4-YEAR AUDIT BREAKDOWN OF ECOT CHARTER SCHOOL

Akron Beacon Journal (OH) - April 3, 2006

Edition: 1 STAR
Section: OHIO
Page: A3
As students enroll in charter schools, the state deducts money from the public school district the student would otherwise attend and
gives it to the charter school.

To determine whether the transfer of money is correct, the Ohio Department of Education conducts random audits of student records at
the end of the school year.

The Electronic Classroom of Tomorrow has been audited by the department for four of its five years of operation.

Here are the results of those audits, based on public records and interviews:

School year 2000-01

Released in 2002

The Department examined a random sample of ECOT students.

Conclusion 1: ECOT was overpaid $2.1 million for the sample.

Conclusion 2: The department applied the error rate to the entire student enrollment (a process known as "extrapolation") and determined
that ECOT was overpaid $7.6 million. Other errors added another $109,126, bringing the department's estimated overpayment to $7.8
million.

Negotiations: ECOT contended the numbers were incorrect.

The department concluded that it may not be able to defend "extrapolation" in court. The department decided to use the number it felt it
could prove: The $2.1 million found in the random sample.

Settlement: ECOT repaid $1.65 million over three years.

Audits released

last week

School year 2001-02

An independent auditor was hired to review a random sample of ECOT students. The department reviewed the independent audit and
ECOT records.

Conclusion: Using extrapolation, the department concluded ECOT was overpaid $154,702.

ECOT has agreed to this amount.

School year 2002-03

Two separate reviews occurred.

1. As in 2001-02, the work of an independent auditor was reviewed by the department.

Conclusion: Using extrapolation, ECOT was overpaid $217,125.

2. School districts across the state challenged ECOT's claim to 394 students. The department withheld funding for those students.

In a recent review, the department determined that 168 students were legitimate and ECOT was owed $862,735.

Bottom line: For 2002-03, ECOT is owed $645,610.

ECOT has agreed to this amount.

School year 2003-04

No audit. The department said audits are not required for every year.

School year 2004-05

The department reviewed a random sample of ECOT students.

Conclusion: Through extrapolation, ECOT was overpaid $227,662.

ECOT has agreed to this amount.

Summary

ECOT repaid $1.65 million to the state for school year 2000-01, or about 16 percent of the $10.4 million it received that year. The last
payment was made in June 2005. Each Ohio school district that lost students and funding to ECOT received a refund of 16 percent of
cost paid to ECOT for students from that district.

ECOT will receive a payment of $263,246 for school years 2001-02, 2002-03 and 2004-05.

The department has not yet decided whether the payment will come out of a department account or if it will be deducted from school
districts.

Memo: See main story: Ohio to pay online school

Index terms: EDUCATION, STATE AID, PER PUPIL SPENDING, FINANCE, AUDIT; CHRONOLOGY, ELECTRONIC CLASSROOM OF TOMORROW
CHARTER SCHOOL
Record: 0604050179
Copyright: Copyright (c) 2006 Akron Beacon Journal