When Annual Income Isn’t Really Annual: A Question Worth Asking About Texas Education Freedom Accounts

Estimated Time to Read: 6 minutes

When Texas created the Texas Education Freedom Account (TEFA) program, its purpose was to expand educational opportunities for families by prioritizing assistance based on financial need. Like many Texans, I supported the idea that limited funding should be directed to the families who need it most.

But after my daughter went through the application and appeal process for my granddaughters, I was left with a question I believe deserves public discussion: how does the TEFA program determine a family’s true financial need?

For many families, the annual income reported on a federal tax return is a reasonable way to measure financial resources. But what happens when that tax return includes a one-time financial event that does not reflect the family’s ongoing ability to pay for education?

My family’s experience illustrates the concern. My mother, my daughter, and my two granddaughters all live in the same household. Because my mother claims the girls as dependents on her tax return, her income is the household income the program evaluated. She is retired and lives on a fixed income of about $52,000 a year. In 2025, she made the difficult decision to withdraw money from her retirement account to help meet significant family obligations, including private school tuition, a replacement vehicle, and a needed car repair. Federal law correctly required that withdrawal to be reported as taxable income, raising her Adjusted Gross Income for that tax year from $52,000 to $130,000.

Here is the important point. The withdrawal did not increase her ongoing income. It emptied a retirement account she had built over many years, and it will cost her roughly $675 a month in dividend income going forward. The one event that made her look wealthier on paper actually left the household poorer month to month. Yet on the tax return the program relied on, it registered simply as a jump in income.

Despite explaining this during the TEFA appeal process, our family’s priority classification remained unchanged under the program’s standardized methodology, because that methodology considered only the reported figure and not the circumstances behind it.

This experience raises a broader policy question that extends well beyond our family. If two households report the same Adjusted Gross Income, but one family’s figure includes a one-time retirement withdrawal while the other’s consists entirely of recurring wages, should the program automatically treat them as having the same ongoing financial resources?

The same question applies to families who sell a home after decades of ownership, receive a one-time insurance settlement, cash out retirement savings to pay medical bills, or experience another extraordinary financial event. Should a single, non-recurring event define a family’s financial need for educational assistance?

These are not easy questions, and I recognize the challenge of administering a statewide program fairly and consistently. Standardized rules matter. But good public policy also requires us to ask whether those rules produce the outcomes the Legislature intended.

My purpose in raising this is not to seek special treatment or to criticize the people who administer the program. Throughout our experience, the program followed the methodology that currently exists. Instead, I hope this discussion encourages policymakers to examine whether that methodology accurately reflects a family’s ongoing financial circumstances when an extraordinary one-time event significantly affects reported income.

Programs like TEFA were created to help Texas children access educational opportunities. Ensuring that families are evaluated based on their true financial circumstances strengthens public confidence in the program and helps fulfill its intended purpose.

I hope legislators, policymakers, and program administrators will consider this question and determine whether additional clarification or future policy improvements are warranted.

Sometimes improving public policy begins with asking the right question. Perhaps this is one worth asking.

About the Author. The author is a Texas grandparent and citizen advocate who writes on education policy, financial equity, and administrative fairness. Drawing on her family's experience with the Texas Education Freedom Account program, she raises questions intended to strengthen how the state serves families. Her name has been withheld at her request.

Disclosure. The author writes from her family's direct experience with the Texas Education Freedom Account program. This piece discusses Senate Bill 2, 89th Legislature (2025). Texas Policy Research published its own analysis of that legislation, which can be read here. The author reports no financial interest in the legislation discussed and is not a registered lobbyist. Guest contributors write independently of our positions; we neither require agreement nor decline submissions on the basis of disagreement.