements for admission.

Permits the school’s governing authority to delegate any or all of its rights, duties, and responsibilities to the [CEO].

Specifies that funds paid to the [CEO] by the school are not considered public funds and no public entity, including the school, has an interest in assets or property purchased with those funds.

Exempts the [school district] from provisions of current law allowing a school to be suspended or put on probationary status for (1) failure to meet student performance requirements in the contract, (2) fiscal mismanagement, (3) a violation of law or the contract, or (4) other good cause.

Specifies that, for state funding purposes, [a district] student is considered automatically re-enrolled the following school year until the student’s enrollment is formally terminated.

Eliminates the requirement that [the district] spend per pupil on instruction at least as much as the per pupil statewide classroom teacher amount specified under the . . . school funding model ($2,931 in FY 2009)

So what’s this district’s secret for avoiding punishment and actually gaining support through the GOP’s budget? What model should the superintendents of other struggling districts follow?

Donate to your legislator. A lot. No, I mean a LOT.

As in $220,795.00 per year.

Let’s unravel this mystery district if you haven’t already figured it out.

William Lager is the founder of ECOT (Electronic Classroom of Tomorrow) online charter school, the 21st largest “district” in the state of Ohio with over 9,000 students. Because ECOT is online, there are no school buildings, no transportation costs, no lunch needs and only 633 total employees.

A 2010 audit by the state of Ohio and auditor Mary Taylor (yes, now Lt. Governor Mary Taylor) included the following:

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Electronic Classroom of Tomorrow, Franklin County, Ohio, as of June 30, 2010. 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 2010 was $2,392,656. As of June 30, 2010, all fees had been paid to Altair. ECOT contracts with IQ Innovations, LLC for the purchase of curriculum services for ECOT students. The cost of services for fiscal year ended 2010 was $9,570,623. As of June 30, 2010, $0 was outstanding and payable. IQ Innovations, LLC and Altair Learning Management I, Inc. have the same principal owner.

To reiterate, William Lager is the CEO of both Altair Learning Management and IQ Innovations, LLC. And auditor Mary Taylor found nothing wrong with him directing nearly $12,000,000 in taxpayer dollars straight from the Ohio Department of Education and into the accounts of private companies he owns and operates.

And in the year 2010, William Lager, Ohio charter school operator with an undisclosed salary, managed to donate $220,795 to a variety of election campaigns, most notably:

$11,000.00 Speaker of the House Speaker William Batchelder $5,000.00 House Speaker Pro Tempore Louis Blessing $11,000.00 House Majority Floor Leader Matt Huffman $10,000.00 House Asst Majority Floor Leader and Finance & Appropriations member Barbara Sears $5,000.00 House Majority Whip and Commerce & Labor member John Adams $500.00 House Asst Majority Whip and Finance & Appropriations member Cheryl Grossman $10,000.00 House Finance & Appropriations chair Ron Amstutz $5,000.00 House Finance & Appropriations member Mike Duffey $5,000.00 House Finance & Appropriations member Bob Peterson $5,000.00 House Finance & Appropriations member Gerald Stebelton $5,000.00 House Finance & Appropriations member Troy Balderson $5,000.00 House Commerce & Labor (SB5) member Todd McKenney $5,000.00 House Commerce & Labor (SB5) member Lynn Wachtmann $5,000.00 Representative Terry Johnson $3,000.00 Senate Insurance, Commerce and Labor (SB5) Chair Kevin Bacon $3,000.00 Senate Finance Committee Chair Chris Widener $11,395.00 State Auditor David Yost (Successor to Mary Taylor)

To clearly spell out that donor list for those superintendents wishing to follow this strategy: donate a total of $42,500 to the majority leadership in the House and an additional $30,000 to members of the committee that will be hearing the budget bill (make sure you remember to give double to the committee chair).

$220,795 in donations to Ohio legislators in 2010. What percentage of your income do you donate to political candidates? Is ten percent too high? How about five percent? If William Lager donated a generous five percent of his 2010 income to Ohio politicians, then that would place his 2010 salary at an eye-popping $4,415,900. In January, the Westerville School district made news when it was claimed the school board “went ‘overboard’ in its negotiations” with Superintendent Dan Good in granting him a raise to $189,000. Perhaps he should have held out for more, considering his district is considerably larger than Lager’s.

Oh, and there’s that small fact that ECOT actually has a team of administrators, albeit unlicensed, that supposedly run the organization. So what does Lager actually do? Well, despite the fact that the entire organization is taxpayer funded, we have no idea.

So let’s try to summarize this hot mess. The 21st largest school district in the state has had flat or declining test scores for a nine year period; graduation rates of below 35% over that entire time are consistently 20 points lower than Cleveland Schools’ scores, a district that is being discussed for state takeover. Attendance rates are consistently below the state average, while student achievement scores are significantly below state averages. And instead of intervening in year 3 or 4 according to State regulations, the state allowed enrollment to increase at one of the highest rates in the state, allowing a net growth of nearly 2,600 students in the last five years. And instead of taking a financial penalty, the district received 36% more in per pupil funding than the state average. All of this while being run by an unlicensed superintendent and unlicensed assistant superintendent who are each being paid over $100,000 per year (above statewide averages) and teachers are paid an average salary of $34,450, well below the state average of %55,812. And in spite of the existence of these administrative roles, the district is actually managed and operated by CEO William Lager of Altair Learning Management, whose fee for 2010 was $2,392,656. And William Lager, the CEO who is running the district, created a new company, IQ Innovations, who then created a software solution for the district, who then paid IQ Innovations $9,570,623, also for 2010. And again, instead of intervening, instead of conducting inquiries in search of anything from ethics violations to criminal activities, our legislators, aided by $220,795 worth of elbow nudges, are instead using the budget bill to modify state laws in order to help William Lager better expand the scheme of laundering state tax dollars.

That’s right, $12,000,000 per year in Ohio taxpayer dollars funneled directly to William Lager is apparently not enough, so the Governor and GOP-controlled House are going to make it even easier and less transparent for him.

I’d like to recommend that you scan through this post again, now that you know that I am referring to an online community school. I think you may find some of the facts even more shocking through that lens.

I would like to close with a reading from the Book of John (Kasich): Reforms; Page 3, Line 1

“Budgets are about more than money. Budgets express an administration‘s priorities.”

Never has he spoken truer words.