The views expressed in this article represent the opinions of the author and do not necessarily reflect the opinions of the Chattanooga Area Chamber of Commerce, its staff, or its board of directors.
My husband and I are in the thick of it. With two toddlers and a baby on the way, we have spent the past several months touring classrooms, interviewing admissions directors, and comparing tuition against our family budget. Like thousands of families across Chattanooga, we are navigating a question that sounds simple but is anything but: where should we send our kids to school?
Chattanooga has options. Charter schools, magnet programs, private institutions, homeschool co-ops. But “options” and “access” are not the same thing. Magnet schools have waitlists. Charter lotteries are exactly that — lotteries, where only a lucky few get in.Private tuition requires financial sacrifice that not every family can make. And the default option — your zoned public school — may or may not align with what you believe is best for your child.
This is the problem that Tennessee Education Freedom Scholarships (EFS) are designed to address. And this spring, it was at the center of one of the most heated policy debates in Nashville. The legislature has now acted, and the result is a significant win for Tennessee families. The program is expanding, funding follows the child, and parents, not bureaucrats, decide how their children are educated. That is not defunding education. It is improving it by putting the people who know their children best in charge of the decision.
What Vouchers Actually Are
The EFS program, as the state’s own website describes it, allows K-12 students to use “state funds” toward tuition and fees at registered non-public schools. But that framing reveals precisely the misunderstanding at the heart of the debate. Critics, and even the program’s own description, frame vouchers as the government directing “state funds” to private schools. This gets the economics exactly backwards.
The government has no money. Every dollar in the state budget originated in the pocket of a Tennessee taxpayer. When a family receives a voucher, the state is not giving them a gift. It is returning a portion of their own tax dollars. And for lower-income families, it redistributes resources so that wealth is not the deciding factor in whether a child receives a quality education. Either way, the result is the same: parents, not bureaucrats, direct the money toward the school they believe best serves their child.
Milton Friedman made this argument in 1955, proposing that governments should finance education through vouchers rather than operate schools directly. As he put it, the purpose is “to enable parents to have free choice, and the purpose of having free choice is to provide competition.” The insight was elegant: separate the funding of education from the delivery of education. Taxpayers fund education. Parents choose the provider.
This distinction matters enormously. Under the current system, public schools receive funding based on enrollment — money follows the institution. Vouchers flip this. Money follows the child. The family, not the government, decides where education dollars are spent.
Who Really Benefits
One of the more persistent criticisms is that vouchers are a subsidy for wealthy families who would send their children to private school regardless. The data tell a different story.
Wealthy families already have school choice. They exercise it every day. They choose by purchasing homes in desirable school districts where demand for better schools drives up property values, making the neighborhood itself a price of admission that only some can afford.They choose by paying private tuition outright, effectively paying twice: once in taxes for a public system they do not use, and again for the education they actually want. Affluent families have options. The question is whether everyone else does.
A single mother in East Chattanooga who works two jobs is priced out of the neighborhoods with higher-rated schools. She cannot afford to pay tuition on top of the taxes she already contributes to a public system. Under the traditional system, her child attends the zoned school, period. The voucher gives her what the current system does not: the ability to choose.
Education Freedom Scholarships currently provide up to $7,295 per student for the 2025-26 school year, well below the nearly $16,000 total per-pupil spending in TN when state, local, and federal funds are combined. The program launched with 20,000 available slots, and demand has surged, with over 56,000 applications in the second year, up from 43,000. The legislature just passed an expansion to 35,000 slots for the 2026-27 school year, with the scholarship value rising to more than $7,500. The expansion barely cleared both chambers — 52-43 in the House and 18-14 in the Senate — but the demand numbers tell a different story than the vote margins. Families want this.
Here in Hamilton County, more than 600 students are using EFS vouchers while thousands more sit on a waitlist. That waitlist is not an accident. It is a signal. Parents want more control over their children’s education, and when given the option, they are choosing it in overwhelming numbers.
Beyond Test Scores
A January 2026 audit by Tennessee Comptroller Jason Mumpower’s office found that students using Education Freedom Scholarships, on average, performed below their public school peers on state standardized tests. Critics seized on this as proof that the program is failing.
But this conclusion requires a remarkably narrow definition of what education is supposed to accomplish.
Parents do not optimize solely for test scores, and economists would not expect them to. Families choose schools for a constellation of reasons: religious instruction, classroom discipline, school safety, smaller class sizes, specialized academic programs, athletics, a particular approach to character formation. A parent who moves her child from a school where he is being bullied to one where he thrives socially and emotionally has made a rational choice, even if his TCAP scores are flat.
The research bears this out. A sweeping review published in the Journal of Economic Literature found that voucher programs are “neither the rousing success imagined by proponents nor the abject failure predicted by opponents” when measured by test scores alone. But test scores are not the only measure that matters, or even the most important one.
Five of six major studies on voucher programs find gains in high school graduation rates, ranging from four to twenty-one percentage points. Research on Milwaukee’s Parental Choice Program, the nation’s oldest voucher program serving over 28,000 low-income students, found that voucher recipients had lower rates of criminal activity and fewer unplanned pregnancies in young adulthood. A study of Washington, D.C.’s program found that voucher participation reduced chronic absenteeism by over five percentage points. Students in that program also rated their schools as safer.
A 2021 meta-analysis concluded that voucher programs may be cost-effective even when test scores show no improvement, meaning the non-academic benefits alone can justify the investment.
Reducing a child’s education to a standardized test score is like evaluating a restaurant solely by its calorie count. It captures something, but it misses almost everything that matters.
The Competition Problem Tennessee Is Creating
Here is where Tennessee’s approach gets interesting, and from an economic standpoint, still insufficient.
One of the strongest arguments for school choice is that it introduces competition into a system that has operated as a near-monopoly. When families can exit, public schools face pressure to improve. The research is remarkably consistent: twenty-six of twenty-nine studies examining the competitive effects of school choice programs found that nearby public schools improved when faced with the possibility of losing students.
Competition works. But it only works if schools feel it.
The original EFS law included a “hold harmless” provision that guaranteed public school districts the same state funding allocation even when students left for private schools on vouchers. The expansion bill improves on this but does not fix it. Under the new law, districts must document which students specifically left for the EFS program to receive hold harmless funding, and the provision is limited to the 2026 and 2027 school years. Beginning in 2028, districts will still receive supplemental funding for students who depart for EFS, but not for students who withdraw for other reasons.
This is a step in the right direction. Tightening eligibility and adding a timeline signals that legislators recognize the provision cannot last forever. But the fundamental problem remains: a public school that loses a student to a voucher still keeps the money. The competitive signal is muffled. A family votes with her feet, and the school that lost her child faces no financial consequence.
The political logic is understandable. Legislators on both sides face enormous pressure from school districts whose primary concern is protecting their budgets, not improving outcomes. But the economic logic cuts the other way. If a public school loses students but keeps the money, where is the incentive to improve? The hold harmless provision, even in its revised form, insulates public schools from the competitive pressure that makes choice programs work in the first place.
It is akin to telling a business that its customers are free to shop elsewhere, but its revenue will remain the same regardless. No economist would predict that such a business would innovate or improve its product. Worse, it costs taxpayers more. The state pays for the voucher and continues paying the district as if the student never left. School choice has the potential to improve parental control, raise educational quality across the board, and save the state money. But not if we pay twice for every student who exercises that choice.
It Is About Choice
At its core, the debate over vouchers is not really about test scores, funding formulas, or even education policy. It is about a more fundamental question: who decides?
Under the current system, that decision is made largely by geography and income. If you can afford the right zip code, you choose. If you cannot, the system chooses for you. Vouchers do not guarantee that every family will make the perfect choice. They guarantee that families get to make the choice at all.
As Thomas Sowell has observed, few things are more dangerous than putting decisions in the hands of people who pay no price for being wrong. Public education has operated as a government monopoly, shielded from the feedback mechanisms that improve every other sector of the economy. Vouchers introduce those feedback mechanisms.
My husband and I will figure out where to send our kids. We have the resources and the information to weigh our options carefully. Not every family does. That should not be the determining factor in whether a child receives a quality education. Every Tennessee family deserves the ability to choose. Vouchers get the government out of the way so that parents regain control over the decision that matters most: their children’s future.
Dr. Claudia Williamson Kramer is the Scott L. Probasco, Jr., Distinguished Chair of Free Enterprise, Professor of Economics, and Executive Director of the Center for Economic Education at UTC.
