By Kate Fitzgerald
August 31, 2020
When the coronavirus pandemic forced teachers and students to move classroom learning online this year, school districts and educators suddenly face a raft of challenges around handling new expenses for tools needed for cyber education.
Many schools are still improvising ways to authorize and reimburse teachers for online learning materials they buy on the fly, but ClassWallet, a Hollywood Fla.-based platform specializing in managing school expenses, has it figured out.
“Working with school districts, we created a process enabling teachers to have items shipped directly to their homes with the flexibility to get what they need within established budgets”, said Neil Steinhardt, ClassWallet’s president.
ClassWallet added the feature in March for 3,000 schools in 20 states that use its platform, and extended free access to its spending management service to all school districts for the rest of the year. This has accelerated the startup’s growth.
In recent weeks ClassWallet has won key public-education contracts with the states of Oklahoma and Utah to add customization, fraud controls and visibility to the school- and teach-related expenses.
ClassWallet replaces manual processes with a streamlined digital system that works in real time across diverse channels.
“On average it takes 15 minutes of bookkeeping per transaction to reconcile every teacher receipt, club expense or routine reimbursement, and we’ve see purchase orders for some of these that are 40 or 50 pages long after it passes through all the necessary channels”, Steinhardt said.
Miami-Dade County Public Schools, for example, makes about $300 available per teacher per year for classroom and teaching supplies, which previously required the organization to collect 50,000 receipts per year. In 2017, the school system began working with ClassWallet and consolidated those expenditures to a single report, according to a spokesperson from the Florida organization.
ClassWallet also supports payments by parents, who use ClassWallet to pay for tuition, services and education supplies with government-supplied funds and teachers who use the platform to pay for classroom supplies and related expenses. The platform leverages digital channels for uploading orders and receipts, paying invoices, managing purchasing and prepaid cards and automating reimbursements with broad transparency while protecting data and privacy, he said.
Data protection has become a hot topic in recent years for schools, which have suffered data breaches along with many other types of organizations, exposing personally identifiable information of students, families and school employees.
The Arizona Department of Education adopted ClassWallet early this year following a data breach in 2018 that required a broad audit stretching into 2020. The audit also uncovered misspending of school funds.
Arizona is now replacing a previous expense-management approach, which relied on Bank of America prepaid debit cards, with ClassWallet’s platform to disburse special state funds for students from low-income families to assist with private school, tutoring and home-schooling, according to reports.
In contrast to larger ERP systems that many schools still use for larger purchases, ClassWallet handles thousands of small and medium-sized purchases that historically have involved a lot of paper from purchase orders, invoices and checks, Steinhardt said.
“We can provision a wallet for specific purchases, and authorize many vendors for approved e-commerce purchases from anywhere and drop-ship items to schools, and it’s all reconciled with a full electronic record including the SKU”, Steinhardt said.
Under a new contract with Oklahoma announced this month, ClassWallet will add control and transparency to the payout of $18 million in federal funds for private school tuition for students from low-income families. ClassWallet’s platform will also track and authorize spending on curriculum content, technology and other materials for public and private schools’ classroom and remote learning.
In Utah, ClassWallet last month won a five year contract to manage discretionary teacher spending on classroom incidentals, amounting to about $200 per teacher per year. Each teacher receives a ClassWallet account for ordering items to be delivered to school or to their home, with the ability to support large, big-box retailers and lesser-known merchants, ClassWallet said. Teachers are reimbursed through the platform via ACH funds sent to their bank account within days.
Utah estimates ClassWallet’s platform will reduce the personnel and paperwork costs of managing individual teacher expenditures by $750,000 over five years.
Although the platform in some cases has replaced prepaid debit card programs, ClassWallet continues to support prepaid and purchasing cards for some schools.
“Fraud can be a problem for schools using cards, but they’re still somewhat popular so we support them with a lot of controls”, he said.
ClassWallet is currently launching a new prepaid card program with Sunrise Banks for platform users to make purchases against a digital balance that’s loaded in real time with the specific amount of funds.
ClassWallet has held discussions with North Carolina about supporting disbursement of funds to needy students’ families through educational savings accounts, and recently won a contract to provide similar services for the state of Tennessee.
“As a fintech with a digital focus we’re able to shape the platform around the changing needs of schools, because it’s never been more true that one size does not fit all”, he said.
The privately held company has a relatively small number of investors and to date has raised about $7 million in funding, but it’s preparing for its next phase of growth.
“We see a lot of opportunity in helping schools migrate from legacy payment systems to a digital platform, and we also plan to move into some new areas, including helping schools manage expenses around facilities and buildings”, Steinhardt said.