Education Freedom Accounts grow toward $30M; phase‑out grant expires July 1, 2026, DOE says

Department of Education staff reviewed the operational mechanics, scope and fiscal impacts of Education Freedom Accounts (EFAs), the statewide scholarship‑style program that routes funds to scholarship organizations which then distribute digital‑wallet assistance to participating families.

Mark Manganiello described how the EFA payments follow the adequacy components (base adequacy, F&R, special education and ELL differentials) but are paid in the current fiscal year to a scholarship organization that may retain up to 10% for administration before placing the remainder in a family’s digital wallet. Staff cited per‑pupil rates used in the packet: base adequacy $4,265.64, F&R differential $2,392.92, special education $2,184.84, and ELL $832 (packet examples).

The department’s packet showed EFA participation rose from 1,635 pupils (first year) to 3,025 pupils (second year) and an estimated 5,852 pupils for the current fiscal year; the department estimated program disbursements at approximately $30 million for the current year. Manganiello also explained the phase‑out grant: the statute provides transitional payments to districts after a pupil leaves for an EFA (first year the district retains a portion of the lagged adequacy payment, the next year it receives 50% of that adequacy amount for the departed pupil, then 25% the following year). He told the committee the phase‑out ends on July 1, 2026; pupils who enroll in EFAs in FY26 will be the last cohort to generate phase‑out payments to their former districts.

Committee members asked questions about accountability and implementation. Representative Kelly asked how the ‘‘digital wallet’’ operates and whether families may withdraw funds for higher education; staff said the scholarship organization, not the department, oversees wallet mechanics and educational‑appropriateness determinations and suggested the committee contact the scholarship organization for operational details. Representative Papovich asked whether unspent funds left in an account after a pupil’s K–12 eligibility ends are returned to the state; staff said the department reconciles accounts and instructs scholarship organizations to remit remaining funds as required by statute.

Ending: Staff said the department conducts annual reconciliations with scholarship organizations, will share annual oversight reports and reconciliation summaries, and will arrange for a representative of the scholarship organization to appear for committee questions if members want operational detail about the digital‑wallet system.