Educational Assistance Organizations

PURPOSE: This rule establishes procedures and requirements for educational assistance organizations participating in the Missouri Empowerment Scholarship Accounts Program (the program) and is intended to ensure that the program conforms to state statutes and regulations. (1) Certification. Any non-profit organization registered in this state that is exempt from federal taxation under the Internal Revenue Code may apply with the treasurer to be a certified educational assistance organization. (A) Annual Application Deadline. The application deadline for a certification for a school year, as that term is defined in section 160.041.1, RSMo, shall be published annually by the treasurer. (2) Requirements. (A) Qualifications of Educational Assistance Organizations. The following are the qualifications and requirements necessary for an educational assistance organization to be eligible for certification by the treasurer to participate in the program: 1. An educational assistance organization shall demonstrate it is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code of 1986, as amended; 2. No educational assistance organization that has been through a Chapter 7 or Chapter 11 bankruptcy in the seven (7) years immediately preceding application for certification shall be qualified to be certified as an educational assistance organization; 3. Financial viability shall be demonstrated by an educational assistance organization’s most recent year audited financial statements, Form 990, or other financial records as determined by the treasurer; 4. An educational assistance organization shall not have a president, officers, or director who owns or operates a qualified school that is participating in the program; 5. An educational assistance organization shall not provide a scholarship account to a child of: a member of its board, including the president, officers, director or, an employee of the educational assistance organization; and 6. An educational assistance organization shall comply with the provisions of section 285.530, RSMo. (3) Program Participation. (A) Qualified Student Eligibility. A Missouri resident who is a qualified student designated as a beneficiary in a participation agreement may be a recipient of an Empowerment Scholarship Account grant. A parent that obtains a scholarship account shall provide the valid Social Security number or individual taxpayer identification number and address in the United States of the beneficiary of the applicable scholarship account. Social Security numbers will be utilized for student identification and Department of Elementary and Secondary Education funding purposes. A qualified student shall only be the beneficiary of one (1) scholarship account administered by the program. 1. Within thirty (30) days of the United States Department of Agriculture publishing in the Federal Register the income eligibility guidelines to be used in determining eligibility for free and reduced price meals under the National School Lunch Program and the School Breakfast Program, the treasurer shall publish the program’s income eligibility guidelines on the treasurer’s official website. 2. Household income shall be determined using the eligibility criteria for free and reduced price meals under the National School Lunch Program and the School Breakfast Program. (B) Parent Eligibility. A parent may be any individual who 1) is a Missouri resident, 2) submits to an educational assistance organization a completed participation agreement, and 3) otherwise meets the qualifications set forth in Missouri law and promulgated rules governing the program. A parent that applies for a scholarship account shall provide the valid Social Security number or individual taxpayer identification number and address in the United States of the qualified student. (C) Participation Agreements. To participate in the program, a prospective parent shall submit a completed qualified student application and participation agreement to an educational assistance organization that has approved the qualified school the student will attend by the deadline established by the treasurer. Educational assistance organizations shall accept rolling admissions into the program. Within thirty (30) days of receipt of a completed qualified student application and participation agreement, the educational assistance organization shall notify the parent in writing that the application is approved, granted conditional approval pending funding, or denied, in accordance with the criteria set forth in section 166.700(8), RSMo, unless granted an extension by the treasurer. The participation agreement shall provide that the parent (and any successor account owner) will retain oversight over payments made under the program and for the benefit of the beneficiary designated by such parent (or the successor account owner). Only one (1) parent and one (1) beneficiary is permitted per scholarship account. Each participation agreement shall provide that the participation agreement may be cancelled upon the terms and conditions set forth therein. 1. Agreement. The treasurer shall prescribe the form and content of the program participation agreement. 2. Withdrawal. A parent may cancel a participation agreement and withdraw a qualified student from the program at any time by submitting to the educational assistance organization a written notice to terminate the participation agreement in such form as the treasurer may specify. A parent and a beneficiary of a cancelled participation agreement shall continue to be subject to the terms and conditions of the program during any term of schooling in which tuition was paid for using scholarship grant funds. The qualified student’s scholarship account shall be closed and any remaining funds shall be returned to the educational assistance organization for redistribution to other qualified students. 3. Copy of Agreement to Parent. Upon request by a parent, the educational assistance organization shall provide the parent with a copy of the participation agreement executed by the parent, mailed within ten (10) business days of receipt of the parent’s request. 4. FERPA and Age 18. Any eligible student that attains the age of eighteen (18) while still enrolled in qualified school that is subject to the provisions of the Family Educational Rights and Privacy Act (FERPA) shall provide any school records to an educational assistance organization or the treasurer when requested. Failure of the eligible student to provide school records as requested by an educational assistance organization or the treasurer shall result in the immediate suspension of the eligible student’s scholarship account and may result in the eligible student being required to reimburse the educational assistance organization for any program funds expended for the benefit of the eligible student during the term in which the scholarship was suspended. Any such funds that are reimbursed to an educational assistance organization shall be redistributed to other qualified students. (D) Limitation on Additional Scholarships for Newly Qualified Students. In the event the amount appropriated by the general assembly in any fiscal year for pupil transportation pursuant to section 163.161, RSMo, is less than $111,562,312, no additional scholarships for newly qualified students shall be awarded. Students who received a scholarship in a previous year shall be eligible to apply for renewal. If the general assembly does not appropriate the required amount, the treasurer shall notify participating educational assistance organizations no later than June 1 that no newly qualified students shall receive a scholarship award for the upcoming fiscal year. (E) Background Checks. 1. An educational assistance organization shall conduct a review of criminal history records maintained by the Missouri State Highway Patrol in the Missouri criminal records repository of all operators, directors, executives, board members, and employees and exclude from employment or governance any individual who might reasonably pose a risk to the appropriate use of contributed funds or who is listed on the sex offender registry. Any such criminal background check shall be provided to the treasurer upon request. 2. An educational assistance organization shall conduct a review of criminal history records maintained by the Federal Bureau of Investigation of any employee who has signatory authority on any educational assistance organization bank account or who has access to the accounting system of the educational assistance organization, and exclude from employment or governance any individual who might reasonably pose a risk to the appropriate use of contributed funds. Any such criminal background check shall be provided to the treasurer upon request. (F) Investment Policy. When investing any contributions received from the program, an educational assistance organization shall adhere to the written Missouri Empowerment Scholarship Account investment policy prepared and maintained by the treasurer. (G) Financial Accountability and Viability. 1. Surety Bond. An educational assistance organization shall file with the treasurer, within thirty (30) days of notification of certification and allocation, unless granted an extension by the treasurer, a surety bond with the Missouri State Treasurer named as obligee in an amount equal to the aggregate amount of contributions expected to be received during the school year, or pledge collateral in an amount determined by the treasurer to demonstrate the financial viability of the organization. 2. Annual Audited Financial Statements. An educational assistance organization shall submit to the treasurer annual audited financial statements, which have been audited by a certified public accountant within six (6) months of the end of the educational assistance organization’s fiscal year, unless granted an extension by the treasurer. The auditing certified public accountant shall certify the report is free of material misstatements or misrepresentations. (H) Testing of Students. Educational assistance organizations shall ensure qualified students take the state achievement tests or nationally norm-referenced tests that measure learning gains in math and English language arts, and provide for value-added assessment, in grades that require testing under the statewide assessment system set forth in section 160.518, RSMo. Costs of this testing requirement may be covered by the scholarships distributed by the educational assistance organization. Beginning with the first year of testing and on an annual basis thereafter, the educational assistance organization shall provide the parents of each student who was tested and the treasurer a copy of the test results. (I) Reports and Audits. Educational assistance organizations certified by the treasurer to participate in the program shall submit all reports and audits required by state statutes and promulgated rules. (J) Parental Satisfaction Survey. No later than March 1, an educational assistance organization shall distribute the annual parental satisfaction survey to all parents with whom the organization has a current participation agreement. The treasurer shall prepare and maintain the form of the annual parental satisfaction survey which shall include questions written to obtain the following information: 1. A parent’s level of satisfaction with the child’s academic achievement, including academic achievement at the school the child attends through the scholarship program versus academic achievement at the school previously attended; and 2. A parent’s level of satisfaction with school safety at the school the child attends through the scholarship program versus safety at the school previously attended. (K) Excess Funds. Any funds remaining after an educational assistance organization distributes scholarships and takes statutory administrative and marketing fees shall be used for scholarship accounts. (L) Readiness. Prior to being allocated any tax credits, an educational assistance organization must demonstrate to the treasurer’s satisfaction, by providing the readiness information requested in the application to be certified, that it is able to begin granting scholarships for the upcoming school year. (4) Scholarships. All grants to scholarship accounts shall be in the form of a deposit by an educational assistance organization into the scholarship account. The maximum amount which may be contributed annually by an educational assistance organization with respect to a beneficiary shall be established by the treasurer, but in no event shall it exceed a total annual grant amount equal to the state adequacy target as defined in section 163.011, RSMo, and calculated annually by the Department of Elementary and Secondary Education. (5) Changes of Designated Parent. A parent may transfer ownership of an account to another parent eligible to oversee the account under the provisions of the statute and this rule, and upon receipt of a request for change of account ownership that satisfies the criteria set forth in this section, the transferee shall be considered the parent for all purposes related to the program. (A) General Rule. Any such change of account ownership shall be effective provided the transfer completed by the parent 1) is irrevocable, 2) transfers all oversight, 3) the transferee satisfies the definition of “parent” as that term is defined in section 135.712.2(2), RSMo, and 4) is submitted to the educational assistance organization on a change of account ownership form in such form as the treasurer may specify from time to time. (B) Designation of Successor Account Authority. Any parent may designate a successor account owner for his or her account, to become the sole authority of the account automatically upon the death or disability of such parent. Prior to the initial action taken by the successor account owner following the death or disability of the parent, the successor account owner shall provide the educational assistance organization a certified copy of a death certificate sufficiently identifying said deceased parent by name and Social Security number or taxpayer identification number, or such other proof of death as is recognized under applicable law, or shall provide sufficient proof of disability. The successor account owner shall provide any other documentation requested to establish he or she satisfies the definition of “parent” as that term is defined in section 135.712.2(2), RSMo. (6) Payment of Expenses. (A) Qualified Expenses. A parent may request a qualified withdrawal from his or her account by submitting a completed request for a qualified withdrawal to the educational assistance organization in such form as the treasurer may specify from time to time. (B) Limitation on Expenses. 1. The annual expenses for any one category set forth in section 166.705.1(4), RSMo, may be limited by the treasurer from time to time. If the treasurer limits the annual expenses for any one category, those limitations shall be communicated to the educational assistance organizations no later than July 1 for the following school year. 2. Mileage Limitation. Mileage reimbursement shall not exceed the state mileage reimbursement rate authorized by section 33.095, RSMo. 3. Computer Devices. Expenses for computer hardware and other technological devices shall be limited to a single computer device per student every three (3) years, unless otherwise pre-approved by the educational assistance organization as a necessary educational resource, including assistive devices and accessible educational hardware and materials. Smartphones are specifically excluded from this category of expenses. 4. Specialized After-School Education Program. A specialized after-school education program is any after-school program that provides services during non-school hours to support student learning, including tutoring, homework help, and other academic enrichment, such as hands-on math, reading/language arts, and science programs. Specialized after-school education programs do not include child care provided by a child-care facility, as that term is defined in section 210.201(3), RSMo, or any child care provided by a person or facility that is providing care to six (6) or less children. 5. Summer Education Programs. A summer education program is any educational program that occurs outside the regular school term during the months of June, July, and August that provides services to support student learning, including tutoring, homework help, credit recovery, and other academic enrichment, such as hands-on math, reading/language arts, and science programs. Summer education programs do not include child care provided by a child-care facility, as that term is defined in section 210.201(3), RSMo, or any child care provided by a person or facility that is providing care to six (6) or less children. (7) Distribution Limitations. No distributions shall be made within thirty (30) days of receipt by the board of a completed change of parent form or request to change the mailing address of the parent, unless the current parent’s signature has an acknowledgement by a notary on the request. (8) Costs of Administration. All costs of administration of the program shall be borne by the educational assistance organizations and the treasurer’s office. (9) Funds for the Administration of the Program. (A) Educational Assistance Organization Administration Costs. An educational assistance organization may withhold from contributions an amount to cover the costs of administering the program, up to the maximum amounts authorized for marketing and administrative expenses in section 135.714.1(5) (c), RSMo. All remaining funds shall be made available to qualified students for scholarship accounts. (B) Treasurer Administration Costs. An educational assistance organization shall submit a remittance report to the treasurer no later than the 15th of each month following any month in which the educational assistance organization received a contribution from one (1) or more taxpayers. The remittance report shall include 1) a copy of the treasurer approved receipt the educational assistance organization provided to each taxpayer from which it received a contribution to indicate the value of the contribution received from that taxpayer, and 2) four percent (4%) of the total qualifying contributions received by the educational assistance organization for that calendar month, to be deposited in the Missouri Empowerment Scholarship Accounts fund. Money shall be remitted by Automated Clearing House (ACH) transfer or check made payable to the Missouri State Treasurer and delivered to the treasurer’s office when the report is filed. (10) Scholarship Accounts. (A) Scholarship Account Distributions. Scholarship account grants may be distributed either four (4) times per year or in a single lump sum at the beginning of the school year as requested by the parent of a qualified student. The annual total of all such distributions to scholarship accounts shall not exceed a total annual grant amount equal to the state adequacy target as calculated by the Department of Elementary and Secondary Education. Distributions shall be in the form of a deposit to the scholarship account of a qualified student. (B) End of Year Balance. Any funds remaining in a qualified student’s scholarship account at the end of a school year shall remain in the account to be used for qualified expenses and shall not be returned to the educational assistance organization. (C) Separate Accounting. An educational assistance organization shall provide separate accounting for each individual scholarship account. (11) Renewal of Scholarship Accounts. Scholarships eligible for renewal shall be renewed on or before July 1. (12) Completion of Secondary Education. Funds remaining in a scholarship account after an eligible student has completed their secondary education shall only be used for expenses set forth in section 166.705.1(4)(g), RSMo, and shall be spent no later than June 30 immediately following such completion. Any funds remaining in a scholarship account after the June 30 immediately following a qualified student’s completion of their secondary education shall be returned to the educational assistance organization to be redistributed to other qualified students for scholarship accounts. (13) State Adequacy Target. The annual total grant amount shall not exceed the grant limits as provided under sections 135.714.1(6)(a)a.–d., RSMo. (14) Distribution Order. Priority must be given to eligible students as provided under sections 135.714.1(4)(a)-(i), RSMo. (15) Non-Compliance or Fraud. (A) Revocation. The treasurer may revoke the certification of any educational assistance organization that is found to be in non-compliance with applicable state laws and regulations. If the treasurer receives information, directly or indirectly, which gives the treasurer reason to believe an educational assistance organization has intentionally and substantially failed to comply with the provisions of sections 135.712 to 135.719, RSMo, and 166.700 to 166.720, RSMo, promulgated rules, or any other provision of law, the treasurer may suspend the certification of such educational assistance organization. In such a case, the treasurer shall notify the educational assistance organization in writing of the grounds for the proposed suspension of certification and provide the organization an opportunity to respond to the allegations in writing or, upon request, through a hearing conducted in accordance with the provisions of Chapter 536, RSMo. Suspension of an educational organization’s certification by the treasurer shall not be a prerequisite nor a substitute for any other civil or criminal causes of action to which such organization may otherwise be subject, but is in addition to such possible remedies. Any information obtained or compiled by the treasurer in determining whether to suspend a certification may be disclosed to appropriate law enforcement agencies, in any investigation, action, or proceeding, civil or criminal, brought by a governmental agency to enforce the laws of this state or upon court order in any action or proceeding where such information is material to an issue in the action or proceeding. After a twelve (12) month waiting period, any educational assistance organization whose certification has been suspended may thereafter seek to be re-certified in accordance with the applicable laws governing certification. (B) Notification. Any educational assistance organization suspended, revoked, or otherwise barred from the program by the treasurer shall immediately notify affected parents of qualified students of the decision. (16) Unspent Balance. Any educational assistance organization that does not apply for recertification following a year in which they were previously certified, or whose certification is suspended, revoked, or otherwise not renewed by the treasurer, shall immediately notify the state treasurer’s office of the amount of the unspent balance. The state treasurer’s office shall direct the educational assistance organization to either distribute the unspent funds to other specified educational assistance organizations in good standing, or to return any unspent balance to the treasurer for redistribution to educational assistance organizations in good standing. (17) Number of Certified Educational Assistance Organizations. The treasurer shall limit the number of certified educational assistance organizations to no more than ten (10) in any single school year, with no more than seven (7) having their principal place of business in any one (1) of the following entities: Greene County, Jackson County, St. Charles County, St. Louis County, or St. Louis City. An educational assistance organization will be evaluated based on experience, geographic coverage pertaining to eligible students it can serve, readiness to award scholarship grants, and the organization’s anticipated administrative expenses. All decisions regarding certification are final. (18) Severability. If any provision of this rule, or the application of it to any person or circumstance, is determined to be invalid by a court of competent jurisdiction, such invalidity shall not affect other provisions of this rule which can be given effect without the invalid provision or application, and to that end, the provisions of this rule are severable. AUTHORITY: section 135.719, RSMo Supp. 2024.* Emergency rule filed April 11, 2022, effective April 25, 2022, expired July 30, 2022. Original rule filed Jan. 26, 2022, effective July 30, 2022. Amended: Filed Nov. 14, 2024, effective May 30, 2025. *Original authority: 135.719, RSMo 2021.