Over the past year, K-12 school choice programs across the United States have been required to have a surety bond.
Some states include Oklahoma, Wisconsin, and Tennessee. Regulations regarding school choice programs have been created and revised.
The surety bond for these schools ensure that the school choice programs such as a charter school will ensure the protection of students if it were to unexpectedly close. The types of protection includes paying back tuition and state funds. With the surety bond, the school promises that it is financially stable and will reimburse tuition to the students and state funds if it were to close.
In Oklahoma, the Oklahoma Board of Private Vocational Schools (OBPVS) requires some charter and private schools to be bonded. New vocational schools are required to have a minimum $5,000 surety bond when they are first licensed. The bond amount is calculated based off 10% of the projected combined tuition and student fee revenue for the first year after licensing. Schools are required to maintain financial stability along with complying with other laws.
School choice programs receive a large amount of scholarships for their students. The surety bond requires school choice programs that receive more than $50,000 in scholarship funds to supply financial information that demonstrates their financial stability. These programs have a choice to either provide proof of financial stability or have a surety bond equal to 25% of the amount of expected scholarships.
The Department of Education requires any choice school that participates in the Individualized Education Account Program (IEA) to be bonded. Nonpublic schools that take part in this program must provide proof of financial strength. Financial strength ensures the school can repay any funds up to the expected amount. The bond amount is calculated based off of multiplying the number of IEA eligible students the school can enroll.