How the Kasich Administration and Ohio State Had Taxpayers Fund Bill Lager’s Private Business Venture, Then Tried to Cover Their Tracks
For Immediate Release: Feb. 24, 2016
COLUMBUS—Political leaders close to charter school operator William Lager steered at least $2.7 million in public money to enhance IQ Innovations, a Lager-owned distance learning platform tapped by the Kasich Administration to provide online textbooks and other educational materials to Ohio schools.
While public records show that IQ Innovations consistently failed to deliver on the system’s promised functionality, it didn’t seem to matter. IQ had a powerful protector on the inside.
Former Lager consultant John Conley, appointed by the administration as Vice Chancellor of Educational Technology for the Board of Regents, was tasked with overseeing the project. Conley helped keep public money flowing to IQ Innovations and he helped to sideline whistleblowers who tried to hold IQ accountable, according to a new report by ProgressOhio.
After two internal investigations at OSU found no wrongdoing, Ohio’s Inspector General launched an ongoing investigation. OSU said it is fully cooperating.
“The amount of public resources used to hatch this plan, then cover up its failures, is breathtaking,’’ said ProgressOhio Executive Director Sandy Theis. “Bill Lager made quite an investment in Ohio politicians and received quite a windfall.’’
Since Kasich’s first run for governor in 2010, Lager, his employees and main lobbyist have donated more than $1.5 million to Kasich, state legislators and other GOP candidates and accounts, according to a ProgressOhio analysis. The total includes $153,649 from IQ Innovations to the Republican Governors Association in 2010 – the year of Kasich’s first run for governor.
The report makes public new information that shows how Ohio taxpayers paid to enhance a private company owned by a prolific Republican Party donor. The report also examines when and why the deal began to unravel and the roles played by Kasich’s administration, The Ohio State University and the Ohio Board of Regents.
Among the main findings:
- Governor John Kasich paved the way for the deal in his first state budget, which required the distance learning platform to be relocated at OSU, but authorized the Chancellor of the Ohio Board of Regents to select the vendor. Chancellor Jim Petro selected IQ and listed among its main benefits a pledge to “provide the technology for free and only recoup user fees;’’
- Since 2012 taxpayers have spent at least $5 million to enhance, staff, oversee and investigate IQ Innovations’ improved – but still-flawed — distance learning clearinghouse that’s known as iLearnOhio;
- In January 2013, when it became clear that IQ Innovations could not deliver what it had promised, Chancellor Petro, a Kasich appointee, announced that Ohio taxpayers would pay IQ $1.2 million for “enhancements’’ to the platform;
- The price tag included $167,401 for one “enhancement” – a requirement for a single log-in for all systems. IQ Innovations responded simply adding a hyperlink to access Google Docs;
- Vice Chancellor Conley, as well as OSU leaders, were warned on at least two occasions that the Board of Regents had limited leverage to encourage performance because it had no contract with IQ Innovations. It never got one;
- Top-tier publishers such as Pearson and BrainPop, eager to add their textbooks to Ohio’s digital library, complained to both Conley and IQ officials that IQ Innovations was missing deadlines, failing to show up for meetings and not returning phone calls;
- By December 2013, a high-ranking Ohio Board of Regents employee sent higher-ups an email stating “there are no textbooks in the iLearn repository nor are any publishers under contract to provide them. …. The BOR (Board of Regents) has no contract with the vendor, IQ…. Therefore we are on tenuous legal ground and we have no leverage to encourage performance…. Many bugs remain to be fixed….”
- Even as problems with publishers and performance continued, IQ Innovations received $1.6 million in state money for an eTextbook pilot project administered by the Board of Regents. House Bill 59, Kasich’s second state budget, earmarked $6 million over two years for the textbooks, but required them to be purchased “through the state’s electronic distance learning clearinghouse.’’ This arrangement resulted in Lager’s company getting more than half of the first year’s eTextbook allotment;
- Mid-level OSU employees responsible for trying to hold IQ accountable grew increasingly frustrated, with some of the more persistent critics uninvited from important meetings, disciplined or simply re-organized out of their jobs;
- Three OSU employees filed 2014 whistleblower complaints with OSU’s Office of University Compliance and Integrity and complaints singled out Conley as one of the top offenders. Compliance officials found that the whistleblowers provided “credible information of significant retaliation,” but could not make a final determination, saying they lacked jurisdiction to interview John Conley or other Board of Regents employees. The report states that investigators didn’t even try.
- At least one of the whistleblowers filed a complaint with the Office of Ohio Inspector General Randall Meyer who opened an investigation. An OSU spokesman said the university is “fully cooperating.’’
- In March 2014, the Ohio Board of Regents decided to seek a replacement for IQ Innovations and said that IQ never should have been selected without first issuing the customary request for proposal. The Board of Regents has not made this decision public and the future of the clearinghouse is unclear. Soon after the Regents decided to replace IQ, John Conley abruptly resigned.
OSU spokesman Chris Davey said the distance learning system remains a valuable asset. “During the 2014-15 academic year, over 745,000 visitors accessed content disseminated from the clearinghouse.’’
There is a difference, however, between “visitors” and “users.” Records show usage rates flat, and teachers and administrators complaining the system remains riddled with problems and not user-friendly.
OSU’s contract with IQ expired on July 31, 2013, Davey said, and the platform’s fate is unclear.
Issues raised by the whistleblowers, and not properly investigated by OSU, prompted ProgressOhio to launch its own investigation. While doing so, we learned of the IG’s investigation.
“ProgressOhio welcomes the Inspector General’s investigation of this matter and our staff is willing to provide his office with any information we have that could be helpful,’’ Theis said.
The Office of Inspector General does not make its findings available to the public until after the investigation is complete.
For More Information, Contact:
ProgressOhio Executive Director Sandy Theis