A Very Special Session, Part 1

Emergency School Choice

On Monday the 27th, the Tennessee legislature will convene at the Governor’s request for a Session-within-a-Session. Why this is necessary, when most of the bills for the Special Session were filed in the regular Session, is not fully clear, but the simplest explanation is that passing heavy-hitting bills in a special session is easier than passing them in regular Session. That’s because the legislature will be in flow-motion, reducing the time and effort required to push bills through committees and allowing them to become law in days instead of weeks.

Five bills have been filed for the Special Session, and we’re starting with Governor Lee’s School Choice bill and its companion appropriations bill — SB6001 and SB6005, respectively. The school choice bill is the main reason for Special Session, and it has the potential to completely remake public and private education in Tennessee, so it deserves a thorough read from everyone in the state. If you already read up on HB1, filed a few weeks ago, the big difference is that under this version, the state has the option to increase the new scholarship program if it fills up, instead of mandatorily increasing it. This should help them manage the budget better in future, rather than adding $35,000,000 per year whether future legislatures want it or not.

Now, as for what it actually does.

The bill creates 20,000 Education Freedom Scholarships. The value of each scholarship will start at $7,075 for the ‘25/’26 school year and increase over time, as it is tied to TISA funding. The state will give these $7,075 scholarships to eligible students for allowable uses. “Eligible students” are those entitled to attend K-12 public school in Tennessee, unless the student is already in home school or a church-related school. Homeschool and church-school students are not eligible for the scholarships.

Those 20,000 scholarships are then evenly divided into two categories. One group of 10,000 is open enrollment, with no further restrictions on who can apply. The other 10,000 are limited to students who either a) have parents that make less than $173,160 per year, b) are eligible for the previously passed Education Savings Accounts program, or c) are eligible under the “Individualized Education Act” because they have disabilities of some kind.

In the case that at least 75% of the 20,000 scholarships are applied for in a given year, the program may grow by up to 5,000 scholarships per year. If the program does not meet this 75% application rate in a particular year, it will remain at the rate for the previous year. (So, if 2 years from now it has grown to 30,000 openings, and then only 20,000 students apply, it will remain at 30,000 openings.)

If too many students apply in a given year, a prioritization system is created. Students who received a scholarship in past years are prioritized first (presumably to keep the program stable for those taking advantage of it). New students are prioritized based primarily on their income level, with those whose parents make less than $57,000 per year getting top priority, then those whose parents make less than $173,000, and then those who apply first. There are also a few more eligibility requirements: a) complete application, b) actually attend a private school with the scholarship money, and c) don’t go to a public school while also receiving money to go to private school (no double-dipping!)

If a student applies and is accepted, the money must be spent on tuition, textbooks, uniforms, tutoring, and the like. If a student leaves the program, any leftover money is put back into the fund for another applicant. Every students who takes scholarship money must also take at least one national or TCAP standardized test per year.

For schools that choose to accept this state scholarship money, the bill states that they do not become agents of Tennessee government, and attempts to limit the amount of oversight that the state has over them. They are specifically exempted from altering their creeds, practices, policies, or curriculum in exchange for receiving scholarship money.

Since the funds are kept in a bank account and not distributed directly to parents, they will not count as income for parents, and will not be taxable as such. Before awarding scholarship money, the state will be required to check the immigration status of the students, and will not give scholarships to those who cannot prove they are in the US legally.

Any public schools that students leave will maintain their state funding year after year. In the past, reduced enrollment in a school district would eventually result in reduced funds to the school. But if students leave for these new scholarships, the state will keep the school’s funding equal to what it was before the student left. (EDIT: the section of the bill dealing with public schools that lose students is somewhat fuzzy, but it actually appears that schools will only maintain current levels of funding for one year after a student leaves.)

And, last on the docket: every teacher employed in K-12 public schools will receive a one-time bonus of $2,000, paid for by the state.

So what will all of this cost? SB6005 has the appropriations, so we can see what the state thinks the numbers will be. According to their estimate, the first year (including those bonuses for teachers) will be $424,200,000. $77,200,000 of this will come out of the sports betting fund for the construction and maintenance of school buildings, so that partially offsets it, and those sports betting funds will continue to fund school building projects in perpetuity.

In future years, costs are unknown (because the program could increase). But the state estimates it will cost at least $225,800,000 in year two. If the program is popular and scholarships increase at a rate of 5,000 per year, estimated second-year costs would be $261,175,000 (or greater, depending on the TISA formula for the year in question). Assuming a similar TISA funding amount, the cost increases by $35,375,000 per year, as long as the legislature continues to fund it.

For context, it is worth noting that in 2020, Tennessee spent about $11,000,000,000 on education in the state. $11 billion. So this $424m first-year expense is only a 4% increase in education funding, and the ongoing increase is closer to 2%. On the flip side, Tennessee already has higher per-capita education spending than many states, without commensurate attainment in higher learning and graduation rates.

We could also point out that the funding rates for public schools were just re-evaluated in an extensive process 18 months ago (this is the TISA formula, referenced above). This new funding model seems to be producing some good fruit (several of the rural schools where we live have seen improved test scores and graduation rates), but it’s still too early to tell.

So. Whether it’s worth a 4% budget increase to try something new, or whether we should sit back and see how the TISA model performs is a question worth asking. And our legislators should be asking that question, and a hundred others, on Monday.