State ex rel. Nese v. State Teachers Ret. Bd. of Ohio

Decision Date02 May 2013
Docket NumberNo. 2012–0251.,2012–0251.
PartiesThe STATE ex rel. NESE et al., Appellants, v. STATE TEACHERS RETIREMENT BOARD OF OHIO, Appellee; Jefferson County Educational Service Center Governing Board, Appellant.
CourtOhio Supreme Court

OPINION TEXT STARTS HERE

Green, Haines, Sgambati Co., L.P.A., Ira J. Mirkin, Stanley J. Okusewsky III, and Charles W. Oldfield, Youngstown, for appellants John Nese, Donald Williams, and Catherine Miles.

Pepple & Waggoner, Ltd., R. Brent Minney, Cleveland, and Mark J. Jackson, Middletown, for appellant Jefferson County Educational Service Center Governing Board.

Michael DeWine, Attorney General, and Allan K. Showalter and John E. Patterson, Assistant Attorneys General, for appellee.

O'CONNOR, C.J.

[Ohio St.3d 103]{¶ 1} This is an appeal from a judgment denying the request of relators-appellants John Nese, Donald Williams, and Catherine Miles (“the instructors”) for writs of mandamus to compel respondent-appellee State Teachers Retirement Board of Ohio (STRS) to accept employer and employee contributions to its retirement fund and to compel respondent-appellee Jefferson County Educational Service Center Governing Board (Jefferson County ESC) to make employer contributions to the retirement system on their behalf.

{¶ 2} The salient question in this appeal is not whether the instructors were “teachers” as that term is commonly understood.1 Rather, the question before us is whether the STRS had some evidence to support its conclusion that the instructors were independent contractors, and not employees, of the Jefferson County ESC and therefore were not “teachers” within the meaning of R.C. 3307.01(B)(5).

{¶ 3} Because the instructors fail to establish that the STRS abused its discretion in determining that they were not “teachers” within the meaning of R.C. 3307.01(B)(5), we must affirm the decision of the court of appeals, which [Ohio St.3d 104]similarly held that the instructors had not established that the STRS abused its discretion.

Relevant Background

{¶ 4} An “education service center” (“ESC”) is a statutory creation. As part of an educational regional service system, its purpose is to provide support to state and local educational initiatives and to improve school effectiveness and student achievement. R.C. 3312.01(A). An ESC provides services to school districts and community schools by contract and by statute. R.C. 3312.01(A) and (C); Hastings, Manoloff, Sharb, Sheeran & Jaffe, Baldwin's Ohio School Law, Section 4.5, 44–45 (2011–2012 Ed.).

{¶ 5} Jefferson County ESC works with administrators, teachers, and students in seven local school districts. In 2001, school superintendents in some of those schools were concerned over the depletion of resources in their districts caused by the loss of students recruited to “community schools,” also known as “charter schools,” which were authorized by the General Assembly's enactment of R.C. Chapter 3314 in 1997. 147 Ohio Laws, Part I, 909, 1187. See State ex rel. Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio St.3d 568, 2006-Ohio-5512, 857 N.E.2d 1148, ¶ 1, 6. The superintendents believed that it was necessary to research “online curriculum options” that could be used to compete with charter schools, and Jefferson County ESC began looking at a “virtual learning academy” that was being used by another district.

{¶ 6} A “virtual learning academy” or “VLA” is an “internet-based educational delivery system designed for K–12, providing alternative educational options for credit deficiencies, alternative programs, home schooling, home bound instruction, and 2002 summer school programs.” A VLA is not a school; it is an “educational option,” like “distance learning,” which involves “systematic instruction in which the instructor and/or student participate by mail or electronic media.” Ohio Adm.Code 3301–35–01(B)(10)(a) (including “distance learning” as an “educational option”).

{¶ 7} After researching the market, Jefferson County ESC determined that the best on-line curriculum was available through a California vendor, Learning Springs. Jefferson County ESC passed a resolution to partner with Learning Springs and then marketed its own VLA to local school districts and, eventually, districts around the state. But as the program proved more successful in enrolling students, concerns arose over the curriculum's failure to fully align with Ohio's state academic-content standards. In 2003, Jefferson County ESC hired teachers to rewrite the curriculum so that it would fully align with state standards.

[Ohio St.3d 105]{¶ 8} Although we are not aware of any reported case in the state or federal courts that addresses the specific question with which we are confronted, we are aware that “cyber schools” and curriculum options like the VLA are increasing in America. A number of states include virtual learning as a form of public education. See generally Browning, Will Residency Be Relevant to Public Education in the Twenty–First Century?, 8 Pierce L.Rev. 297, 338–339 (2010). Indeed, cyber schools are an increasingly popular, and rapidly growing, addition to the education community. There were only 60 “virtual” or “cyber” charter schools in America in 2003, but by 2009, more than 100,000 students were enrolled in 195 virtual schools in 26 states. Brady, Umpstead & Eckles, Unchartered Territory: The Current Legal Landscape of Public Cyber Charter Schools, 2010 B.Y.U.Educ. & L.Rev. 191.

{¶ 9} Ohio is at the forefront of this development. “In 2003, Ohio had only six cyber charter schools. Since 2003, Ohio has officially granted charters for the opening of thirty-nine additional cyber charter schools.” Id. at 196, fn. 19. As of April 2008, the VLA served 22,000 students in 180 school districts in Ohio.2

{¶ 10} The instructors in this case were hired to instruct students in the VLA. Each instructor can serve hundreds of students in a given year.

{¶ 11} If a school district decides to use the VLA as part of its own curriculum, that district decides whether to use its own faculty or the VLA staff. If the school district decides to use VLA staff, Jefferson County “matches” the students to one of the VLA instructors. Jefferson County receives a participation fee of $175 per student for its role and “passes through” the pay VLA instructors receive, which is $105 per student per semester, or $210 per student for a full (two-semester) academic year.

{¶ 12} In order to obtain that pay, VLA instructors submit a stipend form to Jefferson County ESC when a student completes a course or the student's license expires. If the school district withdraws a student from a VLA course, Jefferson County ESC pays the instructor on a prorated basis for the number of units of the course the student completes.

{¶ 13} As VLA instructors, Nese, Williams, and Miles did not have contracts with Jefferson County. Rather, they signed a form provided by Jefferson County that stated that they agreed “to be on board to take on VLA students.” As VLA instructors, they did not receive health insurance or other fringe benefits from Jefferson County ESC. However, most VLA instructors are full-time teachers working in classrooms. Nese and Williams served as teachers in local [Ohio St.3d 106]school districts and thus received health insurance and other benefits through their traditional teaching jobs. And Miles retired as a teacher at the end of the 20082009 school year and likely received those benefits through her retirement plan.

{¶ 14} Nese, Williams, and Miles were entitled to a great deal of latitude in their day-to-day work. For example, VLA instructors were authorized to create their own midterm and final examinations or to use on-line lessons as the examinations.

{¶ 15} They were also free, as were other VLA instructors, to choose when and where they did their work. Jefferson County did not set specific times at which they were required to instruct or deadlines by which the work had to be completed. And although Jefferson County offered a place to work for teachers and students who do not have access to a computer, the VLA instructors were not required to teach there. In fact, most of the VLA instructors worked at home or at a public library and often did so after typical school hours.

{¶ 16} Jefferson County ESC initially considered its VLA instructors to be independent contractors rather than employees. Consequently, it did not deduct contributions to pay into the retirement system. Eventually, however, Jefferson County ESC decided to treat its VLA instructors as employees and withheld contributions accordingly. Thus, for example, in 2004, Williams received a 1099 form from Jefferson County for his work instructing in the VLA, but for 2005 through 2009, he received W–2 forms. Other instructors also received 1099 forms initially and subsequently received W–2s.

{¶ 17} In November 2008, the STRS determined that the VLA instructors were independent contractors instead of employees. It refunded all contributions made by Jefferson County ESC on the VLA instructors' behalf. Thereafter, Jefferson County ESC adopted a resolution specifying duties for its VLA faculty, including the general duties of “logging into the system on a daily basis to grade student's work, answering student's questions, providing feedback to students, providing structure to students, and outlining expectations to students.” And Nese, Williams, and Miles were given performance evaluations after the STRS's decision that they were independent contractors.

{¶ 18} In December 2009, Nese, Williams, and Miles filed an action in the Tenth District Court of Appeals challenging the STRS's decision. In their amended complaint, Nese, Williams, and Miles sought writs of mandamus to compel Jefferson County ESC to make the requisite employer contributions to the retirement system for their VLA instruction and to compel the STRS to accept employer and employee contributions...

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