Choice and money: committee grills sponsors on Educational Freedom Accounts and safeguards

Senate Bill 294 would create Educational Freedom Accounts that make eligible students — phased in over three years — eligible for up to 90 percent of prior‑year statewide foundation funding to spend on approved providers or preapproved and reimbursable expenses. Department staff told the committee parents would not receive direct 'blank checks'; funds flow to providers or reimbursements and the program will require annual audits and allow the division to remove misusing participants.

Sponsors said the program is capped at 1.5 percent of statewide enrollment in year 1 and 3 percent in year 2, then open in year 3 with proration if funds are insufficient. "There is no lottery," the sponsor told the committee; instead officials said funds would be prorated across approved accounts. The department also proposed retaining up to a 5 percent service fee from accounts for administration and auditing if needed.

Committee members pressed where auditing responsibility will rest. The department and counsel said they are in conversation with Legislative Audit; rules will specify auditing entities, random audit frequency and fraud reporting. Private and participating schools must meet accreditation, fiscal solvency and staffing requirements and are subject to audits and disqualification if they lose accreditation, counsel said.

Public commenters divided sharply: private‑school leaders and some parents called the provision a necessary expansion of choice and tailored services, while many teachers, administrators and civil‑rights and disability advocates warned the accounts will drain resources from public schools, disproportionately harm vulnerable students, and create an inequitable two‑ or three‑tier system.

What remains to be decided: the department will develop proposed rules that define eligible expenses, appeal processes for denied expenses, the auditing regime, the priority order for admission when funds are insufficient and operational details for homeschool accounts the department will delay until implementation year 2024–25.

Provenance: Sponsor explanation and phased caps (SEG 2670–2681, SEG 2620–2636), auditing and 5% admin fee (SEG 2268–2274, SEG 2230–2236), public comments for/against (SEG 3230–3350, SEG 3340–3460).