Title: Educational Freedom Accounts Act
Policy area: Education

Summary:
Educational Freedom Accounts Act
This bill (1) establishes an educational savings account program for District of Columbia children who are eligible to receive a free public education in the District, but whose parents choose not to enroll them in a public school or home schooling; and (2) specifies the use of such funds, including for private schools.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2163 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                S. 2163

          To expand school choice in the District of Columbia.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 28, 2017

Mr. Cruz (for himself and Mr. Lee) introduced the following bill; which 
        was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
          To expand school choice in the District of Columbia.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Educational Freedom Accounts Act''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Administering entity.--The term ``administering 
        entity'' means the entity that receives the contract under 
        section 3(a) for a fiscal year.
            (2) Chief financial officer.--The term ``chief financial 
        officer'' means the Chief Financial Officer of the District of 
        Columbia.
            (3) Eligible child.--The term ``eligible child'' means a 
        child--
                    (A) who is a resident of the District of Columbia;
                    (B) who is eligible to receive a free public 
                education in the District of Columbia;
                    (C) who--
                            (i) was enrolled in a public school or 
                        preschool program of the District of Columbia, 
                        including a charter school, during the previous 
                        school year;
                            (ii) received an education savings account 
                        under this Act for the preceding school year;
                            (iii) received an opportunity scholarship 
                        under section 3007(a) of the Scholarships for 
                        Opportunity and Results Act for the preceding 
                        school year; or
                            (iv) is entering prekindergarten or 
                        kindergarten;
                    (D) whose parent chooses to not enroll the child in 
                a public elementary school, secondary school, or 
                prekindergarten program for the school year for which 
                the child will receive a scholarship under section 4; 
                and
                    (E) whose parent does not submit a notification of 
                home schooling described in section 5202 of title 5, 
                Code of the District of Columbia Regulations (or any 
                successor notification) to the Office of the State 
                Superintendent of Education of the District of Columbia 
                for any year for which the parent enters into an 
                agreement under section 4(a)(2)(B).
            (4) Institution of higher education.--The term 
        ``institution of higher education'' has the meaning given the 
        term in section 102 of the Higher Education Act of 1965 (20 
        U.S.C. 1002).
            (5) Parent.--The term ``parent'' means the guardian, 
        custodian, or other person with the authority to act on behalf 
        of a child.
            (6) Participating provider.--The term ``participating 
        provider'' means an entity that--
                    (A) is--
                            (i) a nonpublic school located in the 
                        District of Columbia that provides education to 
                        prekindergarten, elementary school, or 
                        secondary school students;
                            (ii) a public school, including a charter 
                        school, located in the District of Columbia, 
                        except only with respect to providing 
                        individual courses or extracurricular 
                        activities described in section 4(c)(1)(E) or 
                        transportation described in section 4(c)(1)(I) 
                        to such services;
                            (iii) a tutor or tutoring facility;
                            (iv) a nonpublic provider of distance or 
                        online learning;
                            (v) a therapy center or other provider of 
                        special education or disability services;
                            (vi) an institution of higher education 
                        located in the District of Columbia; or
                            (vii) an entity that provides educational 
                        services or products;
                    (B) notifies the administering entity of the 
                entity's intent to become a participating provider; and
                    (C) agrees, as a condition of receiving funds from 
                an education savings account established under section 
                4, to comply with the requirements of this Act.

SEC. 3. CONTRACT AUTHORIZED.

    (a) In General.--Beginning with the 2018-2019 school year, the 
Chief Financial Officer shall carry out this Act for each school year 
by awarding a contract to 1 entity described in subsection (b) to 
enable the administering entity to carry out the program under section 
4 for all eligible children in the District of Columbia.
    (b) Eligibility.--In order to be eligible for a contract under this 
section, an entity shall be--
            (1) exempt from Federal income tax pursuant to 501(c)(3) of 
        the Internal Revenue Code of 1986;
            (2) based within the District of Columbia; and
            (3) able to demonstrate an ability to meet all requirements 
        of this Act.
    (c) Application.--An eligible entity desiring a contract under this 
section shall submit an application to the Chief Financial Officer at 
such time, in such manner, and containing such information as the Chief 
Financial Officer may require.
    (d) Administrative Expenses.--From the amounts made available under 
the contract described in subsection (a), the administering entity may 
reserve an amount that is not greater than the sum of 5 percent of the 
funds allocated under section 4(a)(4) for each eligible child with an 
education savings account, to be used by the administering entity for 
the administrative expenses associated with the program under this Act.

SEC. 4. UNIVERSAL EDUCATIONAL CHOICE FOR DISTRICT OF COLUMBIA STUDENTS.

    (a) Basic Elements of Parental Choice in Education.--
            (1) Educational choice.--Except as provided in paragraph 
        (6), the parent of any eligible child may enter into an 
        agreement under paragraph (2)(B) with the administering entity 
        for any year during which the eligible child will be in a grade 
        for which the District of Columbia provides free public 
        education.
            (2) Provision of education savings accounts.--
                    (A) In general.--Beginning with the 2018-2019 
                school year, the administering entity shall provide, to 
                each eligible child whose parent enters into or renews 
                an agreement described in subparagraph (B) with the 
                administering entity for the school year, an education 
                savings account described in paragraph (3), into which 
                scholarship amounts for the year shall be deposited in 
                accordance with paragraph (4).
                    (B) Agreement.--The agreement required under this 
                subparagraph shall be in a manner and on a form 
                determined by the administering entity and shall 
                provide that--
                            (i) the eligible child will receive an 
                        education savings account described in 
                        paragraph (3) and the administering entity will 
                        deposit a scholarship into the account for each 
                        year that the agreement is in effect, in 
                        accordance with paragraph (4);
                            (ii) the eligible child may be educated 
                        pursuant to any of the methods described in 
                        subparagraphs (A) through (G) of subsection 
                        (c)(1);
                            (iii) the parent shall direct the use of 
                        the funds provided in the education savings 
                        account for educational expenses described in 
                        subsection (c), and the administering entity 
                        shall distribute such funds in accordance with 
                        paragraph (3)(B);
                            (iv) the parent agrees to the terms and 
                        conditions of the education savings account, 
                        including any participation necessary for the 
                        accountability activities required under 
                        subsection (d)(3); and
                            (v) with respect to an eligible child who 
                        is a child with a disability (as defined in 
                        section 602 of the Individuals with 
                        Disabilities Education Act (20 U.S.C. 1401)), 
                        the parent agrees that participation in the 
                        program under this section shall have the same 
                        effect as parental placement of child under 
                        section 612(a)(10)(A) of such Act (20 U.S.C. 
                        1412(a)(10)(A)).
            (3) Education savings account.--An education savings 
        account described in this paragraph means a parent-controlled 
        account, established exclusively for the purpose of paying for 
        the educational expenses described in subsection (c) for an 
        eligible child who is the designated beneficiary of the 
        account, that meets the following requirements:
                    (A) No funds shall be deposited into the account 
                unless the funds are--
                            (i) a disbursement of an annual scholarship 
                        from the administering entity as provided under 
                        paragraph (2)(A); or
                            (ii) a deposit of opportunity scholarship 
                        funds, in accordance with section 3007(a)(2) of 
                        the Scholarships for Opportunity and Results 
                        Act (D.C. Code, sec. 38-1853.07(a)(2)).
                    (B) The funds in the account shall be distributed 
                by the administering entity on behalf of the eligible 
                child to one or more participating providers, upon 
                direction by the parent, at the appropriate time.
                    (C) Except as provided in subparagraph (D), any 
                amount in the account that is attributable to a deposit 
                provided under paragraph (2)(A) or a deposit of any 
                opportunity scholarship funds awarded under section 
                3007 of the Scholarships for Opportunity and Results 
                Act (D.C. Code, sec. 38-1853.07) may be paid or 
                distributed out of the account only for the purpose of 
                paying education expenses described in subsection (c) 
                for the eligible child.
                    (D) Any balance remaining in the account shall be 
                returned to the Chief Financial Officer on the last day 
                of the period covered by an agreement described in 
                paragraph (2)(B) if--
                            (i) such agreement is broken or ended by 
                        the parent during the agreement period;
                            (ii) the parent of the eligible child does 
                        not renew the agreement for the eligible child 
                        for the immediately succeeding academic year;
                            (iii) during the most recent year of the 
                        agreement, the parents do not use any funds in 
                        the account for eligible expenses described in 
                        subsection (c); or
                            (iv) the child no longer qualifies as an 
                        eligible child.
            (4) Amount of scholarship and transfer of funds.--
                    (A) Transfer of funds.--By not later than August 1 
                of each school year--
                            (i) the administering entity shall notify 
                        the Chief Financial Officer of the total amount 
                        calculated under subparagraph (B) to be 
                        provided under this Act for scholarships to 
                        eligible children for such school year; and
                            (ii) the Chief Financial Officer shall 
                        transfer such amount, from any funds or 
                        revenues available to the District of Columbia, 
                        to the administering entity to enable the 
                        administering entity to pay for the 
                        scholarships and the administration expenses 
                        for the full fiscal year, in accordance with 
                        subparagraphs (B) and (D) and section 3(d).
                    (B) Amount.--The total amount provided under this 
                section for a full-year scholarship on behalf of an 
                eligible child shall equal--
                            (i) in the case of an eligible child from a 
                        family with an income of not more than 185 
                        percent of the poverty level described in 
                        subparagraph (C) or an eligible child who is a 
                        child with a disability, as defined in section 
                        602 of the Individuals with Disabilities 
                        Education Act (20 U.S.C. 1401), 90 percent of 
                        the funds that would otherwise be allocated by 
                        the District of Columbia Public Schools for 
                        such child, as determined by the uniform per 
                        student funding formula defined in the District 
                        of Columbia School Reform Act of 1995 (D.C. 
                        Code, sec. 38-804.01);
                            (ii) in the case of an eligible child from 
                        a family with an income of more than 185 
                        percent, and not more than 300 percent, of such 
                        poverty level, 85 percent of the funds that 
                        would otherwise be allocated by the District of 
                        Columbia Public Schools for such child as 
                        determined by such uniform per student funding 
                        formula; and
                            (iii) in the case of an eligible child from 
                        a family with an income that equals or exceeds 
                        300 percent of such poverty level, 80 percent 
                        of the funds that would otherwise be allocated 
                        by the District of Columbia Public Schools for 
                        such child as determined by such uniform per 
                        student funding formula.
                    (C) Calculation of poverty level.--In determining 
                the poverty level for purposes of this paragraph, the 
                administering entity shall use the criteria of poverty 
                used by the Bureau of the Census in compiling the most 
                recent decennial census, as the criteria have been 
                updated by increases in the Consumer Price Index for 
                All Urban Consumers, published by the Bureau of Labor 
                Statistics.
                    (D) Quarterly disbursement.--The administering 
                entity shall distribute the amount of a scholarship 
                provided under this section to an eligible child whose 
                parent has entered into an agreement under paragraph 
                (2)(B) into the eligible child's education savings 
                account, which may be through 4 equal quarterly 
                deposits or any other distribution schedule determined 
                appropriate by the administering entity.
            (5) Ownership of the education savings account.--An 
        education savings account established for an eligible child 
        under this Act, and any funds deposited within the education 
        savings account, shall belong to the eligible child. Funds 
        available in the education savings account shall be used as 
        directed by a parent of the eligible child, on behalf of the 
        child, for education expenses described in subsection (c).
            (6) Interaction with opportunity scholarships.--
        Notwithstanding paragraph (2)(A) or any other provision of this 
        Act, a child who receives an opportunity scholarship under 
        section 3007 of the Scholarships for Opportunity and Results 
        Act (D.C. Code, sec. 38-1853.07) for a school year shall not be 
        eligible for a scholarship under this Act for the same school 
        year. Upon the request of any parent of an eligible child who 
        receives an opportunity scholarship and the completion of an 
        agreement described in paragraph (2)(B), the Secretary shall 
        establish an education savings account described in paragraph 
        (3) for the child, in order for the parent to deposit any 
        amount of an opportunity scholarship under section 3007 of the 
        Scholarships for Opportunity and Results Act (D.C. Code, sec. 
        38-1853.07) into the education savings account.
    (b) Continued Availability of Funds.--Any balance in an educational 
savings account established for an eligible child under this section 
that is not used during an academic year shall remain available in the 
education savings account of the eligible child for future education 
expenses described in subsection (c), as long as an agreement described 
in subsection (a)(2)(B) remains in effect for the eligible child.
    (c) Eligible Education Expenses.--
            (1) In general.--Funds available in an education savings 
        account established under this section for an eligible child 
        shall only be used on behalf of such child for one or more of 
        the following educational purposes:
                    (A) The costs of tuition and fees at a nonpublic 
                school, or distance education, provided through a 
                participating provider.
                    (B) Tutoring services offered by a participating 
                provider.
                    (C) The costs of curricula or online courses, or 
                virtual learning environments, including any 
                supplemental materials, textbooks, or supplies 
                necessary to administer the curriculum or to complete 
                the course, offered by a participating provider or 
                purchased for self-study.
                    (D) Fees for any special education or related 
                services provided through a participating provider.
                    (E) The costs of tuition and fees required to 
                complete individual courses or extracurricular 
                activities at a public school, including a charter 
                school, within the District of Columbia.
                    (F) The costs of tuition and fees required to 
                complete any dual credit courses, which are courses 
                that qualify for both secondary and postsecondary 
                education credit, from a participating provider in the 
                District of Columbia.
                    (G) The costs of a career and technical education 
                course offered by a participating provider.
                    (H) Fees for any--
                            (i) national norm-referenced achievement 
                        examination;
                            (ii) advanced placement or similar 
                        examination; or
                            (iii) standardized examination required for 
                        admission to an institution of higher 
                        education.
                    (I) Transportation required for the eligible child 
                to travel to and from a participating provider, except 
                that not more than $2,000 per year from the education 
                savings account may be used for this purpose.
                    (J) A contribution to a qualified tuition program 
                (as defined in section 529(b) of the Internal Revenue 
                Code of 1986) with respect to which the eligible child 
                is a designated beneficiary or a contribution to a 
                Coverdell education savings account (as defined in 
                section 530(b) of such Code) with respect to which the 
                eligible child is a designated beneficiary, except that 
                not more than a total of $2,000 per year may be used 
                for contributions under this subparagraph.
                    (K) Any other education expenses approved and 
                determined by the administering entity to be similar to 
                the expenses described in subparagraphs (A) through 
                (J).
            (2) Rule of construction.--Nothing in this subsection shall 
        be construed to require an eligible child to attend a nonpublic 
        school or a program of distance education described in 
        paragraph (1)(A) in order to receive an academic scholarship 
        under this section to be used for other eligible education 
        expenses described in paragraph (1).
    (d) Governmental and Administering Entity Responsibilities.--
            (1) No extension of regulatory authority.--The creation of 
        the program under this Act does not expand the regulatory 
        authority of the Mayor of the District of Columbia, the 
        officers of the District of Columbia, the District of Columbia 
        Public Schools, or the Federal Government to impose any 
        additional regulations on nonpublic schools beyond the 
        regulations necessary to enforce the requirements of this Act.
            (2) Annual list of participating providers.--
                    (A) Creation of list.--Beginning in academic year 
                2017-2018, and each year thereafter, the administering 
                entity shall ensure that all eligible children, and 
                their parents, are informed of the schools 
                participating in the program under this Act for the 
                next academic year by providing to the Chief Financial 
                Officer, and making publicly available, a list of 
                participating providers each school year.
                    (B) Inclusion on cfo's website.--The Chief 
                Financial Officer shall ensure that the annual list of 
                participating providers prepared by the administering 
                entity under subparagraph (A) is made publicly 
                available on the website of the Chief Financial 
                Officer.
            (3) Updated information regarding educational expenses.--
        The administering entity shall timely notify parents of 
        eligible children of any categories that the entity has 
        determined are educational expenses under subsection (c)(1)(K) 
        by providing notification through the parent handbook, program 
        website, or other primary method used by the administering 
        entity to educate parents about the program.
            (4) Accountability.--The administering entity and the Chief 
        Financial Officer shall take such steps as are necessary to 
        ensure the proper implementation of this Act, including--
                    (A) conducting periodic audits of education savings 
                accounts established under this section;
                    (B) ensuring that the funds disbursed from 
                education savings accounts are used appropriately and 
                in accordance with this Act;
                    (C) freezing or revoking the education savings 
                account of an eligible child if fraud is detected;
                    (D) providing a process through which--
                            (i) parents whose expenses have been denied 
                        may ask the administering entity to review and 
                        reverse the denial; and
                            (ii) the administering entity shall conduct 
                        a review and respond to the parental request to 
                        reverse the denial within 30 days; and
                    (E) if appropriate, referring parents or 
                participating providers found to be using education 
                savings account funds for unlawful purposes for 
                criminal prosecution.
            (5) Exchange of records.--Upon request by the administering 
        entity, the District of Columbia Public Schools shall provide, 
        to any participating provider that is a school and that has 
        admitted an eligible child who previously attended a public 
        school, a complete copy of the child's school records, 
        following the standard procedures established by the 
        administering entity for purposes of the program under this 
        Act.
    (e) Participating Provider Requirements and Rights.--
            (1) Refund and rebate limitations.--
                    (A) General prohibition.--A participating provider 
                that receives scholarship funds provided under this Act 
                for an eligible child shall not--
                            (i) refund or provide a rebate, of all or 
                        any portion of such funds, to the eligible 
                        child or a parent of the eligible child; and
                            (ii) share such funds with such eligible 
                        child or parent in any manner.
                    (B) Refund procedures.--Any refund that is needed 
                for an item that is being returned or an item or 
                service that has not been provided shall be provided to 
                the administering entity and deposited into the 
                education savings account from which the money refunded 
                was originally paid.
            (2) Admissions.--A participating provider may enforce the 
        admission requirements of the school or program offered by the 
        provider and may accept the students best qualified to attend 
        the school, except that a participating school may not 
        discriminate on the basis of race, color, national origin, or 
        sex, in accordance with subsection (f).
            (3) Transfer of documents.--Each participating provider 
        that is a school shall agree, as a condition of participation 
        in the program under this Act, to provide the complete academic 
        records of an eligible child attending the school who receives 
        an education savings account under this Act to any other 
        nonpublic school or public school to which the child transfers.
    (f) Nondiscrimination and Other Provisions.--
            (1) In general.--A participating provider shall not 
        discriminate against program participants or applicants on the 
        basis of race, color, national origin, or sex.
            (2) Applicability and single sex schools, classes, or 
        activities.--
                    (A) In general.--Notwithstanding any other 
                provision of law, the prohibition of sex discrimination 
                in paragraph (1) shall not apply to a participating 
                provider that is operated by, supervised by, controlled 
                by, or connected to a religious organization to the 
                extent that the application of such paragraph is 
                inconsistent with the religious tenets or beliefs of 
                the participating provider.
                    (B) Single sex schools, classes, or activities.--
                Notwithstanding paragraph (1) or any other provision of 
                law, a parent may choose and a participating provider 
                may offer a single sex school, class, or activity.
            (3) Religiously affiliated participating providers.--
                    (A) In general.--Notwithstanding any other 
                provision of law, a participating provider that is 
                operated by, supervised by, controlled by, or connected 
                to a religious organization may exercise its right in 
                matters of employment consistent with title VII of the 
                Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.), 
                including the exemptions in such title.
                    (B) Maintenance of purpose.--Notwithstanding any 
                other provision of law, funds made available through 
                education savings accounts established under this 
                section to eligible children, which are used for a 
                participating provider as a result of the choice of the 
                parents of such children, shall not, consistent with 
                the first amendment of the Constitution of the United 
                States--
                            (i) necessitate any change in the 
                        participating provider's teaching mission;
                            (ii) require any participating provider to 
                        remove religious art, icons, scriptures, or 
                        other symbols; or
                            (iii) preclude any participating provider 
                        from retaining religious terms in its name, 
                        selecting its board members on a religious 
                        basis, or including religious references in its 
                        mission statements and other chartering or 
                        governing documents.
            (4) Rules of construction.--
                    (A) Treatment of assistance.--For purposes of any 
                Federal law, assistance provided under this section 
                shall be considered assistance to the child and shall 
                not be considered assistance to the participating 
                provider that enrolls the child in a school or program. 
                The amount of any scholarship under this section shall 
                not be treated as income of the child or the parents of 
                the child for purposes of Federal tax laws or for 
                determining eligibility for any other Federal program.
                    (B) No ability to control the curriculum.--Nothing 
                in this section shall be construed to authorize any 
                officer or employee of the Federal Government, through 
                grants, contracts, or other cooperative agreements, to 
                mandate, direct, or control the curriculum, program of 
                instruction, instructional content, specific academic 
                standards, assessments, or allocation of resources, of 
                the District of Columbia or of any school in the 
                District of Columbia.
    (g) Transition.--The Chief Financial Officer and the administering 
entity shall take steps to ensure a smooth transition to the program 
under this Act, in order to ensure that academic scholarships and 
education savings accounts under this section are available to eligible 
children attending nonpublic schools through participating providers 
beginning for the 2018-2019 school year. The Chief Financial Officer 
shall allow nonpublic schools to become participating providers 
beginning on September 1, 2018.
    (h) Conforming Amendment.--Section 3007(a)(2) of the Scholarships 
for Opportunity and Results Act (D.C. Code, sec. 38-1853.07(a)(2)) is 
amended by adding before the period at the end the following: ``, or 
deposited in an education savings account established under section 4 
of the Educational Freedom Accounts Act to be used for education 
expenses described in subsection (c) of such section''.
                                 <all>