Sen. Don Gaetz filed legislation on Nov. 21 that would fundamentally restructure how the state funds its Family Empowerment Scholarship program, addressing similar concerns raised by Okaloosa County school officials about the program’s impact on district budgets.

• Senate Bill 318 would move Family Empowerment Scholarship funding into a separate categorical fund outside the Florida Education Finance Program calculation used to fund public schools.

Gaetz, a former Okaloosa County Superintendent who served as Senate president from 2012-2014, said the bill addresses three primary issues identified in an operational audit of the 2024-2025 school year completed by the Florida Auditor General.

“Today, the state does not know where students are at key points in the school year,” Gaetz said during the Nov. 20 Senate Appropriations Committee on Pre-K-12 Education meeting. “Last year, we told you the state couldn’t find 23,000 students. Today, the number is 30,000 students the taxpayers are paying for, but we don’t know where they are.”

According to Gaetz, the audit also found that the state cannot ensure money is following students to their chosen education providers, with more than $270 million unaccounted for “as being in the right place at the right time” on any given day. Gaetz said $100 million that should have been paid to public schools last year was improperly paid for scholarships.

• The third major issue Gaetz cited involves the state’s inability to accurately project scholarship costs for budgetary planning because the program is growing rapidly and application deadlines are not aligned with budget calendars.

“Today, nearly 20 percent of school-age children are educated in private schools or home-schooling arrangements at public expense,” Gaetz said.

The legislation is co-sponsored by Sen. Danny Burgess, who chairs the Senate Appropriations Committee on Pre-K-12 Education, and Sen. Corey Simon, who sponsored the 2022 legislation that created Florida’s universal school choice program. Sens. Jason Pizzo and Rosalind Osgood also expressed plans to co-sponsor the bill during the committee meeting.

“We are all proud that Florida leads the nation in parental choice in education,” Burgess said. “However, to ensure our school choice programs live up to their full potential and promise, there are challenges we need to address.”

Under SB 318, the Department of Education would be required to assign a Florida student ID for all scholarship recipients and cross-check scholarship applicants against district enrollment files to verify students are not enrolled in public schools. This year, the state implemented safeguards requiring families to provide withdrawal forms or proof of non-enrollment to ensure students were not receiving scholarships while attending public schools — a verification process Okaloosa County now participates in.

• The bill would also require families to provide documentation that students are enrolled in private schools, registered for home education or registered as personalized education program students.

Student eligibility would be verified before each payment, and scholarship payments would shift from quarterly to monthly installments. The Department of Education would develop a standard withdrawal form for scholarship applicants leaving public schools.

The bill would also require the Auditor General to conduct annual end-of-year audits of scholarship programs and require Scholarship Funding Organizations to return funds based on audit findings.

“As the Auditor General has made clear, the architecture of our current funding system has scrambled together the funds for public schools, private schools, home schooling and unique ability scholarships and then the Department and the Scholarship Funding Organizations have to unscramble upwards of $4 billion and send the right amounts to the right places for the right students at the right times,” Gaetz said. “No wonder there are problems.”

The bill recognizes that 45 of Florida’s 67 school districts have been losing enrollment over the past five years and would allow funds to be used to buffer that decline, with particular attention to fiscally constrained counties. As enrollment continues to decline, some school districts could be faced with hard decisions such as closing certain schools and reducing personnel.

During a school board workshop last month, Okaloosa County Superintendent Marcus Chambers said he hoped legislators would examine the program’s funding structure.

“I’m all for family choice and parents’ ability to make educational choices that best suit their childs’ needs,” Chambers said at the Oct. 13 workshop. “It is my hope that we look at the funding formula for this program and examine the impact on school districts.”

Okaloosa County reported a 452-student enrollment decline below projections during last month’s workshop, representing approximately $4 million in lost funding. The district attributed the decline to multiple factors, including the Family Empowerment Scholarship program, which grew from approximately 1,800 participants last year to about 3,000 this year in Okaloosa County.

• The scholarship program funnels nearly $28 million through Okaloosa County’s budget as a pass-through, though Chambers noted that a large number of scholarship recipients never attended Okaloosa schools.

“FES is becoming more of a reality, not just with Okaloosa Schools, but across the state of Florida, and school districts will begin experiencing challenges unlike in years past,” Chambers said following the workshop.

SB 318 would authorize school districts to establish a menu of services they can sell to students receiving scholarship funds if those students want or need any service, course or participation in any activity the public school offers.

The bill would also lower the management fee Scholarship Funding Organizations receive from 3 percent of all scholarships awarded to make more money available for scholarships. It would expand use of the Educational Stabilization Fund to ensure all scholarships are funded for eligible students and that school districts receive full payment for the students they serve.

• The bill establishes fall and spring application windows and requires use of a single application for all scholarship programs. It would require additional documentation at the time of application, including more than one form to document residency and the child’s birth certificate.

“We don’t have a perfect bill,” Gaetz said. “But we have a bill which fixes these issues, which, left unaddressed, will continue to worsen and threaten to disrupt and imperil school choice in Florida.”

Gaetz said the bill was developed after working with House colleagues, the governor’s office, private and public schools, and scholarship families.

“Florida is the birthplace of school choice. Our Family Empowerment Scholarships are historic and successful,” Gaetz said. “But the architecture of our current system needs to be partially reengineered. We who believe in school choice and parent empowerment want to safeguard it. That’s what our bill does.”

The bill also restores the McKay/Gardiner name to the unique abilities scholarships and directs the Department of Education to propose ways to improve efficiency and effectiveness of scholarship programs, including negotiating performance and price contracts with Scholarship Funding Organizations as an alternative to the current arrangement.