COLUMBUS — Charter school management companies and other vendors that reap rewards when schools inflate enrollment figures must share the consequences when the state claws back overpayments to those schools, the state auditor said Wednesday.

Auditor Dave Yost this week sent a letter to charter schools and e-schools advising them that, as public schools, they are obligated to go after money paid to management companies, their sponsors, and other vendors if their contracts called for them to be paid on a percentage of school revenue.

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“The benefit of the percentage is that it’s higher risk, higher reward,” he said. “If your enterprise does well, then the vendors reap the rewards of that. The downside is that there is a risk, and I am not a fan of giving people a reward and reducing their risk.

“Today it looks like the downside is here, at least for some players,” Mr. Yost said.

Exhibit A was the Electronic Classroom of Tomorrow, an online charter school sponsored by the Toledo-based Lake Erie West Education Service Center. The state Department of Education is deducting money from its monthly payments to ECOT. The reductions are intended to gradually recover $60 million in public funds the department says was paid to ECOT for students the school couldn’t prove were logged in enough to qualify as full-time students.

The state is also gradually withholding a total of $12.4 million more a year to prevent the school from continuing to collect the higher aid based on the prior year’s student numbers until an official count can be completed in October.

The school still has appeals pending before the Ohio Supreme Court and the 10th District Court of Appeals in Columbus. But it has so far lost every court effort to block the state’s action.

While the state is being made whole through the claw-back process, Mr. Yost said ECOT and other charter schools facing recovery action must work to recover a proportional share from vendors with percentage-based contracts.

“This isn’t an option in our view,” he said. “You’re a public entity. You’re a public school. You owe this to the taxpayers. You owe this to the state. You owe this to the children to go retrieve those resources and use those for the mission of your school, educating children.”

The state has so far gone after at least 13 e-schools, with some cases resulting in court action and others in out-of-court settlements.

In ECOT’s case, Mr. Yost calculates that IQ Innovations, the school’s instructional software provider, should be on the hook for $9.6 million, or 16 percent of ECOT’s prior revenue. Altair Learning Management, the school’s management company, owes $2.4 million, or 4 percent of prior revenue, and the educational service center, $900,000, or 1.5 percent.

ECOT’s founder, William Lager, created the private, for-profit Altair to service the school.

The Thomas B. Fordham Institute, an education think tank and a charter-school sponsor in Ohio, found Mr. Yost’s directive to be a “sensible move.”

“Neither sponsors nor management companies, entities that may receive millions of dollars in public revenue, should be able to simply walk away with public funds if a charter school has inaccurate enrollment figures,” said Chad L. Aldis, the institute’s vice president for Ohio policy and advocacy.

Democrats, meanwhile, have accused the Republican auditor, who is running for attorney general in 2018, of being slow in going after ECOT despite early warning signs.

State Sen. Joe Schiavoni (D., Boardman), Democratic candidate for governor, recently introduced a bill to require that all funds recovered from charter schools be redistributed to the traditional school districts from which the students came.

“No charter school should do what ECOT has done — firing teachers first before anyone else takes a hit,” he said. “Services for our students should be the last thing cut, especially while vendors and executives are overpaid with your tax dollars.”

Contact Jim Provance at jprovance@theblade.com or 614-221-0496.

First Published August 9, 2017, 4:44 p.m.