SB2 Set to Become Law

Education Savings Accounts (vouchers) are about to become law. After a campaign of intense pressure, including the intervention of President Trump, Senate Bill 2 passed the Texas House and Senate last week along a party-line vote. The only hurdle left is the Governor’s signature. That will likely be coming this week.

While the ESA program will not begin until the 2026-2027 school year, San Angelo’s public and private schools will be assessing its impact and whether to participate.

To do that we need to know what is in it. We need a better understanding of what is in it to assess its benefits and drawbacks. This a bold experiment and a Brave New World for education in San Angelo.

SB2 provides for the creation of program, “to provide funding for approved-education related expenses” of children participating in the program. § 29.352. It does not provide for cash payments to families to use to pay for their child’s education. Instead it calls for private companies to administer the program which the state will fund. These companies are called a “Certified educational assistance organization (CEAO)”.

Certified Educational Assistance Organizations

There are various companies across the country that administer state ESA programs similar to SB2. Examples of these type of companies are ACE Scholarship ESA, Odyssey, ClassWallet, and Student First Technologies. Companies will have to apply to the State Comptroller to be certified as a CEAO in Texas. The State Comptroller may certify up to five companies as CEAOs.

Eligible Children

Children are eligible to participate in the ESA program for the semester following the semester in which the child’s application is submitted.

SB2 does not allow the children of non-citizens to participate. The child must be a citizen of the United States or be lawfully residing in the U.S. What lawfully residing in the U.S. means is not clarified by SB2.

The child must also be eligible to enroll in a school district or open-enrollment charter school.

Participation in the program is subject to there being available funding. Total funding for the program for the 2025-2027 biennium is $1 Billion. But as will be discussed below, that does not mean that there will be $1 Billion for students, other costs and expenses in creating and administering the program also come out of that appropriation.

Students in the program can continue to participate so long as there is funding, until they graduate high school, they are no longer eligible to attend a school district or open-enrollment charter school, or the student enrolls in a school district or open- enrollment charter school, or the student is declared ineligible.

Application

Once the Comptroller certifies the education assistance organizations, applications by parents will be submitted to one of the CEAOs. If more applications are received than there are available places in the program because of insufficient funding, the CEAO will fill the available positions by lottery, approving applicants by priority in the following order:

1. Siblings of already participating children.
2. Children not previously participating in the program.
3. Children who were previously in the program.

Within these three groups priority will be given to

1. Children with a disability whose household income is 500% or less of the federal poverty guidelines. ($78,250.00) based on federal poverty level of $15,650).
2. Children whose household income is at or below 200% or less of the federal poverty guidelines. ($31,112.00) based on federal poverty level of $15, 560).
3. Children whose household income is above 200% but below 500 % of the federal poverty guidelines.
4. Children whose household income is above 500% of the federal poverty guidelines.

Participation

For a child to participate in the program under SB2 the parents must agree that the money will only be spent on expenses allowed by the statute. They also must agree that the administrator of an “assessment instrument” (standardized educational test) be shared with the CEAO.

In addition, they cannot sell any item purchased with program money, and notify the CEAO withing thirty days if their child enrolls in a school district or open enrollment charter, graduates from high school or is no longer eligible to enroll in a public or charter school.

Participation for children whose household income is more than 500% of the federal poverty guidelines is limited to 20%.

The Comptroller approves all providers and vendors for educational products to be purchased through the program.

While taking the STAAR test is not required, students enrolled in the program in grades 3-12 must annually take a national standardized test.

Education Related Expenses

Parents can request that program money in their ESA be spent only for the following education-related expenses incurred by a child participating at a preapproved education service provider.

• Tuitions and fees for:
  • a private school,
  • higher education provider,
  • online educational course,
  • or training for an industry based certification
• Purchase of textbooks or other instructional materials or uniforms.
• Fees for classes or other educational services.
• Costs related to academic assessments.
• Fees for private tutor or teaching service.
• Transportation fees.
• Educational therapy fees or services.
• Costs of computer hardware or software required by and education service provider.
• Costs of breakfast or lunch provided during the school day at a private school.

Funding Amount

The funds available for students enrolled in the program is 85 percent of the estimated statewide average amount of state and local funding per student in average daily attendance for the applicable school year.

The estimated spending per student in Texas is currently around $15,503. But this includes state, local and federal spending. Critics contend this number is not an accurate reflection of what the state actually spends. According to an analysis by the Texas Tribune real dollars in state funding have continued to decline over the last decade while local school districts have had to bear the additional costs and ever rising inflation.

The Texas Tribune reported that its analysis showed a total of $12,814 spent per student from state and local funds. The lion’s share spent is from local tax dollars, averaging $8,618 per student. Average stated funding per student is $4,196. 85% of that is around $10,892.

A child with a disability may receive up to $30,000 per years, and a home school child could receive $2,000 per school year.

If a student enrolls in the program after the beginning of the school year, those funds will be prorated. Amounts remaining in the ESA at the end of year roll over to the next year.

Private schools formed after the law takes effect must wait two years to be eligible to participate. Students who were attending public school or and open-enrollment charter for 90% or greater of the previous school year are given priority.

What About Switching Between Private and Public School?

If a student in the program moves to a public school or open enrollment charter during a school year, that district will receive an allotment equal to the basic allotment ($6,160) multiplied by one tenth of a percent (.1%) ($616 per student). That child may not be considered in evaluating the performance of a school district or open-enrollment charter for the first school year after the child enrolls.

When a child is no longer eligible to participate in the program, any remaining balance in the ESA is refunded to the Comptroller. Therefore the remaining allotment is not transferred to the public or charter school in which the student enrolls. Only the basis allotment plus .1% will be paid by the state.

No refunds for tuition or education expenses from the private school to the parent are allowed.

But the statute is not clear on what happens to the funds already paid to the private school if the student withdraws. Does the private school get to keep the funds or will the pro-rated amount be refunded to the state?

Who Makes Money Off The Program?

The Texas Comptroller gets three percent of the amount appropriated each year for administering the program. Three percent of $1 Billion is $30 Million. §29,362(b). Five percent of the amount appropriated may be disbursed to the CEAOs for the cost of providing their services. § 29.362(c). Five percent of $1 Billion is $50 Million.

Autonomy of Private Schools

Under SB2, neither the state, nor the CEAO are allowed to take any action that limits or imposes requirements contrary to the religious or institutional values or practices of a private school.

They also may not limit a private school in determining the methods or curriculum to educate students, admission or enrollment standards, modify or refuse to modify religious or institutional values, practices, operations, conduct, policies, standards, assessments or employment practices based on the school’s religious values or practices.

These are the basics of SB2.

There is still much that we do not know about how this system of privatized public education will work. Legal challenges are likely to follow, then there will be administrative rule making from the Comptroller’s office.

What the impact will be on public schools has been the biggest focus of the debate. Little attention has been paid to the impact this will have on small, local or parochial private schools if corporate education companies move in to an area. Charter schools are not allowed to participate and will not be able to transform themselves into private schools, or wait two years to participate in the voucher program.

We have entered into a faux free market educational era, financed by our state government. What the future holds for education is anyone’s guess.