Tennessee ESA Program

# Tennessee's Trifurcated Choice Landscape: An Analytical Report on the State's Education Savings Account Programs

Section I: Introduction \- From Targeted Intervention to Universal Entitlement

The state of Tennessee occupies a unique and instructive position within the national landscape of K-12 education policy. Over the course of a single decade, it has methodically constructed a multi-layered system of private school choice, evolving from a narrowly defined intervention for a specific student population into a large-scale, universal entitlement program. This trajectory, marked by distinct legislative phases, provides a compelling case study in the strategic evolution of Education Savings Account (ESA) policy. The state's escalating ambition has created a complex and often contentious environment where fundamental debates over fiscal sustainability, participant equity, academic performance, and administrative transparency are now paramount.

Unlike states that made an abrupt leap to universal eligibility, Tennessee’s approach has been incremental, building its policy infrastructure through three distinct legislative pillars. Each program serves as a geological layer in the state's policy history, revealing the political and operational lessons learned at each stage. The three programs that form the state's complex ESA ecosystem are:

1. The Individualized Education Account (IEA) Program: Enacted in 2015, this was the state's foundational ESA, a targeted program designed exclusively for students with qualifying disabilities.1

2. The Education Savings Account (ESA) Pilot Program: Enacted in 2019, this program expanded the ESA concept beyond disability status, creating a means-tested and geographically limited pilot in several of the state's large urban school districts.1

3. The Education Freedom Scholarship (EFS) Act: Enacted in 2025, this legislation represents the culmination of the state's efforts, establishing a universal ESA program open to all K-12 students statewide.1

This deliberate, phased approach was not accidental but reflects a broader strategic pattern seen in the national school choice movement. The journey began with the IEA program in 2015, which established the legal and administrative architecture for ESAs in Tennessee. By limiting the program's scope to a small, high-need population of students with disabilities—a demographic for whom the traditional public system was already perceived by some as having shortcomings—policymakers minimized the initial political and fiscal risk.2 This served as a legislative "foot-in-the-door," normalizing the concept of directing public funds to individual student accounts for private educational use.

Four years later, the ESA Pilot Program expanded this concept, testing the political viability of a broader choice model that incorporated income and geographic limitations.4 The fierce legal and political battles that delayed its implementation for years provided crucial lessons for proponents regarding constitutional challenges and public opposition.5 Finally, the universal Education Freedom Scholarship Act of 2025 represents the capstone of this decade-long effort. It leverages the legal and operational precedent set by the two prior programs to launch a statewide entitlement, a policy goal that would have been far less politically feasible had it been the state's initial proposal.7 This report will dissect this evolution, providing a deep analytical dive into the architecture and performance of each program. It will navigate the competing data and divergent narratives surrounding their impact, examining the financial mechanics, enrollment dynamics, participant demographics, and accountability frameworks that define Tennessee's trifurcated choice landscape.

Section II: The Foundational Programs: A Tale of Two Targeted Architectures

Before the advent of a universal program, Tennessee’s ESA landscape was defined by two distinct, targeted initiatives. These programs, while smaller in scale, established the foundational legal and administrative precedents for the state. An analysis of their unique architectures, enrollment patterns, and performance provides the essential context for understanding the significant policy shifts embodied in the subsequent universal expansion.

A. The Individualized Education Account (IEA) Program (est. 2015\)

The Individualized Education Account (IEA) Program stands as Tennessee's first and longest-running ESA. Enacted in 2015 and governed by Tennessee Code Annotated §§ 49-10-1401 through 1406, it was designed as a statewide intervention specifically for K-12 students with a narrow list of qualifying disabilities who have an active Individualized Education Program (IEP).2 The program is administered directly by the Tennessee Department of Education (TDOE).1

#### Financial Architecture

The financial structure of the IEA program is designed to redirect the full amount of state and local per-pupil funding that would have otherwise gone to the student's home school district. The award is equivalent to 100% of the state and local funds generated for that student through the state's education funding formula (historically the Basic Education Program, or BEP, now the Tennessee Investment in Student Achievement, or TISA), plus any additional special education funds the student would have received.3 The TDOE subtracts a small administrative fee from this total.11 For the 2024-2025 school year, the average IEA award value is approximately $10,709.3

Funds are disbursed to families quarterly, typically through a prepaid debit card system, and can be used for a wide range of approved expenses, including private school tuition, tutoring, curriculum, and educational therapies.3 A unique feature of the IEA's financial design is its flexibility for long-term savings. Unspent funds can be rolled over from one year to the next. Furthermore, families can direct a portion of their IEA funds into tax-advantaged accounts, such as ABLE TN accounts for disability expenses or 529 Coverdell Education Savings Accounts, for future postsecondary education costs.12

#### Enrollment and "Switcher" Mandate

The IEA program serves a relatively small but stable population. For the 2024-2025 school year, 692 students were participating statewide.3 A critical and deliberate feature of the program's design is its "switcher" mandate. To be eligible, a student must have been enrolled in and attended a Tennessee public school for one full school year immediately preceding their receipt of an IEA.9 The only exceptions are for students entering kindergarten for the first time or for those who recently moved to Tennessee.9 This requirement ensures that the program primarily serves students who are actively leaving the public system, a key distinction from the state's later universal program.

#### Accountability and Oversight

Accountability measures for the IEA program are focused on parental responsibility and basic compliance. Participating families are required to provide an education in at least the core subjects of language arts, mathematics, social studies, and science.3 Students in grades 3 through 8 must be administered either the state's TCAP test or a nationally norm-referenced test annually. However, the TDOE's role is explicitly limited; the department only verifies that a test was administered and does not compile, track, or publicly release the results.3 Participating private schools must adhere to all state health and safety laws and are required to conduct criminal background checks on all employees.3

B. The ESA Pilot Program (est. 2019\)

Four years after establishing the IEA, the Tennessee legislature enacted a second, more controversial ESA. The ESA Pilot Program, passed in 2019, expanded the concept beyond disability status to create a geographically and income-limited program. It was initially available to students residing in the Memphis-Shelby County and Metro Nashville school districts, and was later expanded to include Hamilton County.4 To be eligible, a student's family household income could not exceed 200% of the federal limit for free lunch eligibility.5

The program's launch was immediately halted by legal challenges. The targeted nature of the legislation led to a lawsuit arguing that it violated the "home rule" provision of the Tennessee Constitution by singling out individual counties without their consent.5 The ensuing court battles delayed the program's implementation until the Tennessee Supreme Court ultimately overturned a lower court's ruling, allowing the first ESAs to be awarded in August 2022\.6 Like the IEA, the Pilot Program is administered by the TDOE.1

#### Financial Architecture

The funding mechanism for the Pilot Program is similar to that of the IEA, with the award value based on the per-pupil state and local funds generated through the TISA formula for the student's home district.17 For the 2024-2025 school year, the average award is approximately $9,329.18 Unlike the IEA's debit card system, the Pilot Program is managed through a more modern online portal where parents can manage and direct payments for pre-approved expenses, such as private school tuition, fees, tutoring services, and technology.4 The program was designed with enrollment caps, beginning at 5,000 students in its first year with a statutory mechanism to grow by 2,500 students per year, up to a maximum of 15,000.5

#### Enrollment and Participant Profile

Since its delayed launch, the Pilot Program has experienced explosive growth. In its second year of operation (2023-24), enrollment surged by 362%, reaching a total of 2,088 students.4 The TDOE's annual reports on this program provide valuable demographic data unavailable for the state's other ESAs. The 2023-24 report shows that the program serves a diverse population, with 46% of participants identifying as Black or African American and 33% as White.4 This demographic profile is significant given the program's operation in majority-minority urban districts. Similar to the IEA program, the Pilot Program also includes a prior public school attendance requirement, reinforcing its function as an exit ramp from the public system.16

#### Accountability and Academic Performance

The most significant distinction of the Pilot Program is its more stringent academic accountability framework. Unlike the IEA, which merely requires that a test be administered, the Pilot Program mandates that all participating students in grades 3 through 11 take the state's official TCAP assessments for both math and English language arts.4 This requirement has produced the only official, state-sanctioned dataset that allows for a direct comparison of the academic performance of ESA students to their public school peers. As will be discussed in a later section, the results of these assessments have become a central and contentious element in the broader debate over ESA expansion.

These two foundational programs were constructed with a deliberate policy choice that served as a powerful fiscal control mechanism: the "switcher" mandate. A "switcher" is a student who transfers from a public school to a private school using an ESA. For every switcher, the state avoids the full cost of educating that student in the public system, generating an offsetting saving against the cost of the ESA. In contrast, a "non-switcher"—a student who was already enrolled in a private or homeschool setting before receiving an ESA—represents an entirely new cost to the state, as taxpayers begin to fund a student they were not previously funding. By requiring prior public school enrollment for most participants, both the IEA and the ESA Pilot programs were structurally designed to maximize the switcher rate and minimize the number of non-switchers.14 This design demonstrates that fiscal prudence, or at least the political appearance of it, was a primary consideration in the architecture of these early programs. The subsequent abandonment of this mandate in the universal program marks a radical and fiscally consequential policy shift.

Furthermore, the decision to mandate TCAP testing for the Pilot Program, while intended as a measure of accountability, has produced an inadvertent data liability for the program's proponents. The TDOE's own annual reports have consistently shown that students in the Pilot Program underperform their public school peers on state assessments.4 For example, the 2023-24 report revealed an overall ESA proficiency rate of just 27.2% in ELA and 17.6% in Math, compared to statewide public school proficiency rates of 39.0% and 36.7%, respectively.4 This has created a direct contradiction for policymakers, who must now argue for a massive statewide expansion of the ESA model despite the only available state-sanctioned academic data suggesting it leads to poorer test results. This politically inconvenient dataset complicates the narrative of ESA success and provides significant ammunition for the program's critics.

Section III: The Universal Leap: The Education Freedom Scholarship Act (est. 2025\)

The enactment of the Education Freedom Scholarship (EFS) Act in 2025 marks a paradigm shift in Tennessee's approach to school choice. Moving beyond the targeted and limited scope of its predecessors, the EFS Act establishes a large-scale, universal ESA program poised to fundamentally reshape the state's K-12 education funding landscape. Its design incorporates mechanisms for rapid expansion and a broad definition of allowable expenses, reflecting the policy ambitions of the national universal choice movement.

A. Legislative Design and Phased Rollout

The core feature of the EFS Act is its universal eligibility. Beginning with the 2025-2026 school year, the program is open to any K-12 student who is a resident of Tennessee and eligible to attend a public school.7 This removes the disability, income, and geographic restrictions that defined the state's previous ESA programs.

While eligibility is universal, participation is initially capped. The program will launch with a total of 20,000 available scholarships.8 A crucial component of the legislation is a built-in, demand-based growth mechanism. The law includes an automatic "escalator clause": if the number of applications in a given year exceeds 75% of the available slots (i.e., more than 15,000 applicants in the first year), the total number of available scholarships is set to increase by 5,000 the following year, contingent upon legislative appropriation.8 This design feature creates a powerful, self-perpetuating growth trajectory for the program. Given that initial demand far surpassed the 20,000-slot cap, with over 42,000 applications submitted in the first cycle, this growth trigger was activated immediately, ensuring the program is statutorily designed to expand to at least 25,000 students in its second year and continue growing as long as demand remains high.21 This structure functionally commits future legislatures to ongoing program expansion, making it politically difficult to contain costs over the long term and mirroring the explosive, and largely underestimated, growth of Arizona's universal program after its 2022 expansion.1

To address equity concerns, the law establishes a tiered priority system for awarding scholarships. In the inaugural year, the 20,000 slots are bifurcated: 10,000 scholarships are reserved for students from households with annual incomes at or below 300% of the federal poverty level, students with a qualifying disability, or students who would have been eligible for the existing ESA Pilot Program. The remaining 10,000 scholarships are open to all other eligible students statewide.7 In subsequent years, the priority system becomes more granular. First priority is given to students who received a scholarship in the previous year. After that, new applicants are prioritized in tiers based on household income (with lower-income families receiving higher priority), followed by students who were previously in public schools, and then all other applicants.20

B. Financial Architecture and Allowable Expenses

The financial architecture of the EFS program differs from its predecessors in its funding source and value calculation. The scholarship amount is statutorily pegged to the state's base per-pupil funding amount under the Tennessee Investment in Student Achievement (TISA) formula.20 For the program's inaugural 2025-2026 school year, this amounts to approximately $7,296 per student.8 Unlike the IEA and Pilot programs, which draw funds directly from the state and local education funding formula, the EFS program is funded through a direct appropriation from the state's general fund.8

The program offers families significant flexibility in how funds are used. The law prioritizes the payment of private school tuition and fees. However, any funds remaining after tuition is paid can be used for a broad array of other approved educational expenses. These include curriculum and textbooks, private tutoring services, computer hardware and other technological devices, transportation costs, fees for summer programs and postsecondary entrance exams, and educational therapies.8 Any unspent funds in a student's account are permitted to roll over from one year to the next, remaining available for future expenses.8

The EFS Act also significantly broadens the network of eligible providers. The law allows students to use their scholarships at any private school classified as Category I, II, or III by the state. Critically, unlike the state's other ESA programs, private schools are not required to complete a separate application process to be approved to receive EFS funds, which dramatically expands the potential marketplace of participating schools from the outset.20

Section IV: Enrollment Dynamics and the Participant Profile

A central question in the evaluation of any school choice program is a simple one: "Who uses it?" An analysis of the participant profiles of Tennessee's ESA programs reveals distinct patterns for the targeted initiatives and a significant, politically charged data vacuum for the new universal program. This gap in information obscures a clear understanding of the universal program's impact and is at the heart of the debate over its fiscal consequences.

A. A Profile of the Targeted Programs

Official reports from the Tennessee Department of Education provide a clear demographic snapshot of the participants in the state's two foundational ESA programs.

For the Individualized Education Account (IEA) Program, the most recent detailed demographic report from the 2018-2019 school year shows that the program overwhelmingly serves students with specific, high-need disabilities. A majority of participants, 58%, were students diagnosed with Autism, followed by 20% with an Intellectual Disability.24 This data indicates that the program functions as a critical resource for families of children with these particular diagnoses. The enrollment is also concentrated in the younger grades, with 55% of all participants enrolled in grades K-5.24

Data from the 2018-19 IEA Program Annual Report 24

For the ESA Pilot Program, the TDOE's 2023-2024 annual report provides a clear racial profile of its participants. The data shows significant participation among minority students, with 46% of all participants identifying as Black or African American and 33% as White.4 This is a noteworthy finding, as it suggests the program, which is limited to the state's largest urban districts, is being heavily utilized by the minority communities that constitute a large portion of those districts' populations.

B. The "Switcher Rate" Controversy and the Universal Program's Data Vacuum

While the targeted programs offer a degree of demographic clarity, the new universal Education Freedom Scholarship (EFS) program is characterized by a profound and controversial data vacuum, particularly around the critical metric of the "switcher rate." The entire fiscal debate surrounding the universal program hinges on this single variable, yet the state has chosen not to collect the data necessary to measure it.

The official fiscal analysis for the EFS Act, produced by the legislature's Fiscal Review Committee, is built upon a crucial assumption: that only 35% of the program's participants will be "switchers" who leave a public school to use a scholarship. The analysis assumes that the majority of participants—65%—will be "non-switchers" who were already enrolled in private schools before receiving the funds.25 This 65/35 split is the lynchpin of the entire fiscal projection. A small change in this ratio has hundred-million-dollar implications for the state budget. As previously established, every non-switcher represents a new cost to the state, while every switcher generates an offsetting saving. Therefore, a lower-than-assumed switcher rate would mean the program's net cost to the state is significantly higher than projected, while a higher rate would mean the net cost is lower.

Despite the centrality of this metric, reporting has revealed that the TDOE is not explicitly tracking the prior public school enrollment status of EFS applicants.21 This decision creates a fundamental data gap that makes it impossible to verify the fiscal note's foundational assumption or to conduct an objective, evidence-based analysis of the program's true net cost to the state. This lack of transparency has become a major point of political contention, drawing sharp criticism and threats of legal action from lawmakers who argue that the department is shielding the program from proper oversight.26 This situation forces any analysis of the program's fiscal impact to rely on unverified assumptions, creating a "battle of the models" scenario that mirrors the contentious and data-starved debates surrounding universal programs in other states like Arizona.1 The failure to track this data is not a minor administrative oversight; it is a fundamental impediment to fiscal accountability.

Section V: The Fiscal Impact Debate: A Billion-Dollar Question

The fiscal impact of Tennessee's ESA expansion is the most fiercely contested aspect of the policy, giving rise to two diametrically opposed analytical models. One model, rooted in state budgetary accounting, projects a significant new cost to taxpayers. The other, based on long-term economic forecasting, predicts billions of dollars in societal benefits. A comprehensive analysis requires a deconstruction of both models, as their differences stem not from simple calculation errors but from a fundamental disagreement over methodology, time horizons, and what constitutes a "cost" or "benefit."

A. The State Budgetary Impact Model

The official analysis from the state's non-partisan Fiscal Review Committee presents a picture of a costly new state entitlement. This model projects that the universal EFS program will cost Tennessee taxpayers at least $1.1 billion over its first five years of operation.25 The projected cost for the inaugural 2025-2026 school year alone is approximately $350 million. This figure is composed of several key expenditures:

• Scholarship Costs: Approximately $146 million to fund 20,000 scholarships at the initial value of roughly $7,300 each.25
• Public School Provisions: Approximately $198 million for one-time bonuses for public school teachers and $3.3 million to reimburse a small number of public school districts for funding losses due to student disenrollment.25
• Administrative Costs: Approximately $2.7 million for the TDOE to administer the program.25

The inclusion of teacher bonuses and district reimbursements represents a clear political strategy to mitigate opposition from the public education sector. However, the fiscal note reveals the limited scope of these provisions. The analysis projects that only 15 of the state's more than 140 school districts will even qualify for the reimbursement funds by fiscal year 2027\. Further, the total reimbursement amount is a small fraction of the projected $50.3 million that public schools are expected to lose in state funding by that same year as a direct result of students leaving for the program.25

Adding to the controversy is a disparity in the state's direct per-pupil funding. For the 2025-2026 school year, the state's base per-pupil contribution to public schools through the TISA formula is $7,023. This is less than the $7,295 scholarship amount for the EFS program.28 While public schools receive significant additional funding from local governments and federal sources, this difference in the state's direct contribution has created a powerful political narrative for critics, who argue that the state is prioritizing private school students over the vast majority of children who remain in the public system.28

B. The Societal Economic Benefit Model

A competing fiscal narrative, advanced primarily by the Beacon Center of Tennessee, argues that the direct budgetary costs of a statewide ESA program are dwarfed by its massive, long-term societal and economic benefits. This model is not an accounting of state expenditures but an economic forecast projecting that a universal ESA program in Tennessee would generate billions of dollars in net positive value by the year 2038\.30

This analysis quantifies these projected benefits across three primary domains, based on a conservative forecast:

• Increased High School Graduation Rates: The model projects an increase of 13,480 high school graduates, leading to $2.9 billion in associated economic benefits.30
• Increased Lifetime Earnings: The program is forecast to increase overall personal income in the state by $683 million due to higher educational attainment.30
• Reduced Crime: The model predicts a reduction of over 15,000 felons and 21,000 misdemeanants, producing societal benefits valued at $685 million.30

It is critical to understand the methodology behind these figures. This analysis is not based on direct performance data from Tennessee's existing ESA programs. Instead, it is a forecast that relies on econometric modeling. It extrapolates findings from meta-analyses of school choice programs in other states (such as Milwaukee's long-running voucher program) and applies economic models that link educational outcomes to long-term trends in earnings and crime rates.30

C. The Critical Perspective and Risk of Unfunded Expansion

Critics of the universal program, including organizations like EdTrust, argue that the state budgetary model, while projecting high costs, may still be too conservative. They point to the cautionary tale of Arizona, where a similar universal program designed to expand with demand saw its costs explode far beyond initial projections. In Arizona, the program's cost grew from an initial legislative estimate of $65 million to an actual cost of $738 million in a single fiscal year, contributing to a significant state budget shortfall.19

There is also concern that the widespread availability of vouchers will trigger private school tuition inflation. In this scenario, private schools may simply raise their tuition rates to capture the value of the scholarship, leaving families' out-of-pocket costs largely unchanged while dramatically increasing the total cost of the program to the state.29 Finally, critics argue that the diversion of hundreds of millions of dollars from the state's general fund to finance the EFS program will inevitably constrain the state's ability to fund other essential priorities, most notably addressing the persistent underfunding in the public schools that continue to serve the overwhelming majority of Tennessee's students.27

The intense fiscal debate is not a simple disagreement over numbers but a fundamental clash of analytical frameworks. The State Budgetary model is an accounting analysis focused on the near-term (1-5 year) direct costs to the state treasury. Its methodology is based on legislative appropriations, enrollment projections, and statutory formulas. In contrast, the Societal Benefit model is an economic forecast of long-term (20+ year) indirect benefits to society as a whole, based on correlations found in academic literature. It is entirely possible for a program to be a net cost to the state budget in the short term while simultaneously being projected to generate net benefits for the broader economy in the long term. The core policy question is about which framework to prioritize: should policymakers focus on immediate, verifiable budgetary impacts, or should they make decisions based on long-term, speculative economic forecasts? Acknowledging this methodological divide is essential for a nuanced understanding of the debate.

Section VI: Accountability, Oversight, and Performance

The expansion of Tennessee's ESA programs has been accompanied by intense debate over the mechanisms for ensuring financial integrity, administrative transparency, and, most importantly, positive academic outcomes for students. An examination of the available evidence reveals a contradictory picture of student performance, a developing oversight framework, and significant challenges in data transparency that hinder objective evaluation.

A. Academic Outcomes in the Pilot Program: A Contradictory Picture

The ESA Pilot Program provides the only official, state-sanctioned data on the academic performance of Tennessee's ESA participants. The TDOE's 2023-2024 annual report on the program presents a complex and, for proponents, challenging set of findings. On one hand, the report highlights that ESA students demonstrated year-over-year proficiency gains on the state's TCAP assessments, with a 4-percentage-point increase in English Language Arts (ELA) and a 6-percentage-point increase in Math between the 2022-23 and 2023-24 school years.4

However, the report also shows that the overall proficiency rates for ESA students remain significantly below those of their public school peers. In 2023-24, only 27.2% of ESA students were proficient in ELA and just 17.6% were proficient in Math. These figures stand in stark contrast to the proficiency rates for all Tennessee public school students, which were 39% in ELA and 36.7% in Math for the same year.4 This significant performance gap is consistent with a body of national research, often cited by program critics, that has found negative or insignificant academic impacts from voucher programs in other states.19

The TDOE report correctly includes an important caveat, noting that the TCAP assessments are aligned to Tennessee's public school academic standards, and that private schools are not required to teach the same curriculum or follow the same pacing. This misalignment could be a contributing factor to the observed performance gap.4 However, this also raises a critical accountability question: if students in the program are not being prepared for the same academic benchmarks as their public school counterparts, what standards are they being held to, and how can the state ensure it is receiving value for its investment? This decoupling of accountability from expansion—aggressively growing a program model while the only available academic data shows negative results—suggests that the policy's growth is being driven by factors other than demonstrated programmatic success. The political will to expand school choice in Tennessee appears to be operating independently of, and perhaps even in contradiction to, the available evidence on program performance.

B. Financial Auditing and Oversight Mechanisms

The statutory framework for Tennessee's ESA programs includes provisions for financial oversight. The TDOE is required by law to develop and implement an audit plan to monitor the programs for fraud, waste, and abuse, and must report any confirmed instances of fraud to the state's Comptroller of the Treasury.35 Furthermore, participating private schools are required to maintain separate bank accounts for ESA funds and must provide financial information to the department upon request.35

In practice, the oversight appears to be primarily an internal TDOE function, based on reviewing pre-approval forms and expense reports submitted by families and schools.4 While Tennessee has a robust and independent state auditing apparatus under the Comptroller of the Treasury, which conducts regular audits of state and local government entities, there is a lack of publicly available, specific financial or performance audits of the ESA or IEA programs themselves.36

A significant and often overlooked accountability issue arises for students with disabilities. When a family accepts an ESA or IEA scholarship, they must waive their child's rights and protections under the federal Individuals with Disabilities Education Act (IDEA).9 Private schools are not bound by IDEA's mandates and are not required to provide the same level of services or adhere to a student's IEP. This can leave students with disabilities in a vulnerable position, without the legal recourse and guaranteed services they are entitled to in the public school system.38

C. The Challenge of Data Transparency

The rollout of the new universal EFS program has been plagued by a lack of administrative transparency, which has undermined public trust and made independent evaluation of the program nearly impossible. There is a documented pattern of the TDOE refusing to release basic, non-personally-identifiable data about the program, including the total number of students enrolled, the number of students on the waitlist, and, most critically, the prior school enrollment status of applicants—the "switcher rate" data essential for any credible fiscal analysis.21

This refusal to provide data has drawn sharp criticism from lawmakers and the public, who argue that an agency distributing hundreds of millions of taxpayer dollars has a fundamental obligation to be transparent about its operations.26 This data opacity forces any public debate or legislative oversight to rely on unverified assumptions and political statements rather than on verifiable facts, hindering effective governance and accountability.

Section VII: Concluding Analysis and Forward-Looking Implications

Tennessee's decade-long journey into Education Savings Accounts offers a rich and complex case study for the nation. The state's evolution from cautious, targeted programs to an ambitious, large-scale universal entitlement encapsulates the strategic trajectory of the modern school choice movement. This report's analysis reveals a policy landscape defined by a set of core tensions: a radical shift from programs with built-in fiscal controls to a universal model whose true cost is obscured by a data vacuum; a profound conflict between the political narrative of success and official data showing academic underperformance; and a growing chasm between the scale of the state's financial commitment and the transparency of the program's administration.

The experiences of other states that have preceded Tennessee on the path to universal choice, particularly Arizona, offer critical cautionary tales. The Arizona case demonstrates the significant fiscal and political risks of underestimating enrollment growth in a universal program, the budgetary shocks that can occur when a program's costs dramatically outpace projections, and the long-term erosion of public trust that results from a failure to build robust administrative and oversight capacity in lockstep with programmatic expansion.1 Tennessee's new universal program, with its automatic growth trigger and lack of data collection on the critical "switcher rate" metric, appears vulnerable to these same pitfalls.

Based on this comprehensive analysis, several forward-looking considerations emerge for policymakers in Tennessee and in other states contemplating or implementing large-scale ESA programs. These are not recommendations for or against the policy itself, but rather for the establishment of an infrastructure of accountability necessary for any responsible public expenditure of this magnitude.

Mandate Data Transparency from the Outset: The enabling legislation for any ESA program must include a statutory requirement for the administering agency to collect and publicly report key performance indicators. This must include anonymized participant demographic data (income level, race/ethnicity, disability status) and, most critically, prior school enrollment status (the "switcher rate"). Proactive transparency is the only way to provide a factual basis for evaluating program equity and net fiscal impact.

Scale Oversight with Enrollment: Administrative funding and oversight capacity—specifically, the number of auditors and the sophistication of financial review systems—must be explicitly tied to program enrollment or budget size within the authorizing statute. This ensures that the accountability infrastructure grows in lockstep with the program, rather than lagging years behind and creating the kind of "oversight deficit" that has plagued other large-scale programs.

Require Independent Evaluation: To ensure objectivity and public trust, legislative bodies should mandate regular, independent performance and financial audits of ESA programs. These audits should be conducted by an outside entity with statutory authority, such as a State Comptroller's Office or Auditor General, rather than relying solely on the self-reporting of the administering agency.

Clarify Academic Expectations: Policymakers must establish clear and transparent expectations for academic accountability. This includes defining how student performance will be measured and publicly reported in a way that allows for valid comparisons, while also acknowledging the legitimate curricular and pedagogical differences between public and private educational environments.

Ultimately, the long-term success and political viability of any large-scale education reform depend not only on the appeal of its premise but on the integrity of its execution. As Tennessee embarks on this new chapter of universal school choice, its ability to build a foundation of fiscal responsibility, administrative transparency, and public accountability will be the ultimate determinant of the program's legacy.

#### Works cited

1. Building State ESA Tracker.pdf

2. IEA Program, accessed October 28, 2025, https://hbeelearning.com/iea-program/

3. Individualized Education Account Program \- Tennessee \- EdChoice, accessed October 28, 2025, https://www.edchoice.org/school-choice/programs/individualized-education-account-program/

4. Tennessee Education Savings Account Annual Report \- TN.gov, accessed October 28, 2025, https://www.tn.gov/content/dam/tn/education/esa/2023-24\_ESA%20Annual%20Report.pdf

5. Friday Feature: Tennessee Education Savings Account Pilot Program | Cato at Liberty Blog, accessed October 28, 2025, https://www.cato.org/blog/friday-feature-tennessee-education-savings-account-pilot-program

6. Haylie N. Lovelace \- Tennessee's Education Savings Account Pilot Program: An Equal Protection Violation Under the Guise of "School Choice" \- The University of Memphis, accessed October 28, 2025, https://www.memphis.edu/law/pdfs/lovelaceb2.pdf

7. Education Freedom Scholarship FAQs \- TN.gov, accessed October 28, 2025, https://www.tn.gov/content/dam/tn/education/efs/Education\_Freedom\_Scholarship\_FAQs.pdf

8. Tennessee Education Freedom Scholarship Act \- EdChoice, accessed October 28, 2025, https://www.edchoice.org/school-choice/programs/tennessee-education-freedom-scholarship-act/

9. The Individualized Education Account (IEA) Program can help Children with Disabilities Excel in School \- KidCentral TN, accessed October 28, 2025, https://www.kidcentraltn.com/education/special-needs/the-individualized-education-account--iea--program-can-help-children-with-disabilities-excel-in-school-.html

10. April, 2024 (Revised) 1 RULES OF THE STATE BOARD OF EDUCATION CHAPTER 0520-01-11 INDIVIDUALIZED EDUCATION ACCOUNTS TABLE OF CON, accessed October 28, 2025, https://publications.tnsosfiles.com/rules/0520/0520-01/0520-01-11.20240423.pdf

11. Individualized Education Account (IEA) Program \- TNSTEP, accessed October 28, 2025, https://tnstep.info/wp-content/uploads/2020/02/OverviewoftheIEAProgramPresentation\_STEP%E2%80%99s-Lunchtime-Leaders-Webinar-Series\_5.5.16.pdf

12. 2025-26 IEA Program Handbook \- TN.gov, accessed October 28, 2025, https://www.ext.glb.mytn.gov/content/dam/tn/education/iea/2025-26\_IEA\_Program\_Handbook.pdf

13. How Tennessee's ESA Spending Compares to Other States \- EdChoice, accessed October 28, 2025, https://www.edchoice.org/how-tennessees-esa-spending-compares-to-other-states/

14. Tennessee Individualized Education Account, accessed October 28, 2025, https://www.poweredbyeducation.org/tennessee-individualized-education-account/

15. Individualized Education Account (IEA) Program \- TN.gov, accessed October 28, 2025, https://www.tn.gov/content/dam/tn/education/iea/IEA\_QAs.pdf

16. Unpacking Tennessee's Education Savings Account/Voucher Program \- Nashville Public Education Foundation, accessed October 28, 2025, https://nashvillepef.org/wp-content/uploads/2024/03/Unpacking-Tennessees-ESA\_Voucher-Program.pdf

17. View of Tennessee Education Savings Account: Tipping the Scales From Equity to Choice, accessed October 28, 2025, https://ejournals.library.vanderbilt.edu/index.php/iris/article/view/4771/2773

18. Education Savings Account Program \- EdChoice, accessed October 28, 2025, https://www.edchoice.org/school-choice/programs/tennessee-education-savings-account-pilot-program/

19. Peabody Scholars share guidance to inform school voucher policy | Vanderbilt University, accessed October 28, 2025, https://news.vanderbilt.edu/2024/03/01/peabody-scholars-share-guidance-to-inform-school-voucher-policy/

20. Education Freedom Scholarships and Private Schools in Tennessee ..., accessed October 28, 2025, https://sycamoretn.org/wp-content/uploads/2025/02/2025.02.19-final-education-freedom-scholarships-and-private-schools-in-tennessee-update.pdf

21. More Tennessee school voucher data arrives after ongoing requests for transparency, accessed October 28, 2025, https://wpln.org/post/more-tennessee-school-voucher-data-arrives-after-ongoing-requests-for-transparency/

22. Education Freedom Scholarship \- TennesseeCAN, accessed October 28, 2025, https://tn-can.org/efs/

23. The Education Freedom Scholarship Act and Private Schools in Tennessee, accessed October 28, 2025, https://sycamoretn.org/ed-freedom-scholarship-act/

24. 2018-19 IEA Program Student Enrollment Data \- TN.gov, accessed October 28, 2025, https://www.tn.gov/content/dam/tn/stateboardofeducation/documents/2019-sbe-meetings/february-7%2C-2019-sbe-workshop/2-7-19%204%2010%20IEA%20Report%201.pdf

25. Tenn. school voucher plan's cost pegged at $1.1 billion ... \- Chalkbeat, accessed October 28, 2025, https://www.chalkbeat.org/tennessee/2025/01/27/universal-school-voucher-plan-5-year-costs-analysis/

26. Tennessee won't say how many students are enrolled in new voucher program \- Chalkbeat, accessed October 28, 2025, https://www.chalkbeat.org/tennessee/2025/09/17/state-wont-release-student-voucher-data/

27. Vouchers: Now What? | EdTrust-Tennessee, accessed October 28, 2025, https://edtrusttn.org/wp-content/uploads/2025/02/EdTrust-Tennessee\_Vouchers\_Now\_What\_02-07-25.pdf

28. Tennessee to give more average per-pupil funding to voucher participants than public school students \- Chalkbeat, accessed October 28, 2025, https://www.chalkbeat.org/tennessee/2025/08/19/voucher-amoung-public-school-funding-formula-tisa/

29. Tennessee voucher program favors private school students, critics say : r/nashville \- Reddit, accessed October 28, 2025, https://www.reddit.com/r/nashville/comments/1mx39h4/tennessee\_voucher\_program\_favors\_private\_school/

30. The Economic Impact of a Statewide Education Savings Account Program in Tennessee, accessed October 28, 2025, https://www.beacontn.org/wp-content/uploads/2018/12/BCN\_ESAReport\_v3.pdf

31. Beacon Study Demonstrates Benefits of Statewide ESAs \- The Beacon Center of Tennessee, accessed October 28, 2025, https://www.beacontn.org/beacon-study-demonstrates-benefits-of-statewide-esas/

32. Vouchers: What Advocates Should Know for the 2025 Tennessee Legislative Session, accessed October 28, 2025, https://edtrusttn.org/wp-content/uploads/2025/01/EdTrust-Tennessee\_Voucher\_Memo\_01-09-25.pdf

33. Fiscal Capacity 101: A Key Factor in K-12 Education Funding in Tennessee, accessed October 28, 2025, https://sycamoretn.org/fiscal-capacity-key-factor-k12-education-funding-tennessee/

34. TDOE Releases 2023-24 Education Savings Account (ESA) Report \- TN.gov, accessed October 28, 2025, https://www.tn.gov/education/news/2024/12/23/tdoe-releases-2023-24-education-savings-account--esa--report-.html

35. School Handbook \- TN.gov, accessed October 28, 2025, https://www.tn.gov/content/dam/tn/education/esa/ESA\_2025-26\_School\_Handbook.pdf

36. Department of auDit \- Digital Tennessee, accessed October 28, 2025, https://digitaltennessee.tnsos.gov/cgi/viewcontent.cgi?article=1020\&context=dept\_audit\_annual\_reports

37. Understanding Public Chapter 506: Education Savings Accounts (2020) \- Tennessee Comptroller of the Treasury, accessed October 28, 2025, https://comptroller.tn.gov/content/dam/cot/orea/advanced-search/2020/ESA2020Website.pdf

38. Critics of Tennessee's school voucher program worry that it leaves kids with disabilities behind | WPLN News, accessed October 28, 2025, https://wpln.org/post/critics-of-tennessees-school-voucher-program-worry-that-it-leaves-kids-with-disabilities-behind/