Ohio switches to private vendor to manage EdChoice funds

COLUMBUS, Ohio (WCMH) -- Ohio is digitizing its education scholarships, relying on a third-party company to help manage funding for programs like EdChoice.

EdChoice is one of five state-sponsored scholarships allowing families to attend private and charter schools using public money. On Monday, the state announced it will switch from a paper-based system to a digital one, selecting Florida-based ClassWallet to manage the more than 175,000 students enrolled in a state scholarship program. The change also introduces a universal scholarship application, streamlining enrollment.

The switch will require all scholarship students to create accounts through ClassWallet and log in online to manage their funding. Students can attach multiple funds and pay directly from the app. Families are also able to switch between users and manage programs for different kids in the same app.

The change will also streamline scholarship applications, making it easier to apply, proponents said. In partnership with education technology services solution FACTS, ClassWallet is offering the ability to apply for scholarships online. A spokesperson said the transition allows families to apply for all five programs in minutes with reduced paperwork and delays.

Ohio offers five scholarship programs, including EdChoice and EdChoice-Exp, the latter of which removed income requirements and allows any child regardless of financial need to receive at least a partial scholarship to attend nonpublic school. EdChoice and EdChoice-Exp make up 86% of all scholarship participation. See previous coverage of EdChoice in the video player above.

Ohio's Cleveland scholarship offers low-income students in Cleveland schools funding to attend private schools. Ohio also offers the John Peterson Special Needs Scholarship and the Autism Scholarship, which provide funding for students to attend special education programs.

ClassWallet is used in 37 states to manage public funds, including 12 states' education savings accounts and microgrants. ClassWallet said it offers real-time spending tracking to ensure accountability, and it cuts down processing time by 98%.

ClassWallet was once used to manage Oklahoma's pandemic relief funding for students. However, the state auditor found at least $1.7 million in questionable purchases under the program, and sued ClassWallet for a lack of oversight.

Oklahoma's attorney general dismissed lawsuits against the vendor, saying ClassWallet was not responsible for individual misuse and was operating under the direction of state officials. A ClassWallet spokesperson said its technology allows state agencies to set their own spending rules within the digital wallet.

"We’re really proud of our strong track record helping states minimize both fraud and unintentional misuse of funds," a spokesperson said.

In a statement, School Choice Ohio applauded ClassWallet's experience and entry into the scholarship program. School Choice Ohio has advocated for programs like EdChoice for 20 years, and said the transition is a "positive step forward for Ohio families."

"Its technology will help create a more efficient, user-friendly experience for families and schools alike," School Choice Ohio said in a statement. "This change not only saves the state money and leverages innovation but also ensures better support for the more than 175,000 students who rely on Ohio’s scholarship programs."

The scholarships have also received criticism, with opponents alleging they take money from public schools. In June, a Franklin County judge ruled that the EdChoice program is unconstitutional. Expecting an appeal, she stayed her own order, which allowed EdChoice and EdChoice-Exp to continue until it is determined by a higher court. Ohio Attorney General Dave Yost has since appealed the ruling, and legal proceedings continue.