Arkansas LEARNS Act Microschool: EFA Funding and What It Means for Your Pod

The Arkansas LEARNS Act, signed into law in 2023, is one of the most consequential pieces of education legislation in the state's history. For families considering microschools and learning pods, it introduced something that did not exist before: a direct, state-funded mechanism to pay for alternative education. Understanding how that mechanism works — and the restrictions that came with it in 2025 — is essential before you build your pod around EFA funding.

What the LEARNS Act Created for Microschools

The LEARNS Act established the Children's Education Freedom Account (EFA) program, which allocates a portion of state per-pupil education funding directly to individual families rather than school districts. For the 2025–2026 school year, the EFA provides approximately $6,800 per student annually. Critically, the 2025–2026 school year marked the first year of universal eligibility — any Arkansas family with a school-age child can participate, regardless of income.

The practical effect for microschool founders is substantial. A pod serving eight students could, in theory, access up to $54,400 in annual EFA funding if all eight families are enrolled participants and the pod is registered as an approved EFA service provider. That financial reality transformed microschooling from an option for affluent families into something far more broadly accessible.

EFA Microschool Requirements: What the State Actually Requires

The Arkansas Department of Education (ADE) distinguishes between three categories of EFA service providers. Microschools fall under the "Full-Time Student-Facing Provider" category, which carries the highest compliance requirements:

Accreditation or recognized status: The school must be either accredited by a recognized body or operate as an approved unaccredited private school registered with the ADE.

Norm-referenced testing: Students must take a state-approved, nationally norm-referenced test each year. The ADE maintains a list of approved assessments. The school is responsible for administering and documenting these results.

Financial surety bond: Micro schools participating in the EFA program must maintain a surety bond. The bond amount is scaled to the total EFA funds under management.

Employee fingerprinting: All employees who have regular contact with students must complete background checks through the appropriate Arkansas fingerprinting process.

Non-discrimination compliance: EFA-participating providers cannot discriminate in admissions or operations based on categories protected under state and federal law. This language must be documented in enrollment agreements.

ClassWallet integration: EFA funds are distributed and tracked through ClassWallet, the state's designated financial management platform. Providers receive payment through ClassWallet invoicing, not directly from families.

This is substantially more administrative overhead than filing a simple homeschool Notice of Intent. Many families are surprised by the gap between "starting a pod" and "becoming an EFA vendor."

The 2025 Update: Act 920 Spending Restrictions

Senate Bill 625, enacted as Act 920 in 2025, added spending rules that changed how EFA funds can be used. The trigger was political scrutiny over early program spending — reports emerged that families were using EFA funds on horseback riding, gym memberships, and non-academic activities.

Under Act 920, EFA spending is now subject to a 75/25 rule:

• At least 75% of EFA funds must be spent on core academic costs: curriculum, direct instruction, tutoring, essential academic supplies, and educational technology directly tied to instruction.
• No more than 25% may cover transportation to and from the educational setting, extracurricular activities, physical education, and field trips — combined.

For a pod operator managing EFA funds on behalf of families, this creates a practical compliance obligation. If your pod charges a flat monthly fee that covers everything from math tutoring to weekly nature walks and van transport, you need to itemize those costs carefully. Crossing the 25% threshold on non-academic items puts families at risk of a state audit and potential clawback of funds already spent.

There is no official ADE calculator for this. You need your own tracking system.

What the EFA Does NOT Cover Through Your Pod

Several categories remain ineligible for EFA spending regardless of the 75/25 calculation:

• Curriculum or materials that are not primarily secular in nature (there are specific rules around this)
• Costs that cannot be documented with receipts or invoices
• Services from providers who are not registered ADE vendors
• Personal expenses, household costs, or anything not directly tied to the child's education

The ADE's 40-page EFA Family Handbook contains the detailed list, but the plain-English version is this: if you cannot demonstrate a direct educational purpose for the expense, do not invoice it against EFA funds.

Two Paths to EFA Participation for Microschools

Path 1: Register directly as an EFA vendor. Apply through the ADE's online portal as a Full-Time Student-Facing Provider (for full-day micro schools) or Part-Time Provider (for tutors and enrichment programs). This requires the surety bond, fingerprinting, testing plan, and non-discrimination documentation upfront. The application process takes time — plan for several weeks minimum.

Path 2: Partner with an existing approved network. Organizations like Prenda act as master EFA vendors, handling the administrative backend — ClassWallet invoicing, testing administration, state compliance — in exchange for a portion of each student's EFA funds. Prenda's annual fee runs approximately $2,199 per student, deducted directly from EFA accounts. This eliminates the compliance burden but substantially reduces the usable funding per family and removes curricular autonomy.

Most independent microschool founders find Path 1 more sustainable long-term if they intend to operate at scale. Path 2 makes sense as a transitional arrangement while you build your own vendor registration.

Making the Numbers Work

At roughly $6,800 per student annually, a microschool serving 10 students with full EFA participation could access $68,000 in total program funding — from which your pod would invoice for instruction, curriculum, and academic materials. Against that:

• Surety bond costs are typically a small annual premium relative to the bond face value
• A rented commercial or shared space runs anywhere from a few hundred to several thousand dollars per month depending on your market (NWA costs more than rural counties)
• A qualified instructor or tutor commands $35–$80 per hour depending on subject area and credentials

The margin can be substantial for a well-structured pod. The administrative requirements are the real barrier, not the economics.

If you are working through the application process and trying to understand the compliance stack for the 2025–2026 program year, the Arkansas Micro-School & Pod Kit walks through EFA vendor registration, the Act 920 budget allocation framework, and the document checklist the ADE requires — all current as of the 2026 legislative session.

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