Texas Education Freedom Accounts: What Public School Teachers Need to Know

Texas public school teachers are heading into the 2026-27 school year with a significant policy change on the horizon. Senate Bill 2, passed during the 89th Texas Legislature in 2025, establishes the Texas Education Freedom Accounts (TEFA) program — the state’s first Education Savings Account system.

Whether you view this as a long-overdue expansion of educational options or a potential threat to public school funding, the practical reality is the same: this law is now on the books, applications are open, and some of your current students may leave your classroom because of it.

This guide lays out the facts — what the program is, how it works, who qualifies, and what the projected impact on public schools looks like — so you can plan accordingly. No spin. Just what you need to know.

What Is the TEFA Program?

The Texas Education Freedom Accounts program creates state-funded savings accounts that eligible families can use to pay for private school tuition, certain homeschool expenses, and related educational costs. The program was established by SB 2, which Governor Abbott signed into law in 2025.

In practical terms, the state deposits money into an account managed on behalf of each participating family. That money can then be spent on approved educational expenses outside the public school system.

A few key structural details:

The Texas Comptroller’s Office administers the program, not the Texas Education Agency (TEA). This is an important distinction. TEA oversees public schools. The Comptroller’s Office manages financial accounts. Questions about TEFA accounts, applications, and fund disbursement go through the Comptroller, not your district or TEA.
Funding comes from a dedicated $1 billion appropriation for the 2026-27 biennium. This is separate from the Foundation School Program funding that flows to public school districts.
Students who receive TEFA funds are no longer counted in public school Average Daily Attendance (ADA) if they fully withdraw from their public school. Since ADA is the primary driver of per-student funding to districts, each departing student reduces the revenue a district receives.

Who Qualifies?

The TEFA program is available to Texas students who meet certain eligibility requirements. The program covers three main categories of participants, each with different funding levels:

Private School Students

Students enrolled in or planning to enroll in an eligible private school in Texas can receive TEFA funds. For the 2026-27 school year, these accounts are funded at $10,474 per student. That figure represents approximately 85% of the statewide average per-student funding in Texas public schools.

The $10,474 is the base amount. It does not vary by family income — any eligible student attending an approved private school can receive this amount regardless of household earnings.

Students with Disabilities

Students who have an Individualized Education Program (IEP) on file with TEA may receive enhanced TEFA funding of up to $30,000 per year. This higher amount reflects the additional costs associated with specialized instruction, therapies, and accommodations that students with disabilities require.

This is the largest per-student amount in the program and significantly exceeds what many public school districts spend on special education services per student, though special education costs vary enormously depending on the nature and severity of a student’s disability.

One critical consideration for families: students who accept TEFA funds and leave public school may be leaving behind certain protections guaranteed under the Individuals with Disabilities Education Act (IDEA). Private schools receiving TEFA funds are not subject to the same federal special education requirements as public schools. Families should carefully research what services a private school can and cannot provide before making this decision.

Homeschool Students

Families who homeschool their children and do not enroll them in a private school can receive $2,000 per year through a TEFA account. These funds can be used for approved educational materials, curricula, and other qualifying expenses.

The $2,000 homeschool amount is considerably less than the private school amount, reflecting the legislature’s distinction between structured private school enrollment and home-based instruction.

Application Timeline: Key Dates for 2026-27

If you are a public school teacher, these dates matter because they determine when students may begin withdrawing from your campus:

Applications are currently open for the 2026-27 school year.
Application deadline: March 17, 2026 at 11:59 PM CT. This is a firm deadline. Families who miss it will need to wait for the next application window.
ESA rules finalized: May 2026. The Comptroller’s Office is expected to publish final administrative rules governing the program by this date.
Accounts become usable for the 2026-27 school year. Once approved, families can begin using funds for the upcoming fall semester.

From a classroom planning perspective, the March 17 application deadline means that by late spring 2026, districts should begin to have a clearer picture of how many students plan to leave for the 2026-27 year. However, applying does not guarantee a student will ultimately leave — some families may apply, receive approval, and still choose to remain in public school.

How Is This Funded?

The Texas Legislature appropriated $1 billion for the 2026-27 biennium to fund the TEFA program. This is not money redirected from existing public school funding formulas. It is a separate line item in the state budget.

That said, the funding picture for public schools is more nuanced than “separate money.” Here is why:

Every dollar the state spends on TEFA is a dollar that could have been appropriated elsewhere — including toward increasing the Basic Allotment, which has remained at $6,160 per student since 2019. Teachers and administrators who have been advocating for a Basic Allotment increase may view the $1 billion TEFA appropriation in that context.
Students who leave public schools take their ADA-based funding with them. When a student withdraws to use a TEFA account, the district no longer counts that student for state funding purposes. For large urban districts, losing a few hundred students may be absorbable. For small rural districts where every student represents a meaningful percentage of total enrollment, even modest departures can create budget pressure.
Fixed costs do not scale down proportionally. A school that loses 15 students still needs the same number of bus routes, the same building maintenance, the same administrative staff, and often the same number of teachers (you cannot eliminate half a teaching position). Per-student funding drops, but per-student costs often do not.

Projected Enrollment Impact

The Legislative Budget Board (LBB) published enrollment projections when SB 2 was under consideration. These numbers are estimates, not guarantees, but they represent the state’s best fiscal analysis of expected program participation:

Students Leaving Public Schools

Fiscal Year	Projected Students Leaving Public Schools
FY 2027	24,500
FY 2028	49,000 (estimated)
FY 2029	73,500 (estimated)
FY 2030	98,000

Homeschool Students Enrolling in Private Schools

The projections also estimate that a significant number of students currently homeschooled will use TEFA funds to transition into private school enrollment:

Fiscal Year	Projected Homeschool-to-Private Transfers
FY 2027	10,500
FY 2028	21,000 (estimated)
FY 2029	31,500 (estimated)
FY 2030	42,000

If these projections hold, by FY 2030 approximately 98,000 students will have left public schools through the program, and an additional 42,000 formerly homeschooled students will have enrolled in private schools.

To put 98,000 in context: Texas public schools currently enroll approximately 5.5 million students. A loss of 98,000 represents roughly 1.8% of total statewide enrollment. At the statewide level, that is a manageable number. But enrollment losses will not be evenly distributed. Some districts — particularly those near clusters of private schools or in suburban areas where new private schools may open to meet TEFA-driven demand — could see significantly higher percentage losses.

What This Means for Public School Teachers — Practically

Here is where the policy meets your daily reality.

Class Sizes and Staffing

If your campus loses students to the TEFA program, class sizes may decrease — which could be a welcome change in overcrowded classrooms. However, if enough students leave that your campus loses a teaching position, the remaining teachers may absorb additional duties, different grade assignments, or preps in combined classrooms.

Small campuses and small districts are most vulnerable here. A campus of 200 students that loses 10 to the TEFA program has lost 5% of its enrollment. That can mean the difference between funding three sections of a grade level and funding two.

Special Education Considerations

The $30,000 TEFA amount for students with disabilities may lead some families with students on IEPs to explore private school options. If students with more intensive (and more expensive) special education needs leave, it could reduce the overall cost burden on a district’s special education program. Conversely, districts could lose students whose special education funding actually exceeded the cost of services provided — meaning those students were net-positive for the special education budget.

The impact will vary significantly by district and by the specific students who choose to leave.

Campus Culture and Community

Schools are communities. When families leave, it affects more than budget lines. Classroom dynamics shift. Extracurricular programs may see participation changes. Parent volunteer pools and PTA involvement could fluctuate. These effects are difficult to quantify but real.

Your Job Security

For most Texas teachers, TEFA is unlikely to create an immediate job security concern. The projected numbers — 24,500 students statewide in FY 2027 — are spread across more than 1,200 school districts and over 8,000 campuses. The per-campus impact in year one will be minimal for the vast majority of schools.

However, teachers in specific situations should pay closer attention:

Teachers at small campuses or in small districts where even a handful of departures affects staffing formulas
Teachers in areas with a high concentration of private schools where families have ready alternatives
Teachers in districts already experiencing enrollment decline from demographic shifts, where TEFA departures compound an existing trend

No Change to Your Teaching Requirements

TEFA does not alter curriculum standards, STAAR testing, T-TESS evaluations, TIA designation requirements, or any other aspect of your professional responsibilities. Your classroom obligations remain exactly the same whether your district loses zero students or fifty to the program.

What to Watch Going Forward

The TEFA program is new, and several aspects remain uncertain. Here is what is worth monitoring over the coming months and years:

Application Numbers by District

Once the March 17 deadline passes, watch for reporting on application totals. Your district’s central office should be tracking how many students have applied. This data will give you the earliest signal of local impact.

Comptroller Rules (May 2026)

The final administrative rules, expected in May 2026, will clarify important operational details — approved expense categories, accountability requirements for participating private schools, account management procedures, and dispute resolution processes. These rules will shape how the program actually functions day-to-day.

Private School Capacity

The TEFA program creates demand for private school seats. In many parts of Texas — particularly rural areas — private school options are limited or nonexistent. Whether and how quickly new private schools open to meet TEFA-driven demand will significantly affect the program’s real-world enrollment impact. The projections above assume growing participation, but actual uptake depends on whether families have viable private alternatives within a reasonable distance.

Legislative Adjustments

The Texas Legislature meets again in 2027. Legislators will have roughly one year of TEFA data to evaluate. Depending on participation rates, costs, and public response, the program could be expanded, modified, or have its funding adjusted. The $1 billion appropriation covers the current biennium; future funding levels will depend on legislative action.

Impact on the Basic Allotment

Many Texas educators have been vocal about the need to increase the Basic Allotment, which has been frozen at $6,160 since 2019. Whether the TEFA appropriation affects the political appetite for a Basic Allotment increase — either by consuming available budget dollars or by creating political pressure for a “public school package” alongside school choice — remains an open question.

Talking to Parents About TEFA

Some of your students’ parents may ask you about the TEFA program. A few principles for these conversations:

Stick to facts. You can share what the program is and direct families to the Comptroller’s Office for application details. You do not need to offer an opinion on whether they should apply.
Be honest about what you do not know. The program is new. Administrative details are still being finalized. It is perfectly appropriate to say, “I’d recommend contacting the Comptroller’s Office directly for specifics on eligibility and the application process.”
For special education families, encourage thorough research. Families considering TEFA for a student with an IEP should understand what services the receiving private school can provide and what federal protections they may be giving up. This is not about discouraging them — it is about making sure they make an informed choice.
Do not pressure families in either direction. This is a family decision. Your role is to educate, support, and provide information — not to recruit retention or encourage departure.

The Bottom Line

The Texas Education Freedom Accounts program is happening. Applications are open now, with a March 17, 2026 deadline for the 2026-27 school year. The projected enrollment impact on public schools starts modest — around 24,500 students statewide in FY 2027 — and grows to approximately 98,000 by FY 2030.

For most Texas teachers, the immediate classroom impact will be small. For some — particularly those in small districts, near private school clusters, or in areas already experiencing enrollment decline — the effects could be more noticeable.

The best thing you can do right now is stay informed. Know the facts. Understand how your district is tracking potential enrollment changes. And continue doing what you do every day: providing an education so strong that families see their local public school as exactly where their child belongs.

This post covers the TEFA program as established by SB 2 during the 89th Texas Legislature. Administrative rules are still being finalized by the Comptroller’s Office as of February 2026. We will update this guide as new information becomes available.