Texas school districts are reporting funding losses ranging from hundreds of thousands to millions of dollars as the state's first-year private-school voucher program seeks to double its budget. Pflugerville ISD says it lost an estimated $1.2 million after 149 students who otherwise would have enrolled there instead accepted vouchers through Texas Education Freedom Accounts, and the district is now closing four elementary schools. Meanwhile, the Texas comptroller's office is asking state lawmakers for $2 billion in total funding to keep the program running.
TEFA is described as the state's $1 billion education savings account program, according to Community Impact, providing taxpayer dollars for private education and homeschooling. Texas House lawmakers passed the law creating the program in April 2025, and state lawmakers allocated $1 billion for its launch in the 2026-27 school year. Participating students are receiving $10,474 each for private education and related expenses, homeschool families can receive up to $2,000 per eligible child, and students with disabilities are eligible for up to $30,000 each.
State law requires the comptroller's office to give priority to students with disabilities and applicants from low-income families. About 248,000 applicants had been deemed eligible for the program as of Aug. 3, and roughly 70% of selected students had attended a private school in the 2024-25 school year, while 30% had previously been enrolled in a Texas public school.
How the Tiered Priority System Breaks Down
The program sorts applicants into four tiers. Tier 1, covering students with disabilities and household incomes at or below 500% of the federal poverty line, made up about 12% of applicants but 39% of awardees. Tier 2, for children with incomes at or below 200% of the federal poverty line, represented about 32% of applicants and 60% of awardees. Tier 3, for families earning between 200% and 500% of the poverty line, made up about 29% of applicants but had fewer than 30 participating students as of late July. Tier 4, for families earning above 500% of the poverty line, accounted for about 27% of applicants and had no accepted participants.
Texas public schools are funded through the Foundation School Program and other state sources, and districts receive fewer state dollars when students leave for any reason, including enrollment in TEFA. That funding mechanic sits at the center of the dispute now playing out in Austin, where a Senate Education Committee hearing on Wednesday focused on the first-year program's implementation, participant demographics, fraud safeguards and private-school experiences, per the same Community Impact report.
Comptroller Seeks to Double the Budget
The Texas comptroller's office has asked lawmakers to double TEFA funding to $2 billion for the 2027 legislative session, and officials said that amount is necessary just to keep the program's more than 116,000 current participants enrolled. The office has also requested more than $2 billion for the program's second and third years. Accepting the roughly 160,000 students on the waitlist or who have expressed interest in applying would cost at least $4 billion, officials said.
More than 106,000 students were on the program's waitlist as of September, with about 44,000 additional families expressing interest in applying for 2027-28. Travis Pillow said demand for education freedom is expected to increase, the report notes.
Districts Tally Their Losses
An analysis by the Texas Center for Voucher Transparency and Every Texan estimated that public schools could lose up to $294 million after students left to use TEFA funds. A separate report by Our Schools Our Democracy and Every Texan, cited by Houston Public Media, put the estimate at about $300 million in state funding lost this year, finding that more than 700 Texas districts reported at least one student leaving for the voucher program and that districts lose roughly $8,000 in state funding for every student who departs, according to TPR.
District-by-district estimates vary by source. Community Impact reports Dallas ISD on track to lose $6.6 million after about 2,640 students accepted TEFA funds, while Houston Public Media's report put the number of Dallas ISD students lost at 807. Fort Worth ISD is expected to lose $4.7 million with 1,760 students leaving the district for TEFA, and North East ISD in San Antonio faces a similar $4.7 million loss after more than 1,500 students accepted funds, per Community Impact. Garland ISD could lose $2.6 million after more than 1,000 students left, and Alief ISD in the Houston area could lose $1.7 million after nearly 500 students departed.
Austin ISD's projected loss also differs between reports: Community Impact estimated $2.5 million after about 1,000 students accepted TEFA funds, while Houston Public Media reported 301 students left Austin ISD for the voucher program. Houston ISD reportedly lost 1,207 students to the program, according to the same Houston Public Media account. Smaller districts are feeling the pinch too — Abilene ISD could lose $623,000, Granbury ISD $574,000, and Bastrop ISD $492,000, all with hundreds of students accepting TEFA funds, per Community Impact's reporting.
Pflugerville's Elementary School Closures
Pflugerville ISD parent Stacy Harrell said 149 students who otherwise would have enrolled in the district accepted vouchers, producing the estimated $1.2 million loss. The district is closing four elementary schools, and officials there also denied a $300 purchase of frogs for a seventh-grade dissection project, according to Community Impact's account of the district's budget strain. Thrall ISD reported 38 students received TEFA funding in early August but told Community Impact it has not confirmed the total number of students lost to the voucher program.
State Sen. José Menéndez said public school districts he represents lost about $26 million. Rep. Brad Buckley, for his part, said the TEFA opportunity would not hurt public schools, presenting a sharp contrast with the loss figures districts and advocacy groups have reported.
What Arizona's Longer Experience Suggests
Texas lawmakers weighing TEFA's expansion have an older model to study. Arizona has operated a universal Education Savings Account program since 2022, after beginning with a targeted program in 2011, according to Click2Houston. Arizona's Deer Valley Unified School District has experienced declining enrollment.
