AN ACT RELATING TO EDUCATION -- EDUCATION FREEDOM ACCOUNT PROGRAM (Establishes a new program where the per pupil funding, calculated annually by RIDE, would be transferred into a newly created educational funding account run by the children's scholarship fund to pay for educational expenses.)

S2540

2026 -- S 2540
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LC003320
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO EDUCATION -- EDUCATION FREEDOM ACCOUNT PROGRAM

Introduced By:
Senator E Morgan

Date Introduced:
February 13, 2026

Referred To:
Senate Finance
It is enacted by the General Assembly as follows:
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SECTION 1. Title 16 of the General Laws entitled "EDUCATION" is hereby amended by
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adding thereto the following chapter:
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CHAPTER 117
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EDUCATION FREEDOM ACCOUNT PROGRAM
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16-117-1. Short title.

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This chapter shall be known and may be cited as the "Education Freedom Account
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Program."
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16-117-2. Legislative purpose.

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It is the purpose of this chapter to offer qualified students an opportunity to utilize state
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education funds to pay for alternative learning experiences, by allowing parents to direct their
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child's state education funding to private school, courses, materials and educational programs of
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their choice, instead of attending elementary or secondary public school. The education freedom
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account program shall be administered by the children's scholarship fund of Rhode Island.
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16-117-3. Definitions.

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As used in this chapter, the following words and terms shall have the following meanings:
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(1) "Adequate education funds" means the per-student base amount of educational funding
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calculated by the Rhode Island department of education (RIDE) and as may be determined by the
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general assembly on an annual basis.
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(2) "The children's scholarship fund of Rhode Island" or "the children's scholarship fund"

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or "CSF" means the organization approved under this chapter to administer and implement the
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educational freedom account (EFA)
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(3) "Commissioner" means the Rhode Island commissioner of education.
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(4) "Curriculum" means the lessons and academic content taught in a specific course,
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program, or grade level.
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(5) "Department" or "RIDE" means the Rhode Island department of education.
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(6) "Education freedom account" or "EFA" means the account to which funds are allocated
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by the children's scholarship fund and paid to the parent of an EFA student or directly to an
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education service provider in order to pay for qualifying education expenses under this chapter.
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(7) "Education service provider" means a person or organization that receives payments
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from education freedom accounts to provide educational goods and services to EFA students.
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(8) "EFA student" means an eligible student who is participating in the education freedom
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account (EFA) program.
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(9) "Eligible student" means a resident of this state who is eligible to enroll in a public
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elementary or secondary school and whose annual household income at the time the student's parent
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applies for the program is less than or equal to two hundred fifty percent (250%) of the federal
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poverty guidelines as updated annually in the Federal Register by the United States Department of
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Health and Human Services pursuant to 42 U.S.C. § 9902(2). No income threshold need be met in
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subsequent years, provided the student otherwise qualifies.
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(10) "Full-time" means more than fifty percent (50%) of instructional time.
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(11) "Parent" means a biological or adoptive parent, legal guardian, custodian, or other
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person with legal authority to act on behalf of an EFA student.
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(12) "Program" means the education freedom account (EFA) program established in this
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chapter.
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(13) "Remote” or “hybrid" means any public school that is not providing instruction in-
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person where the student or the educator are both not physically present in the traditional classroom
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due to full-time or part-time classroom or school closure.
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16-117-4. Education freedom account program.
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(a) The commissioner shall transfer to the CSF the per pupil annual education fund amount
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calculated by RIDE and determined by the general assembly.
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(b) Parents of an EFA student shall use the funds deposited in their student's EFA only for
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the following qualifying expenses to educate the EFA student as follows:
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(1) Tuition and fees at an elementary or secondary private school;
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(2) Tuition and fees for non-public online learning programs;

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(3) Tutoring services provided by an individual or a tutoring facility;
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(4) Services contracted for and provided by a district public school, chartered public school,
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public academy, or independent school, including, but not limited to, individual classes and
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curricular activities and programs;
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(5) Textbooks, curriculum, or other instructional materials, including, but not limited to,
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any supplemental materials or associated online instruction required by either a curriculum or an
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education service provider;
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(6) Computer hardware, Internet connectivity, or other technological services and devices,
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that are primarily used to help meet an EFA student's educational needs;
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(7) Educational software and its associated applications;
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(8) School uniforms;
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(9) Fees for nationally standardized assessments, advanced placement examinations,
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examinations related to college or university admission or awarding of credits and tuition and fees
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for preparatory courses for such exams;
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(10) Tuition and fees for summer education programs and specialized education programs;
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(11) Tuition, fees, instructional materials, and examination fees at a career or technical
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school;
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(12) Educational services and therapies, including, but not limited to, occupational,
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behavioral, physical, speech-language, and audiology therapies;
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(13) Fees for transportation paid to a fee-for-service transportation provider for the student
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to travel to and from an education service provider; and
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(14) Any other educational expense approved by the CSF.
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(c) EFA funds shall not be refunded, rebated, or shared with a parent or EFA student in any
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manner; provided however, that the funds shall be credited directly to the student's EFA.
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(d) Parents may make payments for the costs of educational goods and services not covered
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by the funds in their student's EFA. However, personal deposits into an EFA shall not be permitted.
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(e) Funds deposited in an EFA shall not constitute taxable income to the parent or the EFA
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student.
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(f) An EFA shall remain in force, and any unused funds shall roll over from quarter-to-
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quarter and from year-to-year until the parent withdraws the EFA student from the EFA program
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or until the EFA student graduates from high school, unless the EFA is closed because of a
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substantial misuse of funds. Upon permanent closure of an EFA, any unused funds shall be
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deposited in the respective city's or town’s educational account.
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(g) Nothing in this chapter shall be construed to require that an EFA student must be

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enrolled, full-time or part-time, in either an elementary or secondary private school or an
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elementary or secondary nonpublic online school.
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16-117-5. Application for an education freedom account.

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(a) A parent may apply to the CSF to establish an EFA for an eligible student. The CSF
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shall accept and approve applications for the fall and spring semesters each year and shall establish
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procedures for approving applications in an expeditious manner.
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(b) The CSF shall create a standard form that parents can submit to establish their student's
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eligibility for the EFA program and shall ensure that the application is publicly available and may
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be submitted through various sources, electronically and in a hard-copy format.
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(c) The CSF shall approve an application for an EFA provided:
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(1) The parent submits an application for an EFA in accordance with application
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procedures established by the CSF;
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(2) The student on whose behalf the parent is applying is an eligible student;
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(3) Funds are available for the EFA; and
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(4) The parent signs an agreement with the CSF:
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(i) To provide an education for the eligible student in the core knowledge domains that
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include science, mathematics, language, government, history, health, reading, writing, spelling, the
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history of the constitutions of Rhode Island and the United States, and an exposure to and
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appreciation of art and music;
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(ii) Not to enroll the eligible student as a full-time student in the public school of their
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residential district while participating in the EFA program;
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(iii) To provide an annual record of educational attainment by:
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(A) Having the student take a nationally-standardized, norm-referenced achievement test
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and to provide the results to the CSF by the end of each school year that the CSF shall make
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available to the department as aggregate scores;
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(B) Having the student take a statewide student assessment test; or
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(C) Maintaining a portfolio including, but not limited to, a log which designates by title the
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reading materials used; samples of writings, worksheets, workbooks, or creative materials used or
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developed by the student. The parent shall have a certified teacher or a teacher currently teaching
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in a nonpublic school, who is selected by the parent, evaluate the student's educational progress
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upon review of a portfolio and discussion with the parent or student;
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(iv) To use the funds in the EFA only for qualifying expenses to educate the eligible student
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as established by the EFA program; and
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(v) To comply with the rules and requirements of the EFA program.

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(d) The signed agreement between the parent and the CSF shall satisfy the compulsory
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school attendance requirements of the state.
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(e) The CSF shall annually renew a student's EFA provided the funds are available.
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(f) Upon notice to the CSF, an EFA student may choose to stop receiving EFA funding and
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enroll full-time in a public school.
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(1) Enrolling as a full-time student in the public school of their residential district shall
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result in the immediate suspension of payment of additional funds into the student's EFA. However,
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an EFA that has been open for at least one full school year shall remain open and active for the
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parent to make qualifying expenditures to educate the student from funds remaining in the EFA.
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When no funds remain in the student's EFA, the CSF may close the EFA.
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(2) If an eligible student decides to return to the EFA program, payments into the student's
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existing EFA may resume if the EFA is still open and active. A new EFA may be established if the
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student's EFA was closed.
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16-117-6. Authority and responsibilities of the children's scholarship fund.

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The CSF shall have the following additional duties, obligations, and authority:
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(1) The CSF shall maintain an updated list of education service providers and shall ensure
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that the list is publicly available through various sources, electronically and in a hard-copy format.
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(2) The CSF shall provide parents with a written explanation of the allowable uses of EFA
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funds, the responsibilities of parents, the duties of the CSF, and the role of any financial
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management firms that the CSF may contract with to administer any aspect of the EFA program.
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(3) The CSF shall ensure that parents of students with disabilities receive notice that
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participation in the EFA program is a placement pursuant to 20 U.S.C. § 1412, Individuals with
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Disabilities Education Act (IDEA), along with an explanation of the rights that parentally placed
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students possess under IDEA and any applicable state laws.
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(4) The CSF shall, in cooperation with the department, determine eligibility for
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differentiated aid subject to any applicable state and federal laws.
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(5) The CSF may withhold from deposits or deduct from EFAs an amount to cover the
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costs of administering the EFA program, up to a maximum of ten percent (10%) annually.
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(6) The CSF shall implement a commercially viable system of payment for services from
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EFAs to education service providers by electronic or online funds transfer.
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(i) The CSF shall not adopt a system that relies exclusively on requiring parents to be
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reimbursed for out-of-pocket expenses, but rather shall provide maximum flexibility to parents by
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facilitating direct payments to education service providers. The CSF may pre-approve requests for
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reimbursements for qualifying expenses, including expenses pursuant to §16-117-4(b), but shall

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not disperse funds to parents without receipt that such pre-approved purchase has been made.
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(ii) The CSF may contract with a private institution or organization to develop a payment
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system.
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(7) The CSF may also seek to implement a commercially viable system for parents to
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publicly rate, review, and share information about education service providers, preferably as part
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of the same system that facilitates the electronic or online funds transfers.
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(8) If an education service provider requires partial payment of tuition or fees prior to the
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start of the academic year to reserve space for an EFA student admitted to the education service
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provider, such partial payment may be paid by the CSF, if funds are available, prior to the start of
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the school year in which the EFA is awarded and deducted in an equitable manner from subsequent
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quarterly EFA deposits to ensure adequate funds remain available throughout the school year.
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However, if an EFA student decides not to use the education service provider, the partial reservation
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payment shall be returned to the CSF by such education service provider and credited to the
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student's EFA.
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(9) The CSF shall continue making deposits into a student's EFA until:
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(i) The CSF determines that the EFA student is no longer an eligible student;
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(ii) The CSF determines that there was substantial misuse of the funds in the EFA;
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(iii) The parent or EFA student withdraws from the EFA program;
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(iv) The EFA student enrolls full-time in the public school of their residential district; or
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(v) The EFA student graduates from high school.
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(10) The CSF may conduct or contract for the auditing of individual EFAs, and shall at a
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minimum conduct random audits of EFAs on an annual basis.
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(11) The CSF may make any parent or EFA student ineligible for the EFA program in the
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event of intentional and substantial misuse of EFA funds.
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(i) The CSF shall create procedures to ensure that a fair process exists to determine whether
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an intentional and substantial misuse of EFA funds has occurred.
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(ii) If an EFA student is free from personal misconduct, that student shall be eligible for an
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EFA in the future if placed with a new guardian or other person with the legal authority to act on
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behalf of the student.
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(iii) The CSF may refer suspected cases of intentional and substantial misuse of EFA funds
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to the attorney general for investigation if evidence of fraudulent use of EFA funds is obtained.
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(iv) A parent or EFA student may appeal the CSF's decision to deny eligibility for the EFA
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program to the department.
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(12) The CSF may bar an education service provider from accepting payments from EFAs

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if the CSF determines that the education service provider has:
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(i) Intentionally and substantially misrepresented information or failed to refund any
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overpayments in a timely manner; or
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(ii) Routinely failed to provide students with promised educational goods or services.
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(13) The CSF shall create procedures to ensure that a fair process exists to determine
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whether an education service provider may be barred from receiving payments from EFAs.
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(i) If the CSF bars an education service provider from receiving payments from EFAs, it
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shall notify parents and EFA students of its decision as soon as possible.
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(ii) Education service providers may appeal the CSF's decision to bar them from receiving
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payments from the EFA to the department.
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(14) The CSF may accept gifts and grants from any source to cover administrative costs,
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to inform the public about the EFA program, or to fund additional EFAs.
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(15) The department shall adopt rules and regulations that are necessary for the
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administration of this chapter.
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(16) The CSF shall adopt policies or procedures that are necessary for the administration
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of this chapter, including, but not limited to:
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(i) Establishing or contracting for the establishment of an online anonymous fraud
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reporting service;
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(ii) Establishing an anonymous telephone number for fraud reporting;
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(iii) Requiring a surety bond for education service providers receiving more than one
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hundred thousand dollars ($100,000) in EFA funds;
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(iv) Refunding payments from education service providers to EFAs; and
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(v) Ensuring appropriate use and rigorous oversight of all funds expended under this
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program.
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(17) The CSF shall not exclude, discriminate against, or otherwise disadvantage any
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education provider with respect to programs or services under this chapter based in whole or in part
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on the provider's religious character or affiliation, including religiously based or mission-based
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policies or practices.
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SECTION 2. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO EDUCATION -- EDUCATION FREEDOM ACCOUNT PROGRAM
***
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This act would establish a new program where the per pupil funding, calculated annually
2
by the department of education (RIDE), may be transferred into a newly created educational
3
funding account (EFA) administered by the children's scholarship fund if a student qualifies, to pay
4
for certain educational expenses such as, tuition and fees at a private school, tutoring, textbooks,
5
computers, among other items.
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This act would take effect upon passage.
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