State voucher program to return to ClassWallet after nixing contract with other payment vendor – Arkansas Times

In its first year, Arkansas’s new school voucher program contracted with a Florida-based company called ClassWallet to run an online platform for voucher families to make payments to private schools and other vendors.

This spring, the state selected a new vendor, Indiana-based Student First Technologies, to run the platform in Year Two of the program. The selection followed a contentious bidding process in which ClassWallet sought to hold on to the contract. But only a couple months into the 2024-25 school year, Education Secretary Jacob Oliva said Arkansas would terminate its contract with Student First by the end of December and seek $563,000 in penalties and damages due to missed deadlines and non-functioning systems.

Now, after a new round of bids, the state is going back to ClassWallet. A state agency that handles procurement for other departments posted notice of its “anticipation to award” the contract to Kleo Inc., the parent company of ClassWallet, on Wednesday afternoon.

The voucher program was created by Arkansas LEARNS, the sweeping K-12 education law championed by Gov. Sarah Sanders. Over 14,000 students statewide are now receiving vouchers, which use taxpayer funds to pay for private school tuition, fees and other approved expenses. In Year Two of the program, homeschool families are newly eligible to receive vouchers, which they can use for expenses including curricula, books, tutors, supplies and equipment, and more. A voucher is worth $6,856 per student in the 2024-25 school.

It’s a big job to coordinate the disbursement of tens of millions of dollars in public funds to hundreds of vendors on behalf of thousands of families, so the state is paying a third-party company to handle it. ClassWallet’s proposal documents estimate it will cost the state just under $14 million over the next seven years. That covers the payment portals for both the voucher program and a much smaller LEARNS program that provides literacy tutoring grants.

The $14 million figure is lower than the estimated value of the contract awarded to Student First Technologies earlier this year, $15.2 million. It’s also significantly lower than the $18.6 million quoted by ClassWallet during the spring bidding process in which it was rejected in favor of Student First.

Also worth noting: ClassWallet’s proposal describes a 1.85% settlement fee assessed on payments to vendors and schools. That’s less than the 2% transaction fee charged by Student First, and significantly less than the 2.5% fee ClassWallet charged during its first year as vendor in Arkansas.

ClassWallet outscored three competitors for the new bid: Primary Class, Inc., doing business as Odyssey; Merit International; and ACE Services, doing business as ACE Scholarships. A proposal from a fifth company, Trilogy Mentors Inc., doing business as Pearl, appears to have been rejected by the state without being scored.

The state doesn’t expect to award a final contract until Nov. 18, according to a tentative timeline released with the Department of Education’s request for proposals earlier this month.

Here’s the scoring sheet, and here’s the proposal from ClassWallet: