HouseH.R. 10801119th Congress
School Freedom Act of 2026
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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10801 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 10801
To direct the Secretary of the Treasury to carry out a program under
which Federal funds for elementary and secondary education are either
provided directly to parents to cover certain educational expenses or
approved by parents for distribution to the public school their child
attends, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 13, 2026
Ms. Mace introduced the following bill; which was referred to the
Committee on Education and Workforce, and in addition to the Committee
on Ways and Means, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To direct the Secretary of the Treasury to carry out a program under
which Federal funds for elementary and secondary education are either
provided directly to parents to cover certain educational expenses or
approved by parents for distribution to the public school their child
attends, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``School Freedom Act of 2026''.
SEC. 2. TERMINATION OF FEDERAL ELEMENTARY AND SECONDARY EDUCATION
PROGRAMS.
(a) Termination.--Each covered Federal education program shall
terminate on a date determined by the Secretary of Education that is
not later than June 30, 2027.
(b) Wind-Down of Programs.--The Secretary of Education shall take
such steps as may be necessary to provide for the orderly cessation of
activities under each covered Federal education program by not later
than the date determined by the Secretary under subsection (a).
(c) Prohibition on Federal Funds.--Beginning on the date of
enactment of this Act, no Federal funds may be appropriated for a
covered Federal education program.
(d) Allocation of Unobligated Amounts.--Any amounts appropriated
for a covered Federal education program that are unobligated as of the
date such program terminates under subsection (a) shall be used to
carry out the School Freedom Account program under section 3.
(e) Reorganization Plan.--
(1) Submission of plan.--Not later than the date determined
by the Secretary of Education under subsection (a), the
Secretary of Education shall transmit to the appropriate
congressional committees a reorganization plan regarding the
consolidation, reorganization, and streamlining of the
Department of Education in connection with carrying out
subsection (a) and (b).
(2) Plan elements.--The plan transmitted under paragraph
(1) shall contain such elements as the Secretary of Education
determines appropriate.
(3) Modification of plan.--The Secretary of Education may,
on the basis of consultations with the appropriate
congressional committees, modify or revise any part of the plan
transmitted under paragraph (1) until that part of the plan
becomes effective in accordance with paragraph (4).
(4) Effective date.--The reorganization plan described in
this subsection, including any modifications or revisions of
the plan under paragraph (2), shall become effective on a date
determined by the Secretary of Education that is not later than
18 months after the date of enactment of this Act.
(5) Supersedes existing law.--Paragraph (4) shall apply
notwithstanding section 905(b) of title 5, United States Code.
SEC. 3. SCHOOL FREEDOM ACCOUNT PROGRAM.
(a) Account Creation.--
(1) In general.--The Secretary of the Treasury shall
establish a savings account to be known as a ``School Freedom
Account'' on behalf of an eligible individual--
(A) in the case of an eligible individual who is
enrolled in an elementary or secondary school on the
date of enactment of this Act or will become eligible
to enroll in such a school in less than 60 days after
the date of enactment of this Act, 30 days after the
date determined by the Secretary of Education under
section 2(a); or
(B) in the case of an eligible individual who is
not enrolled in an elementary or secondary school on
the date of enactment of this Act and will not become
eligible to enroll in such a school until at least 60
days after the date of enactment of this Act, 60 days
prior to the date that such individual is eligible to
attend an elementary school.
(2) Authority to collect information.--The Secretary of the
Treasury shall take such steps as may be necessary, including
issuance of regulations if needed, to establish a process to
collect the information necessary to determine whether an
individual is eligible for a School Freedom Account under
paragraph (1).
(b) Federal Deposits.--
(1) In general.--For each school year beginning on or after
July 1, 2027, in addition to any amount deposited pursuant to
paragraph (3), the Secretary of the Treasury shall deposit into
each School Freedom Account an amount equal to the per-pupil
Federal expenditure applicable to an eligible individual for
the school year, as determined under paragraph (2).
(2) Per-pupil federal expenditure.--
(A) First year of program.--The per-pupil Federal
expenditure applicable to an eligible individual for
the first school year that begins on or after July 1,
2027, shall be equal to--
(i) the sum of the total amount of Federal
funds appropriated to carry out this section
for fiscal year 2027 and any amounts made
available under section 2(d); divided by
(ii) the total number of eligible
individuals counted for such school year.
(B) Subsequent years.--The per-pupil Federal
expenditure applicable to an eligible individual for
any school year after the year described in
subparagraph (A) shall be equal to--
(i) the total amount of Federal funds
appropriated to carry out this section for the
fiscal year that corresponds to such school
year; divided by
(ii) the total number of eligible
individuals counted for such school year.
(3) Children with a disability.--For each school year
beginning on or after July 1, 2027, in addition to the amount
deposited pursuant to paragraph (1), the Secretary of the
Treasury shall deposit into each School Freedom Account
established on behalf of an eligible individual who is a child
with a disability--
(A) for the school year beginning on July 1, 2027,
$2,000; and
(B) for each subsequent school year, the amount
determined under this paragraph for the preceding
school year, increased by the percentage increase in
the Personal Consumption Expenditures price index (as
published by the Bureau of Economic Analysis) for the
12-month period ending on December 31 of the previous
calendar year.
(4) Classification.--Funds deposited into a School Freedom
Account pursuant to this subsection shall be classified as
``Federal SFA Funds''.
(c) Parental Deposits.--
(1) In general.--Not later than 30 days after the date
determined by the Secretary of Education under section 2(a) and
consistent with the provisions of section 530B of the Internal
Revenue Code of 1986, the Secretary of the Treasury shall issue
regulations establishing how a parent of an eligible individual
with a School Freedom Account may deposit funds into such
School Freedom Account, including how such a parent may make
such a deposit as a pre-tax payroll deduction.
(2) Classification.--Funds deposited into a School Freedom
Account in accordance with regulations issued pursuant to
paragraph (1) shall be classified as ``Parental SFA Funds''.
(d) State Deposits.--
(1) In general.--Not later than 30 days after the date
determined by the Secretary of Education under section 2(a),
the Secretary of the Treasury shall issue regulations
establishing how States may deposit funds into a School Freedom
Account.
(2) Preemption.--Except as provided in section 4(a)(4), no
State may establish any restrictions or conditions on how funds
deposited by the State into a School Freedom Account may be
spent.
(3) Classification.--Funds deposited into a School Freedom
Account in accordance with regulations issued pursuant to
paragraph (1) shall be classified as ``State SFA Funds''.
(e) Availability of Funds.--
(1) In general.--Not later than 30 days after the date
determined by the Secretary of Education under section 2(a),
the Secretary of the Treasury shall issue regulations
establishing how a parent of an eligible individual with a
School Freedom Account--
(A) notifies the Secretary of the Treasury that the
individual is or is not attending a public elementary
or secondary school for a school year;
(B) in the case of a parent who elects to have the
individual attend a public elementary or secondary
school for a school year--
(i) approves the disbursement of the annual
amount of Federal SFA Funds disbursed to the
School Freedom Account pursuant to paragraphs
(1) and (3) of subsection (b) to the local
educational agency serving the school attended
by the individual for use in accordance with
subsection (f)(2); and
(ii) may access any Parental SFA Funds and
State SFA Funds in the School Freedom Account
to pay for the educational expenses of the
individual in accordance with subsection
(f)(1);
(C) in the case of a parent who elects to not have
the individual attend a public elementary or secondary
school for a school year, may access any Federal SFA
Funds, Parental SFA Funds, and State SFA Funds in the
School Freedom Account to pay for the educational
expenses of the individual in accordance with
subsection (f)(1); and
(D) may submit an application to the Secretary of
the Treasury to be issued a payment card connected to
the School Freedom Account by the Secretary of the
Treasury.
(2) Default disbursement.--In the case that a parent of an
eligible individual with a School Freedom Account fails to
notify the Secretary of the Treasury that the individual is not
attending a public elementary or secondary school for a school
year or fails to approve the disbursement of Federal SFA Funds
from the School Freedom Account to the local educational agency
serving the school attended by the individual as required under
regulations issued pursuant to paragraph (1), the Secretary of
the Treasury shall disburse the annual amount of Federal SFA
Funds disbursed to the School Freedom Account pursuant to
paragraphs (1) and (3) of subsection (b) to the local
educational agency serving the last known address of the
individual.
(3) Rule of construction.--Nothing in this subsection,
including the regulations issued under paragraph (1), shall be
construed to restrict or otherwise inhibit interdistrict
enrollment.
(f) Uses of Funds.--
(1) In general.--Funds deposited into a School Freedom
Account (except for Federal SFA Funds required to be disbursed
to a local educational agency under regulations established
pursuant to subsection (e)) may be used to pay for--
(A) books, curricular material, and other
instructional materials, including curriculum materials
designed for a home school;
(B) technological educational materials;
(C) online educational materials;
(D) tutoring or educational classes outside the
home, including instruction as part of a micro school
or learning pod;
(E) private school tuition;
(F) extracurricular activities;
(G) testing fees;
(H) a licensed or accredited paraprofessional or
educational aide;
(I) tuition for vocational or life skills
education;
(J) costs associated with an annual education plan
conducted by an independent evaluation team;
(K) tuition or fees for a non-public online
learning program;
(L) services provided by a public school, including
individual classes and extracurricular programs;
(M) uniforms purchased from or through a school;
(N) educational or learning diagnostic tools;
(O) educational therapies for a child with a
disability;
(P) educational and psychological evaluations;
(Q) assistive technology rentals; or
(R) braille translation goods and services.
(2) Public school funds.--Federal SFA Funds disbursed from
a School Freedom Account to a local educational agency under
regulations established pursuant to subsection (e) may be used
by such local educational agency for any educational purpose
authorized under the laws of the State in which such local
educational agency is located.
(g) Limitation.--The Secretary of the Treasury may not require
that--
(1) individuals obtain preapproval prior to the expenditure
of amounts from a School Freedom Account; or
(2) the expenditure of amounts from a School Freedom
Account be through a specific marketplace or portal.
SEC. 4. HIGHER EDUCATION AND SKILLS OBTAINMENT FUND PROGRAM.
(a) Conversion of School Freedom Account.--
(1) Account creation.--A School Freedom Account established
on behalf of an eligible individual shall be converted by the
Secretary of the Treasury into a savings account to be known as
a ``Higher Education and Skills Obtainment Fund'' on behalf of
such individual on the earlier of the following:
(A) The date on which the individual completes
secondary school.
(B) The date on which the individual is no longer
eligible to attend a public elementary or secondary
school due to the individual's age.
(2) Treatment of federal sfa funds.--Any Federal SFA Funds
that remain in a School Freedom Account at the time such School
Freedom Account is converted into a Higher Education and Skills
Obtainment Fund pursuant to paragraph (1) shall be transferred
to such Higher Education and Skills Obtainment Fund and be
classified as ``Federal HESOF Funds''.
(3) Treatment of parental sfa funds.--Any Parental SFA
Funds that remain in a School Freedom Account at the time such
School Freedom Account is converted into a Higher Education and
Skills Obtainment Fund pursuant to paragraph (1) shall be
transferred to such Higher Education and Skills Obtainment Fund
and be classified as ``Parental HESOF Funds''.
(4) Treatment of state sfa funds.--Each State shall
determine how funds deposited by the State into a School
Freedom Account are to be treated by the Secretary of the
Treasury when such School Freedom Account is converted into a
Higher Education and Skills Obtainment Fund pursuant to
paragraph (1), including requiring such funds to be transferred
to such Higher Education and Skills Obtainment Fund and be
classified as ``State HESOF Funds'' or requiring such funds to
be returned to the State.
(b) Withdraw of Parental HESOF Funds.--Not later than 30 days after
the date determined by the Secretary of Education under section 2(a)
and consistent with the provisions of section 530C of the Internal
Revenue Code of 1986, the Secretary of the Treasury shall issue
regulations establishing how an individual with a Higher Education and
Skills Obtainment Fund may withdraw Parental HESOF Funds.
(c) Use of Funds.--Funds in a Higher Education and Skills
Obtainment Fund may be used to pay for the following postsecondary
educational expenses:
(1) Costs of attendance at an institution of higher
education.
(2) Costs associated with pursuing career and technical
education.
(3) Any other postsecondary educational expense as
determined appropriate by the Secretary of the Treasury.
(d) Termination.--The Secretary of the Treasury shall terminate the
Higher Education and Skills Obtainment Fund of an individual on the
date on which such individual attains the age of 30 years.
(e) Return of Funds.--
(1) Federal funds.--Any Federal HESOF Funds remaining in a
Higher Education and Skills Obtainment Fund of an individual on
the date such fund terminates under subsection (d) shall be
returned to the Treasury of the United States.
(2) Parental hesof funds.--Any Parental HESOF Funds
remaining in a Higher Education and Skills Obtainment Fund of
an individual on the date such fund terminates under subsection
(d) shall be provided to the individual.
(3) State hesof funds.--Any State HESOF remaining in a
Higher Education and Skills Obtainment Fund of an individual on
the date such fund terminates under subsection (d) shall be
disbursed as specified by the State under subsection (a)(4).
(4) Regulations.--Not later than 180 days after the date
determined by the Secretary of Education under section 2(a),
the Secretary of the Treasury shall issue regulations as
necessary to carry out this subsection.
(f) Limitation.--The Secretary of the Treasury may not require
that--
(1) individuals obtain preapproval prior to the expenditure
of amounts from a Higher Education and Skills Obtainment Fund;
or
(2) the expenditure of amounts from a Higher Education and
Skills Obtainment Fund be through a specific marketplace or
portal.
SEC. 5. TAX TREATMENT OF SCHOOL FREEDOM ACCOUNTS AND HIGHER EDUCATION
AND SKILLS OBTAINMENT FUNDS.
(a) In General.--Part VIII of subchapter F of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new sections:
``SEC. 530B. SCHOOL FREEDOM ACCOUNTS.
``(a) Treatment of Accounts.--
``(1) In general.--A School Freedom Account is exempt from
taxation under this subtitle unless such account has ceased to
be a School Freedom Account. Notwithstanding the preceding
sentence, any such account is subject to the taxes imposed by
section 511 (relating to imposition of tax on unrelated
business income of charitable, etc. organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to School
Freedom Accounts, and any amount treated as distributed under
such rules shall be treated as not used to pay qualified
expenses.
``(b) Treatment of Contributions.--
``(1) Deduction for contributions by parents of account
beneficiary.--In the case of a contribution to a School Freedom
Account made by a parent of the beneficiary of such Account
during the taxable year (other than any contribution to which
paragraph (2) applies), there shall be allowed to such parent a
deduction for such taxable year an amount equal to such
contribution.
``(2) Exclusion of employer contributions.--In the case of
an employee who is the parent of a beneficiary of a School
Freedom Account, gross income of such employee (and of such
beneficiary) does not include amounts contributed by such
employee's employer to such Account.
``(c) Treatment of Distributions.--
``(1) Amounts used for qualified expenses.--Any amount paid
or distributed out of a School Freedom Account which is used
exclusively to pay qualified expenses of any account
beneficiary shall not be includible in gross income.
``(2) Inclusion of amounts not used for qualified
expenses.--Any amount paid or distributed out of a School
Freedom Account which is not used exclusively to pay the
qualified expenses of the account beneficiary shall be included
in the gross income of such beneficiary.
``(3) Penalties for distributions not used for qualified
expenses.--
``(A) Penalties.--
``(i) Tax penalties.--The tax imposed by
this chapter on the account beneficiary for any
taxable year in which there is a payment or
distribution from a School Freedom Account of
such beneficiary which is includible in gross
income under paragraph (2) shall be increased
by--
``(I) in the case of the first such
payment or distribution, 20 percent of
the amount which is so includible, and
``(II) in the case of any
subsequent such payment or
distribution, 50 percent of the amount
which is so includible.
``(ii) Criminal penalties.--In the case of
the third payment or distribution to which
clause (i) applies (and each such payment or
distribution subsequent to such third payment
or distribution), in addition to any penalty
imposed under clause (i), such beneficiary may
be imprisoned for up to 1 year for each such
payment or distribution.
``(B) Exception for disability or death.--
Subparagraph (A) shall not apply if the payment or
distribution is made after the account beneficiary
becomes disabled within the meaning of section 72(m)(7)
or dies.
``(4) Special rule for minors.--In the case of any account
beneficiary who has not attained age 18--
``(A) paragraphs (2) and (3) shall be applied by
substituting `the individual who authorized such
distribution on behalf of the account beneficiary' for
`such beneficiary' each place it appears, and
``(B) clauses (i) and (ii) of paragraph (3)(A)
shall be applied separately with respect to each such
individual who authorizes distributions on behalf of an
account beneficiary.
``(5) Treatment after death of account beneficiary.--
``(A) Treatment if designated beneficiary is
spouse.--If the account beneficiary's surviving spouse
acquires such beneficiary's interest in a School
Freedom Account by reason of being the designated
beneficiary of such account at the death of the account
beneficiary, such School Freedom Account shall be
treated as if the spouse were the account beneficiary.
``(B) Other cases.--
``(i) In general.--If, by reason of the
death of the account beneficiary, any person
acquires the account beneficiary's interest in
a School Freedom Account in a case to which
subparagraph (A) does not apply--
``(I) such account shall cease to
be a School Freedom Account as of the
date of death, and
``(II) an amount equal to the fair
market value of the assets in such
account on such date shall be
includible if such person is not the
estate of such beneficiary, in such
person's gross income for the taxable
year which includes such date, or if
such person is the estate of such
beneficiary, in such beneficiary's
gross income for the last taxable year
of such beneficiary.
``(ii) Special rules.--
``(I) Reduction of inclusion for
predeath expenses.--The amount
includible in gross income under clause
(i) by any person (other than the
estate) shall be reduced by the amount
of qualified expenses which were
incurred by the decedent before the
date of the decedent's death and paid
by such person within 1 year after such
date.
``(II) Deduction for estate
taxes.--An appropriate deduction shall
be allowed under section 691(c) to any
person (other than the decedent or the
decedent's spouse) with respect to
amounts included in gross income under
clause (i) by such person.
``(d) Definitions.--For purposes of this section--
``(1) School freedom account.--The term `School Freedom
Account' means a School Freedom Account within the meaning of
section 3 of the School Freedom Act of 2026.
``(2) Qualified expenses.--The term `qualified expenses'
means the expenses described in section 3(f)(1) of the School
Freedom Act of 2026. Any distribution required to be made to a
local educational agency under section 3 of the School Freedom
Act of 2026 shall be treated as used for qualified expenses.
``SEC. 530C. HIGHER EDUCATION AND SKILLS OBTAINMENT FUNDS.
``(a) Treatment of Accounts.--
``(1) In general.--A Higher Education and Skills Obtainment
Fund is exempt from taxation under this subtitle unless such
account has ceased to be a Higher Education and Skills
Obtainment Fund. Notwithstanding the preceding sentence, any
such account is subject to the taxes imposed by section 511
(relating to imposition of tax on unrelated business income of
charitable, etc. organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to Higher
Education and Skills Obtainment Fund, and any amount treated as
distributed under such rules shall be treated as not used to
pay qualified expenses.
``(b) Treatment of Distributions.--
``(1) Amounts used for qualified expenses.--Any amount paid
or distributed out of a Higher Education and Skills Obtainment
Fund which is used exclusively to pay qualified expenses of any
account beneficiary shall not be includible in gross income.
``(2) Inclusion of amounts not used for qualified
expenses.--Any amount paid or distributed out of a Higher
Education and Skills Obtainment Fund which is not used
exclusively to pay the qualified expenses of the account
beneficiary shall be included in the gross income of such
beneficiary.
``(3) Penalties for distributions not used for qualified
expenses.--
``(A) Penalties.--
``(i) Tax penalties.--The tax imposed by
this chapter on the account beneficiary for any
taxable year in which there is a payment or
distribution from a Higher Education and Skills
Obtainment Fund of such beneficiary which is
includible in gross income under paragraph (2)
shall be increased by--
``(I) in the case of the first such
payment or distribution, 20 percent of
the amount which is so includible, and
``(II) in the case of any
subsequent such payment or
distribution, 50 percent of the amount
which is so includible.
``(ii) Criminal penalties.--In the case of
the third payment or distribution to which
clause (i) applies (and each such payment or
distribution subsequent to such third payment
or distribution), in addition to any penalty
imposed under clause (i), such beneficiary may
be imprisoned for up to 1 year for each such
payment or distribution.
``(iii) Prior non-qualified distributions
from school freedom account taken into
account.--For purposes of clauses (i) and (ii),
any payment or distribution from a School
Freedom Account to which section
530B(c)(3)(A)(i) applies shall be treated as
payment or distribution to which clause (i) of
this subparagraph applies if such School
Freedom Account was converted into the Higher
Education and Skills Obtainment Fund with
respect to which clause (i) applies.
``(B) Exception for distribution of parental sfa
funds.--Subparagraph (A) shall not apply to
distributions properly attributable (as determined
under regulations or other guidance issued by the
Secretary) to Parental SFA Funds transferred to the
Higher Education and Skills Obtainment Fund under
section 4(a)(3) of the School Freedom Act of 2026.
``(C) Exception for disability or death.--
Subparagraph (A) shall not apply if the payment or
distribution is made after such beneficiary becomes
disabled within the meaning of section 72(m)(7) or
dies.
``(4) Special rule for minors.--In the case of any account
beneficiary who has not attained age 18--
``(A) paragraphs (2) and (3) (other than paragraph
(3)(C)) shall be applied by substituting `the
individual who authorized such distribution on behalf
of the account beneficiary' for `such beneficiary' each
place it appears, and
``(B) clauses (i), (ii), and (iii) of paragraph
(3)(A) shall be applied separately with respect to each
such individual who authorizes distributions on behalf
of an account beneficiary.
``(5) Treatment after death of account beneficiary.--
``(A) Treatment if designated beneficiary is
spouse.--If the account beneficiary's surviving spouse
acquires such beneficiary's interest in a Higher
Education and Skills Obtainment Fund by reason of being
the designated beneficiary of such account at the death
of the account beneficiary, such Higher Education and
Skills Obtainment Fund shall be treated as if the
spouse were the account beneficiary.
``(B) Other cases.--
``(i) In general.--If, by reason of the
death of the account beneficiary, any person
acquires the account beneficiary's interest in
a Higher Education and Skills Obtainment Fund
in a case to which subparagraph (A) does not
apply--
``(I) such account shall cease to
be a Higher Education and Skills
Obtainment Fund as of the date of
death, and
``(II) an amount equal to the fair
market value of the assets in such
account on such date shall be
includible if such person is not the
estate of such beneficiary, in such
person's gross income for the taxable
year which includes such date, or if
such person is the estate of such
beneficiary, in such beneficiary's
gross income for the last taxable year
of such beneficiary.
``(ii) Special rules.--
``(I) Reduction of inclusion for
predeath expenses.--The amount
includible in gross income under clause
(i) by any person (other than the
estate) shall be reduced by the amount
of qualified expenses which were
incurred by the decedent before the
date of the decedent's death and paid
by such person within 1 year after such
date.
``(II) Deduction for estate
taxes.--An appropriate deduction shall
be allowed under section 691(c) to any
person (other than the decedent or the
decedent's spouse) with respect to
amounts included in gross income under
clause (i) by such person.
``(c) Definitions.--For purposes of this section--
``(1) Higher education and skills obtainment fund.--The
term `Higher Education and Skills Obtainment Fund' means a
Higher Education and Skills Obtainment Fund within the meaning
of section 4 of the School Freedom Act of 2026.
``(2) Qualified expenses.--The term `qualified expenses'
means the expenses described in section 4(c) of the School
Freedom Act of 2026. Any distributions returned to the Treasury
under section 4(e)(1) of School Freedom Act of 2026 shall be
treated as used for qualified expenses.''.
(b) Deduction Allowed Whether or Not Individual Elects To Itemize
Deductions.--Section 62(a) of such Code is amended by inserting after
paragraph (21) the following new paragraph:
``(22) School freedom accounts.--The deduction allowed by
section 530B(b)(1).''.
(c) Clerical Amendment.--The table of sections for part VIII of
subchapter F of chapter 1 of such Code is amended by adding at the end
the following new items:
``Sec. 530B. School Freedom Accounts.
``Sec. 530C. Higher Education and Skills Obtainment Funds.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years ending after the date of the enactment of this
Act.
SEC. 6. TRACKING OF FEDERAL EDUCATION FUNDS.
Before the end of each school year, the Secretary of the Treasury
shall determine--
(1) the aggregate amount of deposits made to School Freedom
Accounts under section 3 for such school year, categorized by--
(A) whether such deposit was made by the Secretary
of the Treasury, a parent, or a State; and
(B) the local educational agency of the account
holder; and
(2) of the amounts measured and categorized under paragraph
(1), with respect to each local educational agency--
(A) the amount made available to parents in
accordance with the regulations issued pursuant to
section 3(e)(1); and
(B) the amount of funds disbursed to the local
educational agency in accordance with the regulations
issued pursuant to section 3(e)(1) and with section
3(e)(2).
SEC. 7. RULE OF CONSTRUCTION.
Nothing in this Act shall be construed to--
(1) affect any aspect of private, religious, or home
education providers;
(2) exclude private, religious, or home education providers
from receiving funds from a School Freedom Account; or
(3) require an educational service provider to alter any
creed, practice, admissions policy, or curriculum in order to
receive funds from a School Freedom Account.
SEC. 8. PROHIBITION ON REGULATIONS.
Except as authorized by this Act, the Secretary of the Treasury may
not issue any rule, promulgate any regulation, or take any other action
which imposes any limitation or requirement on the use of a School
Freedom Account or Higher Education and Skills Obtainment Fund by a
parent or eligible individual.
SEC. 9. GAO REPORTING ON SCHOOL FREEDOM ACCOUNT AND HIGHER EDUCATION
AND SKILLS OBTAINMENT FUND.
(a) One-Time Report.--Not later than 18 months after the date of
enactment of this Act, the Comptroller General of the United States
shall submit a report to Congress that contains the following
information:
(1) A review of the wind-down and termination of covered
Federal education programs by the Secretary of Education.
(2) The reallocation of unobligated amounts originally
appropriated for covered Federal education programs to carry
out the School Freedom Account program under section 3, as
required by section 2(d).
(3) A summary of the regulations established by the
Secretary of the Treasury under section 3(e)(1).
(b) Annual Report.--Not later than 1 year after the date of
enactment of this Act, and annually thereafter, the Comptroller General
of the United States shall submit a report to Congress that contains
the following information:
(1) The most recent annual data collected pursuant to
section 6.
(2) An assessment of whether any additional uses of funds
for a School Freedom Account or Higher Education and Skills
Obtainment Fund could benefit the education of eligible
individuals.
(3) An analysis of how the Secretary of the Treasury is
tracking Federal funds deposited into School Freedom Accounts.
(4) Based on the most recent data available at the time
such report is submitted, and to the extent such data is
available--
(A) the annual number of students who expended
funds from a School Freedom Account to--
(i) attend a private school;
(ii) attend a public charter school;
(iii) attend a homeschool; or
(iv) attend educational classes outside the
home, including as part of a micro school or
learning pod;
(B) the aggregate annual amount of funds expended
by parents from School Freedom Accounts for a purpose
other than an eligible uses under section 3(f)(1);
(C) the aggregate amount of funds in School Freedom
Accounts that rolled over to the subsequent school
year;
(D) the number of School Freedom Accounts that
converted to Higher Education and Skills Obtainment
Funds and the aggregate amount in accounts that
converted;
(E) the aggregate number of eligible individual who
expend amounts from a Higher Education and Skills
Obtainment Fund to pay costs associated with attendance
of an institution of higher education or towards career
and technical education; and
(F) the aggregate annual amount of funds from
Higher Education and Skills Obtainment Funds that were
returned to the Treasury.
(5) Any other information the Comptroller General
determines important to assessing and improving the
implementation or administration of the School Freedom Account
program or the Higher Education and Skills Obtainment Fund
program.
SEC. 10. DEFINITIONS.
In this Act:
(1) Career and technical education.--The term ``career and
technical education'' has the meaning given that term in
section 3 of the Carl D. Perkins Career and Technical Education
Act of 2006 (20 U.S.C. 2302).
(2) Child with a disability.--The term ``child with a
disability'' has the meaning given that term in section 602 of
the Individuals with Disabilities Education Act (20 U.S.C.
1401).
(3) Cost of attendance.--The term ``cost of attendance''
has the meaning given that term in section 472 of the Higher
Education Act of 1965 (20 U.S.C. 1087ll).
(4) Covered federal education program.--The term ``covered
Federal education program'' means an applicable program (as
defined in section 400 of the General Education Provisions Act
(20 U.S.C. 1221)) the primary purpose of which is to support
elementary or secondary education, except such term does not
include the School Freedom Account program authorized under
this Act.
(5) Eligible individual.--The term ``eligible individual''
means, with respect to a School Freedom Account, an individual
who--
(A) has not completed secondary school;
(B) is or will become eligible to attend a
elementary or secondary school;
(C) is a citizen or national of the United States;
and
(D) has at least 1 parent that is a citizen or
national of the United States.
(6) ESEA terms.--The terms ``child'', ``elementary
school'', ``local educational agency'', ``parent'', ``secondary
school'', and ``State'' have the meanings given those terms in
section 8101 of the Elementary and Secondary Education Act of
1965 (20 U.S.C. 7801).
(7) Institution of higher education.--The term
``institution of higher education'' has the meaning given that
term in section 102 of the Higher Education Act of 1965 (20
U.S.C. 1002).
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