Texas Releases First Education Freedom Accounts Report

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On August 3, Texas's newly appointed Comptroller Don Huffines (R) released the first Annual Demographic Report for the Texas Education Freedom Accounts (TEFA) program, fulfilling a reporting requirement established by Senate Bill 2 (SB 2) during the 89th Legislative Session (2025). While previous announcements primarily focused on application totals and funding awards, this report provides the first comprehensive look at who is actually participating in the state's new school choice program.

The report confirms several trends Texas Policy Research (TPR) has highlighted throughout the implementation of TEFA. Demand for educational choice continues to far exceed available funding, the Legislature's statutory priority system has largely operated as intended, and participation extends across nearly every corner of Texas.

At the same time, the report reinforces broader policy questions that remain unresolved. While TPR supports expanding educational freedom and applauds the progress represented by TEFA, we continue to believe Texas should pursue a truly universal school choice model that allows funding to follow students rather than preserving many of the structural incentives within the existing public education monopoly.

The TEFA Report Provides the First Demographic Snapshot

Unlike previous announcements centered on application numbers or award totals, the Annual Demographic Report focuses on the students and families participating in the program.

The report reflects participation as of July 29, 2026, noting that awards and account funding remain ongoing. As additional families accept awards and complete enrollment requirements ahead of the upcoming 2026-27 school year, participation totals will continue to change before lawmakers convene for the 90th Legislative Session, which begins in January 2027.

Even so, the report provides the clearest picture yet of how the first year of Texas's school choice program has unfolded.

Demand Still Exceeds Funding

Although the report's primary purpose is demographic, it also includes updated participation figures.

According to the Comptroller's Office, approximately 274,000 applications were submitted during the program's inaugural year. More than 248,000 students were determined eligible, and more than 122,000 awards have been issued. As of July 29, however, 85,344 student accounts had been funded, while more than 121,000 eligible students remained on the waiting list.

Those numbers reinforce a consistent theme throughout the first year of implementation. Texas families continue to seek educational alternatives in numbers that substantially exceed the Legislature's initial appropriation of $1 billion for the program.

Texas Policy Research has previously examined the growing waitlist, subsequent funding rounds, and the structural funding limitations affecting the program as implementation has progressed.

The report also explains why the number of awards exceeds the number of funded participants. Parents must accept their award, complete required enrollment steps, and satisfy additional program requirements before an account is funded. As those confirmations continue, participation will continue to grow.

The Legislature's Priority System Largely Worked as Intended

Perhaps the report's most significant finding is that the program's statutory priority structure largely functioned as lawmakers designed it in SB 2.

Nearly one quarter of participating students have a qualifying disability, while approximately 80 percent come from households earning less than 200 percent of the federal poverty level. According to the 2026 federal poverty guidelines published by the U.S. Department of Health and Human Services, that equates to an annual household income of $66,000 or less for a family of four. These figures indicate that the program's first year primarily served lower income and working class families, consistent with the priority structure established by the Legislature.

The priority tier data further illustrates this point. More than 20,700 Tier 1 students with disabilities have funded accounts, along with approximately 12,800 eligible siblings. Another 51,800 funded students come from Tier 2 households earning no more than 200 percent of the federal poverty level. Fewer than 30 Tier 3 students had received funding when the report was prepared, while virtually no Tier 4 applicants had received awards outside the statutory sibling provisions.

During debate over SB 2, critics frequently argued that Education Freedom Accounts would primarily benefit higher income families. The first year of participation presents a different picture. At least during the initial implementation under the Legislature's funding priorities, the overwhelming majority of participating students come from lower income households and families with children who have disabilities.

Whether one agrees with those priorities or would prefer a different approach, the demographic report demonstrates that the program largely operated according to the framework established in state law.

TEFA Reach Families Across Texas

The report also demonstrates that participation is not isolated to one region of the state.

Parents from 895 Texas school districts currently have students participating in Education Freedom Accounts. Houston ISD leads the state with 3,327 participating students, followed by Dallas ISD, Northside ISD in San Antonio, Fort Bend ISD, and Fort Worth ISD. Participation is represented across all twenty Education Service Center (ESC) regions.

That geographic diversity reinforces that demand for educational choice is a statewide phenomenon affecting urban, suburban, and rural communities alike.

The Report Answers Some Questions but Leaves Others Unresolved

While the report provides valuable demographic information, it is important to understand what it was intended to measure.

The report does not evaluate student achievement, parent satisfaction, long term educational outcomes, or fiscal effects on public school districts. Nor does it determine whether participating families remain in the program over multiple years. Instead, it establishes an important baseline for future legislative oversight by documenting who received funding during the program's first year. As additional annual reports are released, lawmakers and the public will have a clearer understanding of how participation evolves over time.

Our Perspective

For Texas Policy Research, the report confirms much of what we have observed throughout the implementation of Education Freedom Accounts.

We support expanding educational freedom because parents, not government institutions, should be empowered to choose the educational environment that best serves their children. The creation of Education Freedom Accounts represents an important step toward increasing those opportunities for Texas families.

At the same time, our concerns expressed during consideration of Senate Bill 2 remain. During legislative consideration, TPR supported expanding educational freedom while recommending amendments to move the legislation toward a more universal model.

As reflected in the Texas Liberty Compact, TPR supports truly universal school choice, where funding follows students without arbitrary caps or unnecessary structural barriers. We believe lasting education reform should introduce genuine competition into the education system rather than simply creating a limited program alongside an expanding monopoly.

The Legislature ultimately chose a different approach. Rather than fundamentally restructuring how education funding follows students, lawmakers created a capped Education Freedom Accounts program while simultaneously increasing funding for the traditional public education system, given the colloquial name of the 'Texas Two-Step". Public school districts continue to receive hold harmless funding and additional appropriations even as school choice expands, limiting the competitive incentives that broader structural reform could produce.

As outlined in the Texas Liberty Compact, meaningful school choice reform should change the incentives within public education so funding follows students rather than preserving institutional funding structures.

The first Annual Demographic Report does not change that analysis. Instead, it reinforces it.

The report demonstrates there is substantial demand for educational choice across Texas. It also demonstrates that the current program cannot accommodate that demand because participation is constrained by legislative funding decisions rather than a lack of family interest.

The Future of School Choice in Texas

The release of the first Texas Education Freedom Accounts Annual Demographic Report marks an important milestone.

For the first time, policymakers have detailed implementation data showing who is participating, how the Legislature's priority system functioned in practice, and how demand compares with available funding. Those findings will likely shape discussions during the 90th Texas Legislature as lawmakers consider future appropriations, eligibility priorities, and potential reforms to Texas's school choice program.

For Texas Policy Research, our position remains consistent. We support expanding educational freedom because parents deserve meaningful choices in how their children are educated. We also believe Texas should continue pursuing structural reforms that allow education funding to follow students, reduce unnecessary barriers to participation, and create a truly universal school choice system that fosters lasting competition rather than preserving the status quo.

The first year of Education Freedom Accounts represents meaningful progress. The challenge before the Legislature is determining whether Texas will build upon that foundation with broader reforms or continue operating within a capped system that leaves more than one hundred thousand eligible students waiting for access.

Texas Policy Research believes that future reforms should continue moving Texas toward a truly universal school choice system that empowers families while introducing meaningful competition into public education.

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