TEFA School Voucher Final Rules: What Public and Charter Schools Participating as Vendors Need to Know

Part 6 of the TEFA School Voucher Stakeholder Series

Public and charter schools now have a major opportunity to recoup lost revenue and serve more students by participating in the TEFA school voucher program as approved vendors. From individual elective courses to CTE programs, labs, assessments, and specialized services, schools can expand their reach while meeting community needs.

The Texas Education Freedom Account (TEFA) program allows public schools and open-enrollment charter schools to participate as vendors of educational products or services, but only under specific conditions that protect the integrity of public school funding. The final rules provide important clarifications about your classification, approval process, and the critical boundary around Average Daily Attendance (ADA).

Here's what public and charter school administrators need to know.

Critical Classification: You're a Vendor, Not an Education Service Provider

The most important distinction in the final rules is how public and charter schools are classified within the TEFA program.

Public schools and open-enrollment charter schools are classified as "Vendors of educational products or services," not as "Education service providers."

Why This Matters

This classification reflects the fundamental structure of the program:

• Education service providers (private schools, PreK/K programs) receive full per-pupil funding for enrolled students

• Vendors (including public/charter schools) provide specific services or courses, not full-time enrollment

This distinction ensures that TEFA participants cannot simultaneously:

• Receive TEFA funding based on private school enrollment

• Generate ADA-based funding for public schools

The classification protects the separation between the two funding streams.

The ADA Boundary: The Most Critical Rule

The entire framework for public and charter school participation rests on one fundamental principle:

Services offered to TEFA participants must NOT count toward the school's Average Daily Attendance (ADA) for Foundation School Program (FSP) funding.

What This Means

A TEFA participating child:

• Cannot be enrolled in your school in a manner that generates ADA

• Cannot attend in a way that counts for attendance purposes

• Cannot be counted for state funding formula purposes

In other words: You cannot receive both TEFA payment for services AND state funding based on the child's attendance.

The Eligibility Timing Clarification

The final rules clarified that the eligibility requirement (that the child is not enrolled in a public or charter school in a manner counting toward ADA) applies "during program participation."

This means:

• The restriction applies throughout the child's active participation in TEFA

• A child previously enrolled in public school can join TEFA (they're not permanently excluded)

• A TEFA participant who withdraws from the program could later enroll in public school

• The key is that the two cannot occur simultaneously

What Services Can You Offer?

Given the ADA restriction, what can public and charter schools actually provide to TEFA participants?

Approved Educational Services

You can offer individual classes or services that:

• Do not qualify the child to be counted toward your ADA

• Are provided on a course-by-course or service-by-service basis

• Are paid for through the TEFA payment system (not through FSP funding)

Examples might include:

• Individual elective courses (art, music, physical education)

• Specialized classes (advanced sciences, world languages)

• Career and technical education courses

• Extracurricular academic programs

• Testing and assessment services

• Use of facilities or resources

• Access to specialized equipment or labs

What This Likely Excludes

Given the ADA restriction, you likely cannot provide:

• Core curriculum instruction that would constitute "enrollment"

• Full-day or half-day programs

• Services that require the student to be counted in membership

• Any arrangement that triggers ADA eligibility

Important: The distinction between an individual service and "enrollment" may require legal guidance. Work with your district's legal counsel to determine which offerings comply with the ADA restriction.

Strengthened Approval Language: "Shall Be Approved"

The final rules changed the approval language from "may be approved" to "shall be approved."

What This Means

If your school meets the approval criteria, the Comptroller must approve you as a vendor. This removes discretion and provides certainty.

Approval criteria for public/charter schools:

1. You meet the accreditation requirements (verified by the agency)

2. Services offered do not count toward ADA for FSP funding

Since public schools and charter schools are already accredited by the Texas Education Agency, the accreditation requirement should be straightforward to meet.

Electronic Verification of Accreditation

The final rules explicitly allow approval by "permitting electronic verification" of accreditation.

What This Means

• The Comptroller can verify your TEA accreditation electronically

• You may not need to submit paper documentation

• The approval process should be faster and more streamlined

• Renewals should be simplified

This reduces administrative burden for both your school and the program administrator.

No Physical Location Requirement

Unlike education service providers (private schools), vendors are not required to have a specific physical location in Texas beyond what's required for normal operations.

As a public or charter school, you already have:

• Physical facilities in Texas

• Texas resident staff

• Established operations

The "located in this state" definition that applies to education service providers does not create any additional burden for you.

Criminal Background Screening

Public and charter schools must comply with background screening requirements for personnel who interact with TEFA participants.

Interim Compliance Method

Because the interagency reportable conduct search engine (Health and Safety Code, Chapter 810) is not yet operational, you can use the registry established under TEC §22A.051 (the do-not-hire registry) for screening purposes.

Scope of Interaction

The screening requirement applies to each person who will interact with a participating child "by reason of their employment" with your school, including:

• In-person interactions

• Online interactions

• Electronic interactions

Practical Application

Since your school likely already conducts criminal background checks for all employees under existing state law, this requirement should not create additional burden. You simply need to ensure that anyone interacting with TEFA participants has been properly screened.

Payment System Integration

TEFA participants must purchase approved expenses using a "comptroller-approved payment system."

What This Means for Your School

• You'll need to integrate with or accept payment through the approved system

• Traditional school payment methods (checks, cash, district billing systems) cannot be used for TEFA payments

• The system should facilitate tracking and ensure proper documentation

Action item: Once the Comptroller announces the approved payment system, designate personnel to:

• Understand the system's operation

• Handle enrollment and payment processing

• Maintain records of services provided to TEFA participants

Compliance and Enforcement

The final rules include important provisions about compliance monitoring and enforcement:

District Attorney Referrals

The Comptroller must notify the local district attorney of:

• Fraud

• "Any other violation of law" (the modifier "substantial" was removed)

What this means: The threshold for DA notification is lower. Ensure strict compliance with all program requirements to avoid potential legal referrals.

Documentation Requirements

Maintain clear documentation showing:

• Which services were provided to TEFA participants

• Those services did not count toward ADA

• Payment received through the approved payment system

• Background screening compliance for interacting personnel

Best practice: Treat TEFA services as a separate program with distinct record-keeping to clearly demonstrate the ADA boundary is maintained.

Autonomy Provisions

Like all providers and vendors, public and charter schools benefit from autonomy provisions.

Receiving money from the program does not make you:

• A recipient of federal financial assistance on that basis (beyond what you already receive)

• A state actor on that basis (you're already a state actor as a public entity)

These provisions primarily benefit private providers, but they confirm that TEFA participation doesn't create new federal compliance obligations beyond those already applicable to public schools.

Strategic Considerations for Your School

Benefits of Participation

Participating as a TEFA vendor might:

• Generate additional revenue for specialized programs

• Serve students in your community who've chosen alternative educational paths

• Maintain connections with families who've left traditional public school

• Provide access to your facilities and resources for more students

• Showcase specialized programs or courses your school offers

Potential Challenges

Consider carefully:

• Administrative complexity: Managing a separate payment system and ensuring ADA compliance

• Resource allocation: Whether you have the capacity to serve non-enrolled students

• Legal boundaries: Ensuring you don't inadvertently create ADA-counting enrollment

• Equity concerns: How offering services to TEFA participants affects currently enrolled students

Questions to Consider

Before deciding to participate:

• Which specific services can we offer that clearly don't count toward ADA?

• Do we have capacity in these programs to serve additional students?

• What pricing structure makes sense for individual courses/services?

• How will we track and document the separation between TEFA services and regular enrollment?

• What administrative systems need to be in place?

• Do we have legal clarity on the ADA boundary?

Charter School-Specific Considerations

Open-enrollment charter schools face the same rules as traditional public schools, with one additional consideration: enrollment flexibility. Charter schools typically have more flexibility in creating innovative programs and course structures.

This might make it easier to design specific offerings that:

• Clearly constitute individual services rather than enrollment

• Appeal to TEFA families seeking specialized instruction

• Generate revenue without triggering ADA

However, the fundamental ADA boundary remains: services cannot count toward ADA for FSP funding.

Inter-District and Out-of-District Students

TEFA participants are not restricted to using services from their district of residence.

This means:

• A student residing in District A could purchase services from District B

• Charter schools can serve TEFA participants from anywhere in their service area

• Competition for TEFA business may exist among neighboring districts/charters

• Marketing consideration: If you develop attractive, specialized offerings, you might serve TEFA participants beyond your traditional attendance zone.

Ready to Explore TEFA Vendor Participation for Your District or Charter?

The opportunity is clear, but so is the complexity. Between ADA compliance boundaries, legal considerations, administrative systems, and pricing structures, preparing for TEFA vendor participation requires careful planning that many districts don't have the capacity to tackle alone.

Through our ESA Consulting Services, Accessible Education helps public and charter schools navigate vendor participation strategically:

Planning & Legal Framework

• Identify which services clearly comply with ADA restrictions

• Assess program capacity and develop compliant pricing structures

• Review administrative requirements for separate payment systems

Approval & Setup

• Guide you through the vendor approval application process (opening December 9, 2025)

• Establish personnel designations and background screening compliance

• Prepare for integration with the Comptroller's payment system

Implementation & Compliance

• Develop enrollment procedures and documentation systems specific to TEFA participants

• Create staff training protocols on TEFA requirements

• Build tracking systems that maintain clear ADA separation

• Establish ongoing compliance monitoring and annual program review processes

The districts that begin planning now will be positioned to capture this revenue opportunity when the program launches, without creating compliance risks or operational disruption.

Whether TEFA vendor participation makes sense for your district depends on your specific capacity, programs, and strategic goals. We can help you make that assessment and, if participation is right for you, implement it effectively.

Let's discuss whether and how TEFA vendor participation could work for your district or charter school.  Contact us, follow us on Facebook, Instagram, or subscribe to our newsletter for the latest updates and insights.

Looking Ahead

Public and charter school participation in TEFA as vendors represents a nuanced opportunity that requires careful navigation of funding boundaries.

The final rules create a clear framework: you can offer individual services to TEFA participants, but cannot enroll them in a way that generates traditional public school funding. The strengthened "shall be approved" language and electronic verification provisions make approval straightforward for schools that meet the criteria.

Whether participation makes sense for your school depends on:

• Your capacity to offer specialized services

• Your ability to clearly maintain the ADA boundary

• Your administrative capacity to manage a separate program

• Your strategic interest in serving this student population

For schools with specialized programs, unique facilities, or excess capacity in certain courses, TEFA participation might generate revenue while serving your community. For schools operating at capacity or without clear individual service offerings, participation may create more complexity than benefit.

The key is to approach the decision thoughtfully, with clear guidance and a realistic assessment of your capacity to comply with the program's requirements.

Next in this series: Current TEFA Participants (Returning Families)