According to the Legislative Budget Board (LBB), the fiscal implications of SB 2 are substantial and long-term. The bill authorizes the creation of an Education Savings Account (ESA) program with an initial cap of $1 billion in state spending for the 2026–2027 biennium. This figure includes administrative costs and represents a new draw on General Revenue. Although the program does not appropriate funds directly, it provides a statutory framework that could lead to significant future appropriations, depending on legislative decisions in subsequent biennia.

Beyond the first biennium, the program’s cost is projected to escalate significantly. Assuming the Legislature fully funds the demand estimated in the fiscal note, the cost of the ESA program could grow to approximately $3.3 billion in the fiscal year 2028, $3.7 billion in 2029, and nearly $4.8 billion in 2030. These estimates are based on projected participation rates and the assumed ESA award amounts, which average around $11,693 per student in 2027, increasing to $12,282 by 2030.

While the program may produce some savings through reduced Foundation School Program (FSP) costs as students leave public schools, those savings are not expected to offset total expenditures. The fiscal note estimates potential savings of $257.5 million in 2028, rising to $805.5 million by 2030, but these are dependent on how many students leave public schools and how quickly private school capacity can expand. Administrative costs are also expected to be ongoing, with the Comptroller requiring 38 new full-time staff and the Texas Education Agency adding eight positions. Both agencies anticipate recurring technology and operational costs tied to implementation and oversight.

Overall, the ESA program, as outlined in SB 2, is expected to have a sizable and growing fiscal impact, with net costs projected to be in the billions annually after the first biennium. The actual burden on the state will depend on legislative appropriations, student participation rates, and how the program interacts with existing education funding formulas.

As originally filed and debated in the Texas Senate, SB 2 represented a significant step forward in advancing school choice policy in the state. It proposed the creation of an Education Savings Account (ESA) program that would allow eligible families to receive public funds to spend on approved education-related expenses outside the traditional public school system. At the time of Senate consideration, we supported the bill with a "Yes; Amend" recommendation, recognizing the potential of the bill to expand educational freedom while identifying areas for improvement—such as funding stability, regulatory safeguards, and broader access.

However, as the bill advanced through the legislative process and underwent revisions in the Texas House, a series of stakeholder conversations, legislative analyses, and fiscal projections raised increasing concerns about the bill’s structure and direction. These discussions, which included perspectives from homeschooling advocates, education reformers, and fiscal watchdogs, have collectively reshaped our view of the legislation and its long-term implications.

One of the central concerns is that SB 2 no longer represents a genuinely universal or competitive school choice framework. While it offers universal eligibility in theory, the $1 billion cap on appropriations means that only a small percentage of Texas students—perhaps 75,000 to 100,000 out of over 6 million school-aged children—will be served. This fundamentally restricts access and creates a lottery-based system that leaves most families behind, particularly those in underperforming schools who could benefit most from alternatives.

In addition, the bill’s funding structure does not redirect dollars from public schools to families who opt out of the system. Instead, it creates a parallel, state-run program that adds to overall education spending without placing any competitive financial pressure on the traditional public school system. In effect, this means that public schools retain their full funding even when students leave, limiting the potential for school choice to act as a true market-based reform that drives systemic improvement.

Further concerns have emerged over the administrative and regulatory design of the ESA program. The reliance on preapproved vendors, state-accredited service providers, and Comptroller oversight introduces a level of bureaucracy that could limit educational innovation and autonomy—particularly for homeschoolers and micro-school families. Using taxpayer funds instead of a tax credit model also invites future regulatory expansion, politicization, and litigation, especially as debates over curriculum and accountability intensify.

Taken together, these issues suggest that SB 2 in its current form risks entrenching a state-managed school choice pilot that does not scale, does not shift power meaningfully to families, and does not introduce fiscal competition to the public education monopoly. While the bill may offer benefits to the relatively small number of students who secure a spot in the program, it falls short of the transformative reform that many school choice advocates have worked toward for decades.

As a result, we have updated our position from "Yes; Amend" to a "No; Amend" recommendation. This reflects our continued support for the goal of school choice, but a clear conclusion that SB 2 must be fundamentally improved—particularly by removing the funding cap, redirecting dollars to follow students, and reducing bureaucratic control—before it can be embraced as a meaningful solution to Texas’s educational challenges. Without such changes, the bill risks becoming a symbolic gesture rather than a systemic shift.

We recognize that some may argue that our opposition risks allowing the “perfect to become the enemy of the good”—that rejecting SB 2, even with its flaws, could stall or derail momentum for school choice in Texas. This is a fair concern, especially given how long it has taken to move any form of ESA legislation through the Texas House. However, we believe that settling for a heavily restricted, state-managed pilot program may actually entrench a weak version of school choice, making it more difficult to enact meaningful reforms in the future. Codifying a limited-access model with capped funding and entrenched bureaucratic controls risks becoming the ceiling, not the floor, of what school choice can be in Texas. Rather than opening the door to broad-based educational freedom, this bill could normalize a version of choice that is small in scale, heavy in oversight, and politically vulnerable to rollback or distortion.

We do not oppose compromise or incrementalism when it builds toward a principled, functional goal. But in this case, the current framework of SB 2 may not be a stepping stone—it may be a cul-de-sac, channeling the energy of school choice into a tightly confined, government-dependent system that does little to pressure public schools to improve or empower parents with real control. True competition requires that dollars follow students and that parents—not state agencies—are trusted to determine how their children are educated. Until those principles are reflected more clearly in the legislation, we must respectfully stand in opposition and advocate for amendments that would bring SB 2 in line with the bold reform Texas families deserve.

• Individual Liberty: The bill attempts to empower parents by giving them more direct control over their child's education. For families in underperforming or misaligned public schools, the ESA program opens the door to private, faith-based, or alternative education options that better reflect their values and needs. In practice, the liberty-enhancing effect is diminished by the bill's funding cap, which restricts access to only about 1.5% of Texas students. Moreover, state oversight—via the Comptroller’s preapproval of vendors, curriculum providers, and tutors—means that parents can only exercise liberty within the boundaries of government-sanctioned choices. That’s not educational freedom; it’s a permission slip.

• Personal Responsibility: The bill entrusts parents with the responsibility of managing their child’s ESA funds and making education-related decisions. It requires them to keep records, select services, and ensure compliance with allowable expenses, reinforcing the value of direct parental involvement. The administrative complexity and preapproval process may limit flexibility, especially for homeschool families and unconventional education providers. By filtering all transactions through government-approved channels, it subtly replaces the parent’s judgment with state gatekeeping, undermining the very premise of personal agency.

• Free Enterprise: The bill introduces market-based mechanisms into the education system by allowing funds to be spent outside the public school system. This could, in theory, stimulate innovation among private schools, tutors, and vendors who seek to attract ESA funds. However, by requiring preapproval and compliance with government-determined standards, the bill effectively limits the free market to a narrow, regulated sphere. New or nontraditional providers may struggle to gain approval, especially if they do not meet licensing or accreditation criteria. In this way, the bill constrains educational entrepreneurship and shields public schools from real competition.

• Private Property Rights: The bill does not directly infringe on private property rights. However, to the extent that private educational providers must conform to government-defined rules to receive ESA funds, there may be indirect pressure on institutions to change their admissions, curriculum, or staffing policies to comply with evolving state standards. This could create future risks for institutional autonomy and the integrity of privately held educational philosophies.

• Limited Government: This is where the bill most clearly conflicts with liberty principles. Rather than reducing the role of government in education, the bill creates a new, expansive, state-run program with ongoing administrative costs, regulatory layers, and discretionary power vested in the Comptroller. While framed as a choice initiative, it adds to the state's education bureaucracy and spending obligations, rather than shrinking them. Further, because the ESA is funded through general revenue and not tax credits, it introduces a dependency on biennial legislative appropriations and opens the door to future expansions of regulatory scope under the guise of “accountability.” It creates a new arm of government management over private education, tethering choice to politics.

How School Choice Programs Can Save Texas Billions: A Fiscal Analysis

Texans Embrace School Choice: Strong Support for ESAs and Vouchers

School Vouchers vs. Education Savings Accounts: Key Differences Explained

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