Texas voucher funding could reach $4.4B as lawmakers await audits

Texas’ new private-school voucher program could more than double in cost during the next state budget cycle, and the price could climb higher as another round of families applies. 

Travis Pillow, assistant program director for the Texas Education Freedom Accounts (TEFA) program, presented its budget proposal Wednesday morning during a Legislative Budget Board hearing focused on TEFA. 

The Comptroller’s Office is requesting approximately $2.3 billion to continue the program for another two years. It estimates that funding eligible siblings of current participants and children on the existing waitlist would raise the total cost to approximately $4.4 billion. 

More than 109,000 children are participating in the program’s first year, while 106,127 eligible applicants remain on the official waitlist, according to the Comptroller. 

Senate Bill 2, the law that created TEFA, requires the Comptroller to estimate the cost of funding current participants, children on the official waitlist as of Jan. 1 and children who become eligible for the first time during the biennium and are siblings of current participants. 

The law requires the agency to provide that estimate but leaves it to lawmakers to decide how much to appropriate. 

The $2.3 billion request includes approximately $2.1 billion in base funding to maintain current participation and $226 million in exceptional items to cover projected cost increases. Funding the existing waitlist and eligible siblings of current participants would cost another $2.1 billion. The Comptroller identified that cost but did not recommend that lawmakers include it in the appropriation. 

Even the potential $4.4 billion total would not account for all future demand. Parents of nearly 44,000 students have joined a separate list to receive information about the next application period. Those students have not applied or been determined eligible and are not included in the current waitlist estimate. 

The number used for the required waitlist calculation also could change. Senate Bill 2 directs the Comptroller to use the official waitlist as it exists on Jan. 1 before the new biennium. Children who apply and join the list before then could increase the estimate. 

The Comptroller reported 118,441 awarded students as of Aug. 10, but that figure included participating students and students whose awards had not been claimed. Public data does not show how much of the initial $1 billion has been spent, how much remains in individual accounts or how many families have returned or abandoned awards. 

Critics urged lawmakers not to expand TEFA before they know how much of the first appropriation has been spent and whether participating students are benefiting academically. They also questioned whether the program is expanding access when 70 percent of students included in the Comptroller’s prior-enrollment analysis previously attended private school or were homeschooled. 

The prior-enrollment calculation excludes prekindergarten and kindergarten students and relies on parents’ self-reports about where their children attended school during 2024–25. 

Audits of established programs in other states show that requirements written into law do not always prevent problems or fraud when participation expands faster than state tracking systems. 

A November 2025 Florida Auditor General report found that rapid scholarship growth overwhelmed systems intended to prevent students from receiving voucher funding while also generating public-school funding. Auditors examined 22,700 potential enrollment matches and found delays in determining students’ eligibility, inconsistent recovery of funds owed to the state, and $18.4 million in returned student balances that went undeposited for months.  

Florida underestimated scholarship costs and was slow to reconcile students appearing in both its scholarship and public-school systems. Because the programs shared the same education-funding system, the resulting shortfall led the state to reduce its final payment to public school districts by $47 million. 

Arizona’s Auditor General identified a different oversight weakness in an audit covering fiscal 2024. Auditors concluded that the state’s Empowerment Scholarship Account program lacked a comprehensive risk-based audit process and did not always review transactions that might indicate improper spending or fraud promptly. 

Texas has adopted safeguards that may prevent some of those problems. TEFA has a separate appropriation rather than drawing directly from the state’s Foundation School Program. Accounts are subject to available funding, so excess demand creates a waitlist rather than automatically exceeding the appropriation. 

The $1 billion ceiling enacted in Senate Bill 2, however, applies only to the biennium ending Aug. 31. It then expires, allowing lawmakers to establish a new appropriation. 

Texas also uses a closed payment system. Parents cannot withdraw cash or receive reimbursements. Payments must go through the TEFA marketplace to approved schools, providers and vendors. That eliminated unclaimed balances.  

Senate Bill 2 directly addresses duplicate enrollment by requiring the program administrator to check with the Texas Education Agency twice each school year. By Oct. 1 and Feb. 1, the administrator must verify that each TEFA participant is not enrolled in a public school and counted for state attendance funding. The Comptroller’s Office described the process as an enrollment check conducted once a semester. 

The law also requires the Comptroller to hire a private entity to audit accounts, eligibility data and program administrators’ transaction controls at least annually. The State Auditor must examine each administrator’s eligibility and payment-verification work and randomly select 10 percent of applications for eligibility reviews. The State Auditor may examine individual transactions. 

The Comptroller also can suspend accounts, recover improperly used money, remove providers and refer suspected fraud to prosecutors. 

But the first-year program has yet to complete an annual audit cycle. Lawmakers will consider its next appropriation before any required audits show how well those enacted safeguards work in practice. 

Texas also permits unused TEFA money to roll forward as long as a child remains eligible and intends to continue participating. The rules do not establish a cumulative account limit. Without expenditure and balance information, lawmakers cannot determine how much of the initial appropriation is supporting current expenses and how much is being carried forward. 

Texas law establishes who must conduct audits and what they may examine. It does not yet demonstrate how quickly suspicious transactions will be detected, how extensively payments will be tested or whether the Comptroller has enough independent information to supervise Odyssey, the private organization operating the marketplace and handling much of the eligibility and payment process. 

Audits in the Texas law also are limited to financial aspects of the program. They can determine whether a student was eligible, a provider was approved and an expense was allowed. They do not necessarily show whether a service improved a student’s education or whether the program created a new educational opportunity. 

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