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Gov. Bill Lee’s universal private school voucher plan, if approved by Tennessee lawmakers in a special session that begins Monday, would cost taxpayers at least $1.1 billion during the first five years, according to a state analysis.
During the program’s first year in 2025-26, the cost would be about $350 million, based on the analysis released ahead of the session by the legislature’s independent fiscal review staff.
Those costs would include:
- Nearly $146 million to provide vouchers of $7,075 each for 20,000 recipients to use toward their private education costs;
- $198 million to pay public-school teachers one-time bonuses of $2,000 each;
- $3.3 million to reimburse public school systems for funding they are projected to lose if students disenroll to use a voucher; and
- $2.7 million to administer and staff the program.
After the first year, the program would cost more than $191 million annually, the analysis says.
However, the governor and the legislature’s GOP leaders are seeking even more funding for the program’s first year than the legislative analysis identifies, even as state revenues are down due to corporate tax breaks enacted last year by Lee’s administration.
Appropriation bills filed ahead of the session by Sen. Jack Johnson and Rep. William Lamberth, the majority leaders in their respective chambers, seek $447 million to launch the Education Freedom Act, including $226 million in recurring funds and $198 million in nonrecurring funds. The recurring funds figure includes the $144 million in unused voucher funds that the legislature set aside for the program last year before the bill bogged down in finance committees.
Disaster relief and enforcement of President Donald Trump’s immigration policies are also on the agenda for the special session. Lee proposes to spend another $470 million on flood relief for northeast Tennessee, including $20 million to rebuild a high school in Carter County. Information released thus far does not specify funding for supporting the Trump administration’s crackdown on illegal immigration.
Here are other notable assumptions and projections about the statewide voucher plan based on the analysis released by legislature’s fiscal review staff:
Student eligibility: Income limits would end after first year
Each voucher would pay $7,075 during the first year to up to 20,000 eligible students. (That’s $4,597 less than the average annual cost of private schools in Tennessee, which is $11,672 annually, according to tuition information gathered by Private School Review.)
It’s expected that all vouchers will be awarded, allowing the state to expand the program by 5,000 participants each year, potentially doubling the program’s size by the 2029-30 school year.
During the first year, half of the vouchers would be reserved for students whose families fall below an income limit that is set at 300% of the amount required to qualify for free or reduced-price meals, or $173,160 for a family of four. The other half would have no income restrictions.
Because of the high income thresholds, it’s assumed that 65% of the vouchers would be awarded to students who already attend private schools, with 35% going to students switching out of public schools. The 65-35 split is expected to continue in subsequent years.
It’s assumed that no student who is currently receiving a voucher through the state’s smaller education savings account and individualized education account programs will opt to participate in the new statewide voucher program, since their current benefits are higher.
Accountability: A choice of tests
While private schools accepting the new vouchers would have to give voucher recipients national or state tests annually, those schools are likely to opt for using national tests that they currently use instead of using the Tennessee Comprehensive Assessment Program, or TCAP, which is based on state academic standards.
Test results would be incorporated into an annual state report that the state comptroller’s Office of Research and Education Accountability would deliver to the legislature’s education committees.
Incentives for public schools: Teacher bonuses, district reimbursement
An estimated 86,000 public school teachers would be eligible to receive the one-time bonuses during the current school year.
A proposed school building improvement fund for public schools would receive over $77 million annually, or 80% of tax collections from the sports betting industry, which currently go to lottery-funded college scholarships.
In the first year, 12 public school systems are expected to meet the state’s criteria to receive reimbursements from the state for funding lost when students disenroll to participate in the voucher program. In the second year, 15 districts are expected to qualify for the reimbursements.
The reimbursements would be completely paid for by the state, not from local governments.
Program administration: Current vendor likely to continue
Student First Technologies, the current vendor for the state’s smaller voucher programs known as education savings accounts and individualized education accounts, likely would serve the statewide program, too. The Indiana-based company’s contract runs through May 2028 and requires it to be able to accommodate at least 20,000 users.
In addition, the state expects to hire 11 people to administer the statewide program. The current ESA program has 22 employees providing oversight.
You can read the bill and track its movement on the General Assembly’s website.
Marta Aldrich is a senior correspondent and covers the statehouse for Chalkbeat Tennessee. Contact her at maldrich@chalkbeat.org.
