The States' Education Reclamation Act of 2025 aims to abolish the Department of Education, asserting that federal involvement in education is inconsistent with constitutional principles of federalism and has undermined parental and community control. The bill's findings suggest that the Department has fostered overregulation, standardization, and bureaucracy, leading to stagnated educational performance despite significant budget growth. It posits that local control and parental empowerment are essential for improving educational outcomes.

Upon the Department's abolition, the bill proposes a new system where states would receive direct grants from the Secretary of the Treasury for elementary, secondary, and postsecondary education. These grants, available from fiscal year 2025 through 2033, would be equal to the amount of federal funds appropriated for such programs in fiscal year 2025, excluding those transferred to other agencies. States would have broad discretion to use these funds for any education purpose permitted by state law, including increases in teacher salaries, with the stipulation that these funds must supplement, not supplant, existing state and local funding.

To ensure accountability, states would be required to contract with independent auditing entities annually to review expenditures of grant funds. Any misuse of funds would result in a 100 percent penalty paid to the U.S. Treasury, potentially offset against future grants. States must also submit annual reports detailing their activities and audit results, which must be made publicly available. The Secretary of the Treasury's role would be limited to making payments, approving auditors, and enforcing financial and reporting compliance, while the Attorney General would oversee nondiscrimination provisions.

Certain Department of Education programs would be transferred to other federal agencies within 24 months of the bill's enactment. For instance, job training programs would move to the Department of Labor, special education grants to the Department of Health and Human Services, and the Federal Pell Grant program and student loan programs to the Department of the Treasury. Importantly, these transfers would involve administrative responsibility only, not the personnel currently employed by the Department of Education to carry out these programs.

The bill mandates that no individual shall be discriminated against in any program funded by these state grants based on disability, sex, race, color, or national origin, upholding existing federal nondiscrimination laws. If a state fails to comply with these provisions, the Attorney General may initiate civil action or exercise enforcement powers. Finally, the bill requires the Comptroller General to report on the feasibility of enhancing state education funding through federal tax burden reduction and for the President to submit a plan for the Department of Education's closure within one year.