Court Opinion

ID: 4688103
Source: CourtListenerOpinion
Date Created: 2021-05-19 13:12:26.754079+00
Date Added: 2024-06-11T08:04:45.768634
License: Public Domain

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as State
ex rel. Horizon Science Academy of Lorain, Inc. v. Ohio Dept. of Edn., Slip Opinion No. 2021-
Ohio-1681.]

                                           NOTICE
      This slip opinion is subject to formal revision before it is published in an
      advance sheet of the Ohio Official Reports. Readers are requested to
      promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
      South Front Street, Columbus, Ohio 43215, of any typographical or other
      formal errors in the opinion, in order that corrections may be made before
      the opinion is published.

                          SLIP OPINION NO. 2021-OHIO-1681
  THE STATE EX REL. HORIZON SCIENCE ACADEMY OF LORAIN, INC. ET AL. v.
                      OHIO DEPARTMENT OF EDUCATION ET AL.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
 may be cited as State ex rel. Horizon Science Academy of Lorain, Inc. v. Ohio
                 Dept. of Edn., Slip Opinion No. 2021-Ohio-1681.]
Mandamus—Grant funding for community schools under the Quality Community
        School Support (“QCSS”) Program—Section 265.335 of H.B. 166—
        Definition of “in good standing” for community-school operators under the
        QCSS Program relates to operator’s effectiveness, not corporate
        registration with the secretary of state—Writ granted as to Ohio
        Department of Education.
      (No. 2020-0749—Submitted March 2, 2021—Decided May 19, 2021.)
                                       IN MANDAMUS.
                                    ________________
        Per Curiam.
                               SUPREME COURT OF OHIO

        {¶ 1} In the 2020–2021 biennial budget bill, 2019 Am.Sub.H.B. No. 166
(“H.B. 166”), the General Assembly appropriated $30 million for a Quality
Community School Support (“QCSS”) Program. Under the program, a community
school that has met certain criteria would receive grant funding for the 2020–2021
and 2021–2022 fiscal years. H.B. 166, Section 265.335.
        {¶ 2} Relators are 12 Horizon Science Academy community schools
(collectively, “the HSA schools”)1 that had applied for QCSS grants. The Ohio
Department of Education (“ODE”) denied the applications because the schools’
operator was a foreign corporation not licensed with the Ohio secretary of state and
was therefore, according to ODE, not “in good standing” as required by Section
265.335 of H.B. 166. The HSA schools seek a writ of mandamus ordering
respondents, ODE; its director of community schools, Karl J. Koenig; the Ohio
State Board of Education; and Ohio Superintendent of Public Instruction Paolo
DeMaria, to approve their applications and pay them the amounts due under H.B.
166. Because ODE’s interpretation of “in good standing” is incorrect, we grant the
writ as to ODE. We deny the writ as to the remaining respondents because Section
265.335 of H.B. 166 does not impose duties upon them to perform the requested
acts.
                      I. Factual and Procedural Background
                                  A. The HSA schools
        {¶ 3} The HSA schools are community schools organized under R.C.
Chapter 3314. “[C]ommunity schools are independently governed public schools
that are funded from state revenues pursuant to R.C. Chapter 3314.” See State ex

1. The 12 schools are Horizon Science Academy of Lorain, Inc.; Horizon Science Academy
Youngstown, Inc.; Horizon Science Academy Cincinnati High School, Inc.; Horizon Educational
Services, Inc.; Horizon Science Academy–Cleveland Middle School; Horizon Science Academy
Elementary School, Inc.; Horizon Science Academy, Inc.; Horizon Science Academy Primary;
Horizon Science Academy–Dayton; Horizon Science Academy Dayton High School, Inc.; Horizon
Science Academy–Springfield; and Horizon Science Academy–Toledo.

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                                January Term, 2021

rel. Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio St. 3d 568,
2006-Ohio-5512, 857 N.E.2d 1148, ¶ 5.
       {¶ 4} As authorized by R.C. 3314.01(B), each of the HSA schools contracts
with an operator, Concept Schools NFP (“Concept”), for school-management
services. Concept is an Illinois nonprofit corporation that has operated community
schools in Ohio for more than 15 years. Concept operates 30 schools in seven
states, including 17 schools in Ohio.
                          B. Section 265.335 of H.B. 166
       {¶ 5} Section 265.335 of H.B. 166 established the QCSS Program, which
provides general-revenue funding for community schools. Under the program, a
school designated by ODE as a “Community School of Quality” receives additional
funding of $1,750 or $1,000 per fiscal year, per student, with the amount depending
on whether the student is economically disadvantaged.             H.B. 166, Section
265.335(A). ODE is required to pay the grant amounts to eligible schools no later
than January 31 of each fiscal year. Id. A school deemed eligible for a QCSS grant
for the 2020–2021 school year would also receive the grant for the 2021–2022
school year. H.B. 166, Section 265.335(C). The General Assembly appropriated
$30 million for QCSS grants for the 2020 and 2021 fiscal years. H.B. 166, Section
265.10.
       {¶ 6} There are four ways in which a school may qualify for a QCSS grant
as an eligible Community School of Quality, which ODE refers to as Criteria 1,
Criteria 2, Criteria 3(b)(i), and Criteria 3(b)(ii). Only Criteria 3(b)(i) and 3(b)(ii)
evaluate a school’s operator in determining eligibility. In this case, the HSA
schools attempted to qualify for a QCSS grant under Criteria 3(b)(ii).
       {¶ 7} Under Criteria 3(b)(ii), a school qualifies for a QCSS grant if it
“contracts with an operator that operates schools in other states” and the operator
meets all of the following criteria:

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               (I) One of the operator’s schools in another state performed
       better than the school district in which the school is located, as
       determined by [ODE].
               (II) At least fifty per cent of the total number of students
       enrolled in all of the operator’s schools are economically
       disadvantaged, as determined by [ODE].
               (III) The operator is in good standing in all states where it
       operates schools.
               (IV) [ODE] has determined that the operator does not have
       any financial viability issues that would prevent it from effectively
       operating a community school in Ohio.

(Emphasis added.) H.B. 166, Section 265.335(B)(3)(b)(ii). H.B. 166 does not
define “in good standing.”
       {¶ 8} ODE created a multipage form for schools to use when applying for a
QCSS grant. The form as completed by the HSA schools in November 2019 recited
the eligibility requirements stated in Section 265.335(B)(3)(b)(ii) and further
provided the following five criteria that the operator had to satisfy in order “to meet
the definition of good standing”:

                   All schools it currently manages in all states are not on
       probation;
                   All schools it currently manages in all states are not in
       receipt of notices of intent to suspend operations from the schools’
       current sponsors/authorizers;
                   All schools it currently manages in all states have not
       been required by their sponsors/authorizers to suspend operations;

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                                    January Term, 2021

                    All schools it currently manages are not in receipt of
        notices of termination from their current sponsors/authorizers;
                    All schools it currently manages do not have unresolved
        corrective action plans from the state department of education,
        current sponsor/authorizer, or current operator.2

(Footnote added.) The form also contained a section titled “Operator Assurances
Supplement,” which required the applicant to attest that its operator satisfied each
of the five criteria for “good standing.” However, the form completed by the HSA
schools in 2019 did not require applicants to assure that their operator was
registered as a corporate entity with the office of the Ohio secretary of state or its
equivalent in other states where the operator operates schools.
                 C. The HSA schools’ applications for QCSS grants
        {¶ 9} In November 2019, the HSA schools each applied for a QCSS grant
under Criteria 3(b)(ii). Each school used the application form created by ODE and
attested to its compliance with the requirements of Section 265.335(B)(3)(b)(ii)(I)
to (IV). The HSA schools also attested that Concept satisfied each of the five good-
standing criteria pertaining to operators.
        {¶ 10} On January 10, 2020, Koenig, ODE’s director of community
schools, notified the HSA schools that their applications had been denied. Koenig
informed the schools that they did not satisfy Section 265.335(B)(3)(b)(ii)(III)
because their operator, Concept, “is not registered as a foreign corporation with the
Ohio Secretary of State’s Office and, therefore, is not in good standing in Ohio.”
Koenig did not identify any other criteria that the HSA schools failed to satisfy.

2. Ohio’s community-school statutes define “sponsor” as an ODE-approved entity that monitors the
school’s performance according to state laws and regulations. See R.C. 3314.02(A)(1) and (C)(1),
3314.03(A)(4). In turn, ODE monitors the sponsor’s performance. R.C. 3314.015(A)(2) and (3).

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                              SUPREME COURT OF OHIO

                              D. The mandamus action
        {¶ 11} The HSA schools commenced this action on June 15, 2020, naming
ODE, the Ohio State Board of Education, Koenig, DeMaria, and Governor Mike
DeWine as respondents.        They requested a writ of mandamus directing all
respondents to (1) approve the schools’ QCSS-grant applications and (2) award
each school “an amount up to $1,750 for each student identified as economically
disadvantaged and up to $1,000 for other students enrolled for fiscal year 2020,” in
accordance with the General Assembly’s appropriation in H.B. 166. Respondents
moved to dismiss the complaint, with a separate filing by Governor DeWine. We
granted the motion to dismiss as to Governor DeWine, denied the remaining
respondents’ motion to dismiss, and granted an alternative writ. 160 Ohio St. 3d
1414, 2020-Ohio-4612, 154 N.E.3d 87. The parties submitted evidence and briefs,
and the case is now before us for a decision on the merits.
                                     II. Analysis
        {¶ 12} To be entitled to a writ of mandamus, the HSA schools must
establish by clear and convincing evidence (1) a clear legal right to the requested
relief, (2) a clear legal duty on the part of the respondents to provide it, and (3) the
lack of an adequate remedy in the ordinary course of law. State ex rel. Waters v.
Spaeth, 131 Ohio St. 3d 55, 2012-Ohio-69, 960 N.E.2d 452, ¶ 6, 13. Respondents
do not dispute that the HSA schools lack an adequate remedy in the ordinary course
of law. Indeed, the schools have no avenue to appeal ODE’s determination that
they are ineligible for QCSS grants. See State ex rel. Lakeview Local School Dist.
Bd. of Edn. v. Trumbull Cty. Bd. of Commrs., 109 Ohio St. 3d 200, 2006-Ohio-2183,
846 N.E.2d 847, ¶ 9 (mandamus is appropriate remedy when a school board has no
right to appeal the commissioners’ alleged failure to follow statutory duty to
distribute funds). Thus, our decision turns on whether the HSA schools have
established a clear legal right to QCSS-grant funding and whether respondents have
a clear legal duty to provide it.

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                                 January Term, 2021

      A. The meaning of “in good standing” in Section 265.335 of H.B. 166
       {¶ 13} The crux of the legal dispute in this case is the meaning of the
requirement that a community school’s operator be “in good standing in all states
where it operates schools” in order for the school to qualify for a QCSS grant under
Criteria 3(b)(ii). See H.B. 166, Section 265.335(B)(3)(b)(ii). ODE denied the HSA
schools’ grant applications because their operator, Concept, is an Illinois nonprofit
corporation that had not been licensed by the secretary of state to do business in
Ohio when the schools submitted their applications. See R.C. 1703.27 (“No foreign
nonprofit corporation shall exercise its corporate privileges in this state in a
continual course of transactions until it has first procured from the secretary of state
a certificate authorizing it to do so”). Concept’s failure to be properly registered
does not affect the validity of its school-management agreements with the HSA
schools. See R.C. 1703.29(A). But for purposes of the schools’ eligibility for
QCSS-grant funding under Criteria 3(b)(ii), ODE considers the term “in good
standing” to implicitly include licensure with the secretary of state.
       {¶ 14} When construing a legislative enactment, we must discern the intent
of the General Assembly. State ex rel. Repeal the Lorain Cty. Permissive Sales Tax
Commt. v. Lorain Cty. Bd. of Elections, 151 Ohio St. 3d 247, 2017-Ohio-7648, 87
N.E.3d 1234, ¶ 14. In doing so, we begin with the plain language of the statute. Id.
In this case, however, the General Assembly did not define “in good standing” in
Section 265.335 of H.B. 166. Undefined words and phrases in an enactment “shall
be read in context and construed according to the rules of grammar and common
usage.” R.C. 1.42. “[A] court cannot pick out one sentence and disassociate it from
the context, but must look to the four corners of the enactment to determine the
intent of the [legislature].” State v. Wilson, 77 Ohio St. 3d 334, 336, 673 N.E.2d
1347 (1997); see also Commerce & Industry Ins. Co. v. Toledo, 45 Ohio St. 3d 96,
102, 543 N.E.2d 1188 (1989) (“words and phrases in a statute must be read in
context of the whole statute”). Here, an examination of the QCSS-grant-funding

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criteria as a whole indicates that the “in good standing” requirement in Criteria
3(b)(ii) speaks solely to the operator’s standing as a qualified and effective operator
of community schools.
       {¶ 15} This interpretation of “in good standing” makes sense when
examined in the context of the other Criteria 3(b)(ii) requirements. The other
requirements for a school to qualify for a QCSS grant under Criteria 3(b)(ii) are (1)
that one of the operator’s schools in another state outperformed its school district,
(2) that at least 50 percent of the students enrolled in all of the operator’s schools
are economically disadvantaged, and (3) that the operator does not have any
financial-viability problems that would interfere with its ability to operate a school
in Ohio. See H.B. 166, Section 265.335(B)(3)(b)(ii). Each of these requirements
relates to either the operator’s effectiveness or the provision of educational
opportunity to economically disadvantaged students.            In this context, the
requirement that the operator also be “in good standing in all states where it
operates schools” is logically construed to relate to the operator’s ability to
effectively operate community schools. That is, an operator is “in good standing in
all states where it operates schools” if the operator is not subject to any form of
sanction, suspension, or disciplinary censure by a state’s educational authority or a
school’s sponsor. Not surprisingly, ODE’s own list of “good standing assurances,”
to which the HSA schools had to attest, related to these types of issues and not to
any corporate-registration requirement in Ohio or any other state.
       {¶ 16} An examination of the rest of Section 265.335 of H.B. 166 provides
further support for the conclusion that “in good standing” does not mean
compliance with a corporate-registration requirement with the Ohio secretary of
state (or an equivalent requirement in other states). Under Criteria 1, a school
qualifies for QCSS-grant funding if it meets certain academic performance
standards as of the program’s effective date and if at least 50 percent of its students
are economically disadvantaged. H.B. 166, Section 265.335(B)(1). Under Criteria

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                                     January Term, 2021

2, a school qualifies for QCSS-grant funding if it is a relatively new school
operating under certain timing parameters and is replicating the operational and
instructional model of a Criteria 1 school. H.B. 166, Section 265.335(B)(2). And
under Criteria 3(b)(i), a school qualifies for QCSS-grant funding if its operator
operates schools in other states and if, as of the program’s effective date, its
operator operated a school that received either a grant under the federal Charter
School Program (20 U.S.C. 7221) or funding from the Charter School Growth
Fund.3 H.B. 166, Section 265.335(B)(3)(b)(i).
        {¶ 17} All of the requirements in Criteria 1, 2, 3(b)(i), and 3(b)(ii) relate to
indicia of a school’s successful performance. However, Criteria 3(b)(i) and 3(b)(ii)
also focus on the school operator. Criteria 3(b)(i) does not require that the school
operator be “in good standing” in all states where it operates schools, even though
the General Assembly expressly contemplated that a school applying for grant
funding under Criteria 3(b)(i) would have an out-of-state operator. See H.B. 166,
Section 265.335(B)(3)(b)(i). Instead, the General Assembly considered that a
school that contracts with an operator sufficiently demonstrates the operator’s
effectiveness if it received funding from the federal Charter School Program or the
Charter School Growth Fund.                We likewise interpret the school-operator
requirements in Criteria 3(b)(ii) as being geared toward assurances of the operator’s
effectiveness.
        {¶ 18} If the General Assembly had been concerned with a school
operator’s corporate-registration status as a prerequisite to QCSS-grant funding, it
would have imposed corporate registration as a requirement for schools applying
under any of the criteria and not just for eligibility under Criteria 3(b)(ii). It is just
as likely that a community school seeking to qualify under Criteria 1, Criteria 2, or

3. The Charter School Growth Fund is a nationally recognized philanthropic organization that funds
charter schools nationwide, https://chartergrowthfund.org/ (accessed April 13, 2021)
[https://perma.cc/TNQ2-YSHS].

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                               SUPREME COURT OF OHIO

Criteria 3(b)(i) could have an operator that is a foreign corporation. Indeed, three
other Horizon Science Academy schools also operated by Concept received QCSS-
grant funding under Criteria 1. There is nothing in the language of Section 265.335
of H.B. 166 to suggest that the General Assembly intended to disqualify a school
from a QCSS grant under Criteria 3(b)(ii) if its operator was not registered with the
Ohio secretary of state yet allow a school with the same operator to obtain a QCSS
grant under any of the other three criteria. The QCSS-grant scheme as a whole
indicates that the General Assembly intended the eligibility requirements to relate
to performance-based factors of the school itself (Criteria 1 and 2) or the operator
(Criteria 3(b)(i) and 3(b)(ii)).
                B. ODE’s interpretation is not entitled to deference
        {¶ 19} In support of its interpretation of “in good standing” to include a
corporate-registration requirement, ODE asks the court to apply the principle of
agency deference.      But deference to an administrative interpretation is not
appropriate when the enactment is unambiguous. Cleveland Clinic Found. v.
Cleveland Bd. of Zoning Appeals, 141 Ohio St. 3d 318, 2014-Ohio-4809, 23 N.E.3d
1161, ¶ 29. For the reasons stated above, the phrase “in good standing” as used in
Section 265.335 of H.B. 166 is unambiguous. Based on a reading of the legislative
enactment as a whole, the term has nothing to do with corporate registration.
Therefore, ODE is not entitled to agency deference in this case.
                    C. Mandamus is appropriate only as to ODE
        {¶ 20} For the reasons set forth above, corporate registration is not a
prerequisite to qualify for grant funding under Criteria 3(b)(ii) of the QCSS
Program. Because the HSA schools have met the Criteria 3(b)(ii) requirements,
they have established a clear legal right to QCSS grants and a clear legal duty on
the part of ODE to provide them. The HSA schools are therefore entitled to a writ
of mandamus ordering ODE to approve their grant applications and award them

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                                 January Term, 2021

QCSS-grant funding. The schools are not, however, entitled to a writ of mandamus
as to respondents Koenig, DeMaria, or the Ohio State Board of Education.
          {¶ 21} Section 265.335 of H.B. 166 imposes no duties on either DeMaria
or the Ohio State Board of Education to approve grant applications or disburse grant
funds. And though Koenig is the ODE director of community schools, H.B. 166
imposes the duty of administering the QCSS Program and disbursing the grant
funds on ODE, not on any particular individual or officer. See H.B. 166, Section
265.335(A). Moreover, the evidence shows that ODE’s decisions on whether a
school qualifies for a QCSS grant and whether to approve a disbursement of QCSS
funds to a school are not relegated solely to Koenig. We will not issue a writ of
mandamus against a respondent who has no duty to perform the requested acts. See
State ex rel. Becker v. Eastlake, 93 Ohio St. 3d 502, 506, 756 N.E.2d 1228 (2001).
                                   III. Conclusion
          {¶ 22} The HSA schools satisfied all of the requirements to obtain QCSS-
grant funding under Section 265.335(B)(3)(b)(ii) of H.B. 166. We therefore grant
a writ of mandamus requiring ODE to approve the HSA schools’ QCSS
applications and award them grant funding as set forth in Section 265.335 of H.B.
166. We deny the writ as to the remaining respondents.
                                                                 Writ granted in part
                                                                  and denied in part.
          O’CONNOR, C.J., and KENNEDY, FISCHER, DEWINE, and STEWART, JJ.,
concur.
          DONNELLY and BRUNNER, JJ., dissent and would deny the writ as to all
respondents.
                                 _________________
          Nicola, Gudbranson & Cooper, L.L.C., Nicholas J. Dertouzos, and Arthur
L. Clements III, for relators.
          Organ Law, L.L.P., Erik J. Clark, and Gabriel Siegle, for respondents.

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SUPREME COURT OF OHIO

 _________________

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