The EFA spending rules changed in June: pre-approval, tryout sports and a lower rollover cap

If you hold an Education Freedom Account, the quickest way to get into trouble with it is not fraud. It is a purchase you assumed was obviously fine. The rules governing what the account can buy were tightened in June, and the changes land on exactly the kinds of spending a Conway family is most likely to attempt: sports fees at a PK-12 campus with real athletic programs, equipment, travel, and funds saved up from a previous year.

Here is what changed, what did not, and how to keep an account in good standing.

What the Legislative Council approved

The Arkansas Legislative Council's Administrative Rules committee took up revisions to the EFA program rules on Monday, June 15, and the subcommittee reports were approved at the full council meeting that Friday. Three changes matter for household budgeting.

First, pre-approval. Parents now need approval from the Education Department for purchases that are not considered core educational expenses. That is a procedural change with real consequences: the time to ask is before you buy, not when a reimbursement is denied.

Second, athletics. Fees for some community and homeschool athletic leagues became reimbursable. At the same time, the rules restrict spending on sports that limit participation based on tryouts, and equipment and travel costs are not eligible expenses.

Third, the rollover cap. The maximum amount of unused funds that can carry from one school year into the next dropped from $20,000 to $8,500.

Why the athletics change bites in Conway

Faulkner County's two largest private campuses, Conway Christian School and St. Joseph Catholic School, each run pre-K through grade 12 with competitive athletics attached. A tryout team is the normal way a student plays a sport at either one. Under the revised rules that is the category of spending the state has moved to restrict, and equipment and travel are out regardless.

The practical reading: budget athletics as a family expense, not an account expense, and ask the school's office what it has been told about billing sports fees through ClassWallet. Several schools are still working this out, and a school that invoiced a fee last year may not be able to this year.

The 25% rule has not gone away

Separate from June's changes, there is a standing aggregate limit. Extracurricular activities, physical education, field trips, transportation, musical instruments, sports equipment and membership dues are capped together at 25% of a student's annual funds.

Aggregate is the word to notice. Spend 15% of the account on transportation to a program in Little Rock and 12% on activities and you have already breached it, even though neither line item looks large on its own. The state's new report found families statewide spent under 10% of EFA dollars on enrichment, so most households are nowhere near the ceiling. The ones who hit it are usually the ones combining a long commute with an activity-heavy year.

What is clearly allowable

Tuition and mandatory fees at a participating school, including enrollment and lab fees
Curriculum, textbooks, workbooks and online course subscriptions
Educational software, apps, e-books and audiobooks required for courses
Tutoring and academic classes from approved providers
Speech, occupational and behavioral therapies from licensed providers, when educational in nature
Standardized test fees, including AP, ACT, SAT and CLEP
Required uniforms, including PE uniforms the school mandates
Educational technology such as computers, tablets, printers and routers
Transportation to a participating school or provider, up to the state mileage rate
Dual enrollment fees for college courses taken in high school

The college-course line is the useful one here

Dual enrollment fees are an allowable category, and Conway is unusually well placed to use it. The University of Central Arkansas appears in the state's EFA spending records, so Faulkner County families have already paid for college coursework from accounts. For a high schooler who is homeschooling or taking a lighter campus load, that is a way to bank college credit inside the account.

Two cautions. Post-high-school tuition and fees are not allowable, so this only works while the student is still a high schooler. And confirm the specific course and provider are approved before you register, which is now doubly important given the pre-approval requirement. Our EFA guide walks through the mechanics.

What is not allowed

Entertainment content and electronics, including video games, streaming subscriptions, televisions, consoles, smartphones and smartwatches. Medical and health costs, including doctor visits, medications and insurance. Late fees, penalties, missed-appointment charges and donations. Non-uniform clothing. Home internet, phone plans and utilities. Recreational travel and lodging. Spending at a public school, since a student enrolled full time in public school is not eligible at all. Cash withdrawals are never permitted under any circumstances.

Keep the paperwork

Reimbursement receipts need the vendor's name and contact information, a clear description of each item with dates for services, itemized prices, the total and the purchase date. Direct Pay invoices need the vendor name, item descriptions with service dates, itemized prices and total, and the EFA student's name. Keep copies of everything. The Education Department conducts audits and reviews ClassWallet transactions, and oversight of the program has been mostly financial, through random audits and required tuition and fee reporting.

What happens if you get it wrong

There is a continuum rather than a single penalty. Minor errors, which the state calls improper payments, are usually handled through guidance. Significant or repeated errors, described as misspending, can mean repayment, added oversight or temporary suspension. Deliberate deception can mean permanent removal, legal action and prosecution.

Two obligations are easy to overlook. You must report eligibility changes to the Education Department within five days, including a move out of state or a full-time public school enrollment. And accounts inactive for two consecutive years can be closed. If you want to report suspected misuse by someone else, there is a Financial Integrity Hotline at 501-682-4368.

The calendar from here

Deposits arrive quarterly; the 2026-27 award of $7,208 comes in four installments of about $1,802, and the prior year's handbook shows deposits in August, October, February and April. Renewal happens inside ClassWallet and is required every year for every student. The 2027-28 application window has not been announced. All five participating Faulkner County schools are listed on our Conway schools page if you are comparing before spring.

Sources

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