The Ohio Department of Education is authorized by state law to base the funding of internet- or computer-based community schools, such as the Electronic Classroom of Tomorrow (ECOT), on the duration of student participation, and not only on the “learning opportunities offered” to students, the Ohio Supreme Court ruled today.

In a 4-2 decision, the Supreme Court rejected claims by ECOT that R.C. 3314.08 limits the authority of the Department of Education (ODE) to use a funding formula based on the number of hours or days of “learning opportunities offered” by an e-school.

Writing for the Court majority, Justice Patrick F. Fischer explained the ODE enrollment formula adds a condition that when calculating a student’s enrollment time, an “e-school” cannot claim more than 10 hours of student participation in any 24-hour period.

“We determine that R.C. 3314.08 is unambiguous and authorizes ODE to require an e-school to provide data of the duration of a student’s participation to substantiate that school’s funding,” the Court concluded.

The Court affirmed the Tenth District Court of Appeals’ decision, which also found ODE is authorized to use participation data.

“By stating that the maximum daily credit for each student is ten hours, it is apparent that the legislature intended that an e-school will be credited for a student’s participation for less than ten hours in a day. This calculation can be made only by referring to records that contain evidence of the duration of a student’s participation in learning opportunities,” Justice Fischer wrote.

Chief Justice Maureen O’Connor and Justice Mary DeGenaro joined the majority opinion. Fifth District Court of Appeals Judge W. Scott Gwin, sitting for Justice Judith L. French, also joined the opinion.

Justices Terrence O’Donnell and Sharon L. Kennedy dissented, each writing separate opinions. Justice R. Patrick DeWine did not participate in the decision.

The dissenting justices maintain that the majority misreads the intent of the 10-hour limit in the law, and that no statute ties e-school funding to student participation. They both urged the General Assembly to clarify the law to eliminate confusion.

Department Changes Course When Evaluating ECOT
ECOT began operation in 2000 and became Ohio’s largest e-school. ECOT is publicly funded but operates independently from a local school board. The state determines funding for ECOT by its student enrollment on a “full-time equivalency” (FTE) basis that is reported to the ODE.

ODE is authorized to review a community school’s data to adjust funding based on its review of the reported enrollment. ECOT received funding from ODE from audits in 2002, 2003, 2005, 2006, and 2011 based exclusively on student enrollment and proof that it offered the legally required 920 hours of “learning opportunities” to each student enrolled for an entire school year.

The department typically reviews community schools on a five-year cycle, and ECOT’s last review occurred in 2016. That year, ECOT reported attendance of more than 15,000 students and received more than $106 million in public funding from the ODE.

During the early stages of the review, ODE requested data from ECOT on the duration and frequency of student participation, mainly in the form of records showing the time students logged in and out of ECOT’s online educational programs. ECOT’s data showed that on average, students spent about one hour a day logged into the educational programs. ODE asked for additional information to support the duration of student participation, and ECOT refused to comply.

ECOT sought an order from the Franklin County Common Pleas Court to bar the department from requesting or considering the student participation data in its determination of enrollment-based funding. ECOT maintained that it entered into a contract with ODE in 2002 that established the documentation it was required to provide the department to secure funding, and that agreement did not require student participation data.

ODE admitted that until 2013 it did not realize that there was a lack of evidence in student participation provided by community schools. After conducting reviews of several community schools, ODE began questioning the methods that some schools were using to measure student participation. At that point, ODE began requesting more data and imposed penalties for schools that failed to provide student participation information.

The trial court denied ECOT’s request, and ECOT appealed to the Tenth District Court of Appeals, which affirmed the lower court’s decision. ECOT made several arguments to the Supreme Court as to why it was entitled to the funding without providing the additional data to ODE. The Court agreed to review only the argument that R.C. 3314.08 bars the department from basing funding in part on student participation.

Majority Finds the Law Unambiguously Provides that Participation Is a Factor
The majority explained that internet- or computer-based community schools are funded based on the full-time equivalency of each student enrolled. ODE is required to adjust the payments it makes for students who are enrolled for less than a year.

The formula for determining how much to pay per student is set in R.C. 3314.08(H)(3), which states: “The department shall determine each community school student’s percentage of full-time equivalency based on the percentage of learning opportunities offered by the community school to that student, reported either as number of hours or number of days, is [sic] of the total learning opportunities offered by the community school to a student who attends for the school’s entire school year. However, no internet- or computer-based community school shall be credited for any time a student spends participating in learning opportunities beyond 10 hours within any period of 24 consecutive hours. Whether it reports hours or days of learning opportunities, each community school shall offer not less than 920 hours of learning opportunities during the school year.”

Both ECOT and the department agree that the statute is “unambiguous,” but they have different opinions on how to apply the statute to e-school funding, the Court stated. The parties disagree on the meaning of the statutory language that no e-school “shall be credited for any time a student spends participating in learning opportunities beyond 10 hours within any period of 24 consecutive hours.”

ECOT argued the provision is only meant to ensure that the school spreads out learning over the school year. It explained that unlike a traditional brick-and-mortar school, a student has access to the materials 24 hours a day. It argued that the provision does not condition funding on the student’s participation, but rather prevents an e-school from claiming a student finished the school year in a few months by working around the clock.

Justice Fischer wrote that by adding the 10-hour limit, the legislature intended to cap the credit ECOT could claim for enrolling a student to 10 hours a day. He wrote that the only way the e-school or department could calculate that credit would be by referring to records with evidence of a student’s participation.

The Court explained that enrollment — as measured by learning opportunities offered — provides ECOT the “potential” for funding, but the actual amount of funding paid must be calculated by student participation. If the formula were based only on hours offered, there would be no need for the language that precludes funding for student participation beyond 10 hours a day, the majority concluded.

“The term ‘offer’ is only one word of the operable language of the statute, which when read in full, does not indicate that the legislature intended for e-schools to be funded merely for offering learning opportunities,” the Court stated.

The Court majority held that ODE is authorized to consider the evidence of the duration of a student’s participation when calculating funding for an internet- or computer-based community school, and could reduce the amount it paid to ECOT for the 2015-2016 school year.

Department Lacks Authority to Base Funding on Participation, Justice Asserts
In his dissent, Justice O’Donnell noted that despite approving funding for more than a decade exclusively on student enrollment data, the department announced its intent to base ECOT’s funding on the duration of student participation even though there had been no change in the law or administrative rules. He wrote R.C. 3314.08 plainly does not authorize the use of durational data as a basis for funding ECOT.

He noted that R.C. 3314.08(C)(1) mandates that funding of charter schools be based on the FTE of students “enrolled,” and that R.C. 3314.08(H)(3) calculates the amount paid based on learning opportunities offered.

“If the legislature had intended to condition funding on the duration of a student’s participation in the learning opportunities offered by a community school, it could have expressed that intent by using a phrase such as ‘based on the percentage of learning opportunities participated in by that student,’ but it did not do so,” the opinion stated.

Justice O’Donnell wrote that by basing e-school funding on participation, it creates a burden that is different than on traditional brick-and-mortar schools. For traditional schools, enrollment is based on student attendance on three specific days, and funding is based on the students counted on those days “without regard to student attendance for the rest of the year,” he observed.

Decision Eviscerates School-Funding and -Choice Principles, Justice Maintains
In her dissent, Justice Kennedy wrote that Ohio law funds public schools based on the principle that state education money “follows the student” to the school where the student is enrolled, and the General Assembly did not intend to set e-schools apart from other public schools by basing their funding on the amount of time that a student participates in learning opportunities offered.

The dissent compared the methods the state uses to fund traditional public schools, brick-and-mortar community schools, and e-schools and explained that the funding for each of these types of public schools depends on enrollment. It also noted that in the middle of the school year and without any change in the law, ODE replaced its prior method of calculating ECOT’s funding — which had relied on enrollment data and teacher certificates of the hours of learning opportunities that had been offered to each student — with a new requirement that e-schools submit records verifying the amount of time each day that the student actively participated in the learning opportunities offered. According to the dissent, the evidence at trial showed that the documentation ECOT submitted to ODE would have been sufficient under the criteria used in prior years. 

Justice Kennedy explained that like traditional public schools and brick-and-mortar community schools, e-schools receive funding for only that part of the school year that the student is enrolled.  R.C. 3314.08(H)(3) requires ODE to adjust the amounts paid to an e-school by calculating the student’s FTE, which is the “percentage of learning opportunities offered by the community school to that student ... of the total learning opportunities offered by the community school to a student who attends for the school’s entire school year.” This percentage is then multiplied by the student’s total allocation of state money for the year to determine the e-school’s share of it. The dissent noted that the majority’s holding cannot be squared with the plain meaning of R.C. 3314.08(H)(3), because the words “offered” (which means made available) and “participated” (which means took part in) are not the same thing.

“There is a difference between a school making a learning opportunity available to a student and the student’s choice to take that opportunity and participate in learning,” she wrote.

Justice Kennedy pointed out that the majority has interpreted language in R.C. 3314.08(H)(3) related to the 10-hour rule “more broadly than the General Assembly intended, taking a limited provision for calculating FTE that simply caps the number of hours of learning opportunities available to a student on a given day and inferring from it a new restriction on e-school funding that is not based on enrollment as provided by R.C. 3314.08(C)(2).” In her view, the 10-hour rule is aimed at students who attend an e-school for less than a full year and prevents the school from getting paid more to educate the student than the state should pay.

“Unmooring R.C. 3314.08(H)(3) from its context is ... not just a faulty exercise of statutory construction; it has real-world consequences that arrive at the expense of the very students that the legislature sought to empower by providing an alternative to the traditional public schools that already failed them,” she wrote. And “[b]ecause of the challenges that many students attending e-schools already face, such as high rates of mobility, poverty, and special needs, the majority effectively eviscerates the last chance for an education that many students attending an e-school will have.”

2017-0913. Electronic Classroom of Tomorrow v. Ohio Dept. of Edn., Slip Opinion No. 2018-Ohio-3126.

View oral argument video of this case.

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