1. (a)

   1. (1) Upon notification by the Department of Education that an Arkansas Children’s Educational Freedom Account Program application has been approved, the applicant shall sign an agreement outlining the applicant’s contractual obligations as the account holder upon enrolling in the program, including the acceptable uses of EFA funds and expense reporting requirements.
   2. (2) The agreement shall remain in effect until one (1) or more of the conditions for terminating eligibility are met under 6 CAR § 35-106.

2. (b) In the agreement, the department shall provide account holders with the following:

   1. (1) A written explanation of qualifying expenditures for EFA funds, as defined in Arkansas Code § 6-18-2503(11) and this part;
   2. (2) A written explanation of the responsibilities of account holders, as outlined in subsection (c) of this section;

   3. (3) A written explanation:

      1. (A) Of the applicability, to the extent they apply, of:

3. (i) 20 U.S.C. § 1412 of the Individuals with Disabilities Education Act (IDEA);

   1. (ii) 29 U.S.C. § 794; and

      1. (iii) The procedural rights to a free and appropriate public education (FAPE) to nonpublic institutions; and
      2. (B) That participation in the program is a parental placement pursuant to 20 U.S.C. § 1412; and

   2. (4) A written explanation of the respective duties of the department and, if applicable, of any vendor or other supplier the department has contracted with to administer all or part of the program.

      1. (c) In the agreement, an account holder shall:
   3. (1) Agree not to enroll a participating student full-time in a public school while the student is participating in the Arkansas Children’s Educational Freedom Account Program;

   4. (2) Acknowledge that:

      1. (A) The federal requirement that students receive a free and appropriate public education applies to public schools and not to private schools; and
      2. (B) Upon enrolling in the Arkansas Children’s Educational Freedom Account Program, a participating student may no longer be entitled to a free appropriate public education, including special education and related services, from their public school district of residence, as long as the child remains in the Arkansas Children’s Educational Freedom Account Program;
   5. (3) Agree to use EFA funds on behalf of the participating student strictly for qualifying expenditures as defined in Arkansas Code § 6-18-2503(11) and this part; and

   6. (4) Further agree, unless otherwise enrolled full-time in a participating school, to use a substantial amount of the funds each year, as compared to other eligible expenses, for the benefit of the participating student to satisfy the compulsory attendance requirement in Arkansas Code § 6-18-201, providing an education in at least the subjects of:

      1. (A) English language arts;
      2. (B) Mathematics;
      3. (C) Social studies; and

      4. (D) Science.

         1. (d) The agreement shall not become effective and the first EFA payment shall not be disbursed until the agreement is:
   7. (1) Submitted to the department, along with any other information required by the department; and
   8. (2) Signed by the account holder and a designee of the department.

4. (e)

   1. (1) After the agreement is fully executed by the account holder and the department, the department shall make payments in installments from the participating student’s EFA to the participating school or service provider as provided for in 6 CAR § 35-111.
   2. (2) Payments shall only be suspended if one (1) or more criteria to terminate the agreement under 6 CAR § 35-106 are met.
   3. (3) If a student subsequently enrolls in a public school or is otherwise removed from the program, any of the student’s remaining EFA funds that are unused will be returned to the EFA fund in accordance with 6 CAR § 35-111.

5. (f)

   1. (1) The total allocation to each participating student’s EFA shall be from funds appropriated to the Arkansas Children's Educational Freedom Account Fund, or otherwise made available for the Arkansas Children’s Educational Freedom Account Program, and distributed as an amount equal to ninety percent (90%) of the prior year's statewide foundation funding allotted per student under Arkansas Code § 6-20-2305.

   2. (2)

      1. (A) Any excess funds allocated to the private school shall be refunded to the department.
      2. (B) In the event a participating student withdraws from a private school and the school has received a quarterly disbursement on behalf of that student, the department will determine any excess funds that should be refunded to the state based on the number of weeks the student was enrolled at school prior to withdrawal.
      3. (C) In the event a participating student withdraws from a private school and the school has not received a quarterly disbursement on behalf of that student, the department will determine any excess funds that should be refunded to the state based on the number of weeks the student was enrolled at school prior to withdrawal.

   3. (3) A student who participated in the Succeed Scholarship Program, Arkansas Code § 6-41-901 et seq. [repealed], during the 2022-2023 school year shall continue to receive one hundred percent (100%) of the prior year's statewide foundation funding amount allotted per student under Arkansas Code § 6-20-2305 until:

      1. (A) The participating student graduates from high school;
      2. (B) The participating student receives a certificate of completion; or
      3. (C) An event that requires an account to be closed under 6 CAR § 35-106 occurs.

6. (g)

   1. (1) The department may withhold up to five percent (5%) of the funds allocated to each EFA for the purpose of the Arkansas Children’s Educational Freedom Account Program administration.
   2. (2) The specific amount withheld will be set by the contract procured with a third-party processing vendor.

7. (h) The department shall provide information on how much of these funds were spent, and for what purposes, in its annual legislative report.

   1. (i) An EFA shall remain in force, and any unused funds shall roll over from quarter to quarter and from year to year until the:
   2. (1) EFA has a balance of more than twenty thousand dollars ($20,000) or three (3) times the amount set forth in Arkansas Code § 6-18-2505(a), whichever is greater; or
   3. (2) Agreement is terminated under 6 CAR § 35-106, which shall result in the department closing the account and any remaining funds being returned to the department.

Codification Notes: The Succeed Scholarship Program, Arkansas Code § 6-41-901 et seq., was repealed by Acts 2023, No. 237, § 52.