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The Education Freedom Act (EFA): Updates & Overview

Updated: Jan 31



by Roundtable President Pat Sheehy | Updated Jan. 31, 2025


The Latest

On Jan. 30, Tennessee's House of Representatives and Senate each adopted an identical amendment to the proposed EFA, then passed the bill as amended.

  • Gov. Lee is expected to sign the bill into law shortly.

  • The House vote on final passage was 54-44, with one member present not voting.

  • The Senate vote on final passage was 20-13.


What It Is

The Education Freedom Act of 2025 (EFA) establishes a new statewide school choice program in Tennessee, and also makes additional new state investments in public education.

  • The EFA was one of the main subjects of the First Extraordinary Session of the 114th Tennessee General Assembly - a special legislative session announced on Jan. 15 by Governor Bill Lee and conducted Jan. 27-30, 2025.

  • In his official Proclamation of Jan. 17, Governor Lee called the General Assembly into the special session to consider the EFA, East Tennessee disaster relief, immigration-enforcement measures, and legislation to create a Tennessee Transportation Financing Authority.


What It Does

The EFA's central provision is a new, state-funded scholarship program that will provide annual grants to eligible students to pay tuition and other costs of attending a private K-12 school of their choice.

  • Initially, each scholarship would be $7,075, based on the state's current annual per-student base payment to public school districts under the Tennessee Investment in Student Achievement (TISA) funding formula. In subsequent years, EFA scholarship amounts will increase as TISA's base payment amount rises.

  • The new scholarships will be funded with state general fund revenues, and will be open to eligible students who are currently attending either a public or a private K-12 school.

  • In the EFA program's first year (the 2025-26 school year), a maximum of 20,000 scholarships could be granted.

    • Up to 10,000 of those initial grants are reserved for students who are eligible either for the existing ESA program or for the Individualized Education Account program, or whose annual household income is 300% or less of the amount required to qualify for free or reduced-price lunch.

    • A maximum of 10,000 additional scholarships can be awarded to any student who otherwise meets the EFA application requirements, regardless of income.

  • In each subsequent year, the total number of available EFA scholarships could be expanded by 5,000 - but only if the state receives applications totaling 75% or more of the total EFA scholarships made available in the previous program year.


The EFA also includes additional state investments in public education:

  • It includes a one-time, state-funded $2,000 bonus to be paid to each person who is a Tennessee K-12 public school teacher for 2024-25 school year.

  • It also creates a new School Building Improvement Fund to support K-12 public school construction and maintenance, funded by reallocating 80% of the state's online sports-betting tax revenues that are currently deposited each year into the state’s Lottery for Education college-scholarship account.


How We Got Here

  • In 2019, Tennessee enacted the Education Savings Account (ESA) school-choice program, available to eligible students in Davidson and Shelby Counties.

  • In 2023, ESA program eligibility was expanded to include students in Hamilton County.

  • In 2024, Governor Lee proposed to expand school choice grants statewide through a new Education Freedom Scholarship (EFS) plan.

    • The Tennessee Senate and the House of Representatives each passed separate versions of the EFS plan, both significantly different from Gov. Lee's original EFS proposal.

    • However, the 113th General Assembly did not enact the EFS plan before adjourning sine die on April 25, 2024, after lawmakers were unable to agree upon a final version of the legislation.


Key EFA Requirements

  • To get an EFA scholarship, eligible students/parents will be required to:

    • submit a completed application to the TN Dept. of Education;

    • ensure the student's education meets state compulsory school attendance requirements through enrollment in a private school; and

    • not enroll the student in a public K-12 school for the year in which they get an EFA award.

  • Eligible students receiving an EFA scholarship will be required to apply their award first toward paying for tuition and fees at a category I, II or III private school.

    • After tuition, leftover scholarship funds can be used to pay several other types of expenses - including transportation, tutoring, special education services, books and uniforms and other required materials, technology purchases for school use, qualified costs of summer and afterschool academic programs, and certain workforce-training and college entrance exam costs.

  • Each year, EFA recipients in grades 3-11 will be required to take either the state TCAP tests for math and English, or a national standardized achievement test.

    • Private schools will then have to report their EFA students' test data to their parents, and also to the Office of Research & Education Accountability (OREA), part of the office of the state Comptroller of the Treasury.

    • The OREA must then report on the test results each year to the General Assembly's House and Senate Education Committees.


Key EFA Limitations

  • EFA scholarship recipients can use their awards to pay for the costs of attending a category I, II or III private K-12 school, but not another public school.

  • Homeschooled students and current ESA pilot program participants are not eligible to receive EFA scholarships.

  • Students who cannot prove their lawful presence in the U.S. may also not be approved to receive an EFA award.

  • EFA scholarship recipients do not retain their right to receive special education services from the public school district in which they live. They do, however, have the same rights as all other students enrolled in non-public schools to receive equitable services through an individualized service plan, under the federal Individuals with Disabilities Education Act.


"Hold Harmless" Provision for Public School Funding

Under the EFA, public school districts which experience disenrollment are to be “held harmless.”

  • "Disenrollment" occurs when a public school district's student population drops from one year to the next, after students use EFA awards to depart the district to attend a private school.

  • The EFA calls for the state to give each affected public school district additional funding, to make up for that which they stand to lose resulting from a decline in their total student population = enough to bring their annual TISA allocation back up to its level the previous year.


EFA Cost Estimates

The Fiscal Note for HB6004/SB6001, produced by the General Assembly’s Fiscal Review Committee staff and updated on Jan. 28, appears to estimate the state's total first-year EFA costs - including changes in the Jan. 28 amendment - at just over $409 million.

  • About $347 million of that total will be new spending from the state's general fund, with another $62.7 million transferred out of the state Lottery for Education Fund and into the new public school district construction and maintenance fund.

  • For subsequent years, the fiscal note estimated the EFA's annual cost to the state at just under a net of $211 million per year.


In addition to the new state spending, the Fiscal Note estimated that Tennessee's local governments (which fund the share of their public school districts' budgets not covered by state dollars) may collectively need to spend $62 million under the EFA in its first year (FY25-26).

  • In subsequent fiscal years, local governments' total annual net spending increases were estimated in the Fiscal Note to decline to about $19.6 million for FY26-27, before edging slightly downward in subsequent fiscal years.


The cost estimates in the Fiscal Note on the EFA derive from numerous assumptions made by the professional staff of the General Assembly's Fiscal Review Committee.

  • Such estimates and assumptions are based on a host of information, including but not limited to the text of each proposed bill and its amendments, existing laws, past and current state budgets and appropriations, and available data about similar programs which have been adopted by other states.


Go deeper:

  • Bill page for HB6004 - includes tabs showing the Bill History, Amendments, Video, Summary, Fiscal Notes, and Votes.

  • Text of the bill (HB6004/SB6001), as introduced on Jan. 27.

    • As noted above, prior to final passage of the EFA bill on Jan. 30, the House and Senate each approved an identical amendment to it which adds and changes several non-critical provisions: HA6001.pdf

  • More details and summaries about the EFA are also available on the TN Education Freedom website, created by Governor Lee's office.

    • The Education Freedom site contains a host of factual information, plus additional information supporting passage of the proposed EFA.

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