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S 2635Funding & Budget

Education - Federal Aid

This bill limits school lunch payment processing fees and mandates schools offer a free payment option for families.

Signed into law63 Yea0 Nay12 Not voting
Population
Affected
35
Email Legislator
Introduced Feb 13, 2026Committee Senate Education

Plain-English Summary

This legislation regulates the fees charged by third-party vendors that process payments for school meal programs. It prohibits these vendors from charging fees intended to generate profit, capping any transaction fees at a maximum of 2% of the deposit amount. The bill requires schools and districts to provide at least one no-fee payment method (such as paying in person) and mandates that all online payment platforms clearly disclose any fees before a transaction is finalized. The Rhode Island Department of Education is tasked with establishing regulations to enforce these standards.

For younger readers

This law changes how parents pay for school lunches. Sometimes, when parents pay online, the website charges extra money just to process the payment. This law says those companies cannot charge extra money to make a profit; they can only charge a tiny bit to cover their costs. It also says schools must give parents a way to pay for lunch without paying any extra fees at all, like bringing money to school. Also, the websites must clearly show if there is an extra fee before parents pay so they are not surprised.

Who & Where It Applies

Impacted groups
Parents and GuardiansPublic School StudentsSchool DistrictsPayment Processing VendorsRhode Island Department of Education
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
None
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Reduces the financial burden on working-class families by capping transaction fees and requiring no-fee payment options for essential school meals.
  • Prevents private corporations from extracting profit from public education services by restricting vendor fees to actual processing costs.
  • Increases transparency and protects consumers by mandating clear disclosure of fees before transactions are processed, ensuring families are not exploited by hidden costs.
  • Does not establish universal free school meals, leaving the underlying cost of food as a financial stressor for struggling families.
  • Allows vendors to continue charging up to a two percent fee, meaning some funds intended for student nutrition will still be diverted to payment processors.
  • Relies on the Department of Education for enforcement and rulemaking, which may result in slow implementation or inconsistent oversight across districts.
For Conservatives
  • Increases market transparency by requiring vendors to clearly disclose all fees up front, allowing families to make informed financial decisions.
  • Empowers local school districts to void contracts with vendors that fail to comply with disclosure laws, protecting local taxpayer interests.
  • Ensures that money paid by families is directed primarily toward the actual cost of the meal service rather than administrative overhead or unnecessary third-party profits.
  • Imposes strict government price controls on private businesses by capping the fees they can charge and prohibiting profit on specific services.
  • Interferes with the free market by dictating the terms of contracts between school districts and private payment processing vendors.
  • Expands the regulatory authority of the state Department of Education, creating more bureaucracy and administrative rules for schools to follow.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 45 additions

SECTION 1. Chapter 16-8 of the General Laws entitled "Federal Aid [See Title 16 Chapter 97 — The Rhode Island Board of Education Act]" is hereby amended by adding thereto the following section: 16-8-9.1. School lunch program -- Fees, transparency, and payment protections.

(a) Prohibition and permitted fees by meal service collection providers.

(1) Meal service collection providers shall only impose fees that directly correspond to the actual costs of collecting or processing payments for school meals and shall not generate profit or revenue beyond those costs.

(2) Fees for any other purpose, including profit, convenience, or administrative gain, are prohibited.

(3) Any fee permitted under this subsection shall be capped at a percentage of the transaction amount, which shall not exceed two percent (2%) of the amount deposited into a student meal account, or a lower percentage as may be established by the Rhode Island department of education by regulation.

(4) All funds collected from families or provided by public agencies for school meals shall be applied primarily to the cost of meal service and the limited allowable collection costs under this subsection.

(5) For purposes of this section, “meal service collection provider” means any vendor, contractor, payment processor, or entity engaged by a school, school district, or the Rhode Island department of education to collect, process, or manage school meal payments.

(b) No-Fee payment options.

(1) The Rhode Island department of education (RIDE) shall ensure that all public schools and school districts provide at least one no-fee payment method for parents, guardians, or students to make payments for school meals and any other school-related fees managed through a payment platform.

(2) No-fee options may include, but are not limited to, in-person payments, mailed payments, electronic transfers without vendor-imposed fees, or any other method approved by RIDE.

(3) RIDE shall promulgate rules and regulations establishing uniform statewide standards for no-fee payment access.

(4) Local education agencies, under the guidance of RIDE, shall notify parents and guardians of the available no-fee payment options and the procedures to use them. Notifications shall be clear, timely, and accessible through multiple channels including, but not limited to, email, school websites, and written communications.

(c) Fee disclosure requirements for payment platforms.

(1) Any payment processing platform, online portal, or digital collection system used by a school or school district shall clearly and conspicuously disclose to users:

(i) Whether any user fees will be charged;

(ii) The amount and type of each fee; and

(iii) Whether a no-fee payment option is available and how to access it.

(2) Disclosure shall occur prior to the completion of any transaction and shall not be obscured, minimized, or pre-checked.

(3) Districts shall ensure that contracts with vendors comply with these disclosure requirements. Any contract entered into after the effective date of this section that fails to comply shall be voidable at the option of the district.

(d) Rulemaking. RIDE shall promulgate rules and regulations necessary to implement and enforce the provisions of this section, including vendor compliance, accessibility standards, and uniform disclosure requirements.

SECTION 2. This act shall take effect upon passage.