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Court News Ohio
Court News Ohio

Closed Online School Cannot Challenge Order to Repay State $60 Million

The State Board of Education’s decision that a defunct online community school must return $60 million because it inflated enrollment figures is final and cannot be appealed, the Ohio Supreme Court ruled today.

In a 4-3 decision, the Supreme Court affirmed the state school board’s determination that the Electronic Classroom of Tomorrow (ECOT) must repay the state and that, under R.C. 3314.08, the state school board’s decision is final and not subject to an appeal in common pleas court.

Today’s decision ends two attempts by ECOT to challenge the board’s order.

The Court split on whether the use of the word “final” should be interpreted by its plain meaning or as a legal term of art signifying that a matter may be appealed to a higher legal authority.

Writing for the Court majority, Justice R. Patrick DeWine explained that the General Assembly created a two-step process for reviewing a charter school’s public funding. First, the Ohio Department of Education makes a determination whether a charter school must repay money to the state, which the charter school may appeal to the state school board. Second, the state school board reviews the appeal, and its review is “final.”

Based on the two-step process, a “fair reading of the enrollment-review statute leads to the conclusion that the General Assembly did not use ‘final’ as a legal term of art” to indicate that the state board’s decision is appealable to a court, the opinion stated. Justice DeWine analogized the language to that of a parent ending a discussion with his child, “I’ve made my decision and my decision is final.”

The ruling affirms the Tenth District Court of Appeals opinion rejecting ECOT’s “administrative appeal” of the state board’s decision.

In September 2017, the Supreme Court denied ECOT’s request for the Court to issue writs of mandamus and prohibition to prevent the board from demanding a refund.

Chief Justice Maureen O’Connor and Justice Patrick F. Fischer joined Justice DeWine’s opinion, as did Fifth District Court of Appeals Judge W. Scott Gwin, sitting for Justice Jennifer Brunner, who did not participate in the case.

In a dissenting opinion, Justice Sharon Kennedy maintained that the word “final” in the statute was meant in its legal sense to indicate no further board action would be taken on the matter, and that an administrative appeal to the Franklin County Common Pleas Court could ensue. She wrote that “(t)he majority’s contrary conclusion results in this court’s denying ECOT any opportunity to challenge the state board’s order.”

Justices Melody J. Stewart and Michael P. Donnelly joined Justice Kennedy’s dissent.

Today’s opinion notes that when the Court dismissed ECOT’s direct appeal in 2017 it did not state the rationale. Now, after ruling that the law does not allow for an administrative appeal, any future challenges by a charter school disputing the state board’s final decision regarding the enrollment-review statute can be brought directly to the Supreme Court, the majority opinion stated.

School Challenged Enrollment-Based Payment Decision
Before closing in 2018, ECOT was Ohio’s largest community school, commonly known as a charter school because it operates with state funding, but is not governed by a locally elected board of education.

The Department of Education reviewed student enrollment data in 2016 and concluded that it overpaid ECOT $60 million. The finding was based on the department’s examination of student log-in and log-out data, which revealed that, on average, students remained online for one hour a day. ECOT was required by the state board to provide students with five hours a day of online learning opportunities.

Under R.C. 3314.08(K), the enrollment-review law, the department makes an initial review of how much to pay a charter school based on enrollment. If the department determines it paid too much, then it requires the school to pay back the amount overpaid. A school can appeal the decision to the state board, which is required to conduct an informal hearing on the matter and issue a decision. R.C. 3314.08(K)(2)(d) states, “Any decision made by the board under this division is final.”

At a June 2017 meeting, the board agreed with the department and ruled ECOT owed $60 million. ECOT then instituted two separate legal actions to challenge the board decision. Citing its rights under two provisions of the state law, ECOT appealed the decision to the Franklin County Common Pleas Court. It also appealed directly to the Ohio Supreme Court.

State Challenged School’s Right to Appeal
ECOT argued it was entitled to appeal directly to the Supreme Court because R.C. 3314.08 did not provide a right to appeal the state board’s “final” decision to the common pleas court. The state board urged the Supreme Court to dismiss the case, asserting that ECOT could seek an administrative appeal in common pleas court. The state board also argued that even if ECOT did have a right to appeal, the Supreme Court should still dismiss the case because ECOT failed to assert a legally valid claim. The Supreme Court dismissed the case without issuing an opinion explaining its rationale.

Then, the common pleas court dismissed ECOT’s administrative appeal, concluding that it did not have the authority to review the state board’s final determination. ECOT appealed to the Tenth District Court of Appeals. The Tenth District initially ruled that ECOT could appeal through the common pleas court, but the state board requested that the appeals court reconsider its decision. In April 2019, the Tenth District reversed itself and ruled that ECOT did not have a right to an appeal. ECOT sought review in the Supreme Court, which agreed to hear the case.

Supreme Court Analyzes Enrollment-Review Law
Justice DeWine explained that two state laws generally govern appeals of state agency decisions. R.C. 2505.03(A) allows an appeal of every “final order” of an administrative agency only “when provided by law.” R.C. 119.12(B) states that any party adversely affected by an order of an agency can appeal to Franklin County Common Pleas Court, the opinion noted, and that the state board of education is subject to R.C. Chapter 119.

However, because R.C. 119.12(B) is a general provision, it is trumped by any specific provision in state law regarding the ability to appeal a state agency opinion, the Court stated. The opinion noted that in several statutes the General Assembly has included language such as “final and not appealable” or “final and subject to appeal.”

The opinion cited the Supreme Court’s 2010 Brookwood Presbyterian Church v. Ohio Dept. of Edn. decision to support the conclusion that ECOT could not appeal the state board’s decision. In Brookwood, a church challenged a provision of state education law regarding an appeal by an organization that had been denied the right to sponsor a community school. The law at the time indicated the state board’s decision was final, but a separate provision of that law specifically indicated that the decision could be appealed. In Brookwood, the inclusion of the specific language allowing for an appeal “made all the difference” to the Court in that case, the opinion stated.

The enrollment-review law is a specific law that trumps the general rights to an appeal granted in R.C. 119.12(B), the Court explained. The law makes no mention of the ability to appeal the state board’s final decision. That is in direct contrast to Brookwood, the Court majority noted.

“By explicitly designating the department of education’s decision as appealable, but not the state board’s final decision as such, it is evident that the General Assembly meant only for the department’s initial decision to be subject to an appeal,” the opinion stated.

Law’s Wording Does Not Prevent Legal Challenge, Dissent Maintained
Justice Kennedy explained that long before Ohio was a state, finality has been required before an appeal may be taken. She wrote that the word “final” has an established meaning that a matter is concluded before one tribunal and is subject to an appeal to a superior tribunal if an appeal is provided by law. The dissent pointed to statutes creating a right to appeal from all final decisions of the state school board, which provide a right to appeal from an adverse funding decision made under R.C. 3314.08. This statute lacks any language creating an express exception to the overall right to an appeal, the dissent maintained.

Justice Kennedy noted that when the General Assembly uses the word “final” in statutes, it means neither “appealable” nor “not appealable.” Instead, it simply means “concluded.” Referring to statutes within both the Revised Code in general and R.C. Title 33 in particular, she explained that construing the word “final” to mean “unalterable” makes language in the phrase “final and not appealable” (that is, not alterable and also not appealable) redundant and “renders statutory language that an appeal is ‘final and appealable’ — i.e., unalterable yet appealable — unintelligible.”

She concluded that the law uses “final” not in the sense of it being “unalterable,” as the majority views it, but rather the term “final” addresses “finality.” Other provisions of the Ohio Revised Code address “appealability,” Justice Kennedy wrote.

2020-0182. Electronic Classroom of Tomorrow v. State Bd. of Edn., Slip Opinion No. 2021-Ohio-3445.

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