Texas Education Freedom Accounts: Recent Developments and the Selection of Odyssey
- Accessible Education
- Oct 10
- 11 min read
Updated: Nov 10
Texas is preparing to launch what officials describe as the largest school choice initiative in the nation. The Texas Education Freedom Accounts (TEFA) program, established through Senate Bill 2, will provide families with state-funded education savings accounts beginning in the 2026-27 school year. With applications now expected to open in early 2026, recent months have brought significant developments in how this $1 billion program will take shape.
Since August, we’ve been following every major turn in the development of this new program, from the enrolled version of Senate Bill 2 to the release of proposed rules and the early steps toward implementation. In earlier posts, we explored what ESA legislation means for public schools, private providers, and families, and how priorities around eligibility, special education, and accountability have evolved with each new update. This post continues that series, focusing on the latest milestones: the program’s official name change to Texas Education Freedom Accounts (TEFA), the selection of Odyssey as the Certified Educational Assistance Organization (CEAO), and the growing public conversation around transparency, disability documentation, and pre-K funding.
Here is a quick guide to what we'll cover here so you can jump directly to the topic(s) that matter most to you:
The Formal Launch: Program Name and CEAO Selection
On October 6, 2025, Acting Texas Comptroller Kelly Hancock made a landmark announcement that moved the TEFA program from legislative vision to operational reality. Hancock revealed two critical pieces of information: the formal program name (Texas Education Freedom Accounts) and the selection of Odyssey, a New York-based technology company, as the Certified Educational Assistance Organization (CEAO) chosen to manage the program.
This announcement represented a major milestone. While state law allows the Comptroller's office to select up to five organizations to facilitate the program, Hancock announced only Odyssey on October 6. The company was selected based on its strong track record of successfully managing education freedom programs in Iowa, Georgia, Louisiana, Utah, and Wyoming.
Understanding the CEAO Role: The Engine Behind TEFA
To understand the significance of Odyssey's selection, it's essential to grasp what a CEAO actually does. Certified Educational Assistance Organizations serve as independent contractors tasked with managing virtually every operational aspect of the TEFA program through what officials describe as an "end-to-end platform."
Three Core Areas of Responsibility
Application and Enrollment Services
CEAOs handle everything related to getting families enrolled in the program. This includes creating a secure online platform through which families can apply for state funds, processing applications, verifying eligibility, and prioritizing applicants according to state law (specifically, students with disabilities and those from lower household incomes). The CEAO is also responsible for marketing and outreach efforts to raise awareness about the statewide initiative.
Financial and Payment Services
Perhaps the most critical function, CEAOs manage the state funds allocated to approved
families. They set up trust accounts for each participating child and provide secure digital wallets featuring real-time balances and transaction details. The CEAO develops an e-commerce marketplace that allows families to pay tuition and shop for eligible educational resources, bringing hundreds of educational opportunities together in one place.
Additionally, the CEAO reviews and onboards qualified education providers and vendors, verifying their products and services and granting them access to state marketplaces.
Administrative and Support Services
CEAOs reduce the administrative burden on the state by providing robust customer support to guide families through the application process, managing complaints about the program, meeting strict cybersecurity standards to protect student information, working with the Comptroller to gather data for required reports, and providing tools to limit fraud, waste, and abuse.
Odyssey's Specific Role in Texas
The law allows the state to provide Odyssey up to $50 million (5% of the initial $1 billion in program funding) for administering the education savings account program. This substantial investment reflects the comprehensive nature of Odyssey's responsibilities.
Designing the User Experience
Odyssey will design the core process through which families interact with TEFA. Their proprietary technology aims to integrate with state databases to verify and approve parent applications in a timely manner. They are responsible for collecting applications and determining which families are accepted to the program, handling all aspects of administration to reduce the burden on the state.
Structuring the Financial Marketplace
Odyssey directly controls how state funds flow to families and what choices are available to them. They will develop the system that allows families to pay tuition and shop for eligible educational resources via an e-commerce marketplace. Each approved TEFA recipient will receive a secure digital wallet with real-time balances and transaction details. Critically, Odyssey approves vendors for education-related materials and services such as tutoring, transportation, and textbooks, effectively determining which educational options are available to TEFA families.
Marketing, Outreach, and Oversight
Odyssey carries what officials call the "tremendous responsibility" of raising awareness about the statewide initiative. They will manage marketing and outreach efforts, manage and review inquiries and complaints about the program, and provide tools that allow the state to limit fraud, waste, and abuse within the system.
Odyssey's Background and Approach
Odyssey promotes itself as the leading technology company focused exclusively on enabling and managing education savings accounts and microgrant programs across the United States. The company's mission is to enable access to high-quality education across the U.S. regardless of income or zip code. They emphasize having successfully served hundreds of thousands of students across the nation.
For parents, Odyssey highlights a fast approval process, secure mobile-first digital wallets, an educational marketplace with state-approved vendors, dedicated customer support available around the clock, and best-in-class data protection.
For states, Odyssey offers a turnkey solution handling application management, marketing and outreach, marketplace creation, payments, and customer support. They provide real-time financial data to ensure all money is accounted for and tools to limit fraud, waste, and abuse.
The Proposed Rules: Setting the Framework
Before Odyssey's selection was announced, the Comptroller's office released proposed rules that would govern how the TEFA program operates. On August 22, 2025, Acting Comptroller Hancock announced the publication of these proposed rules, which had been filed with the Office of the Secretary of State on August 11, 2025.
The release initiated a 30-day public comment period, with the earliest possible adoption date set for September 21, 2025. While that date has now passed, the rules have not yet been finalized, indicating the Comptroller's office is taking additional time to review public feedback and make revisions. This timeline remains notably accelerated compared to the statutory deadline. Senate Bill 2 requires the Comptroller to adopt rules no later than May 15, 2026.
How the Rules Evolved: From Legislation to Implementation
The journey from Senate Bill 2 to the proposed rules involved important clarifications and modifications, particularly through the Request for Proposals (RFP) process used to solicit CEAO candidates.
Applicant Prioritization Correction
The most significant correction involved clarifying how students would be prioritized. The initial RFP misinterpreted the prioritization requirements, suggesting that the 90% public school attendance requirement applied to all four income categories. The RFP Addendum corrected this: prioritization based on 90% public school attendance applies only to the highest income bracket (at or above 500% of the federal poverty level). The proposed rules formalized this corrected prioritization order, with siblings prioritized first, followed by former public school participants, then the income tiers.
Account Structure Clarification
While SB2 mandated that funds be held in trust for the benefit of the child, the implementation structure needed clarification. The initial RFP required the establishment of separate trust accounts for each participating child. The Comptroller clarified through the RFP Addendum that the preferred structure is a single bank account (omnibus account) managed by the CEAO, with sub-accounts ledgered for each participant. The proposed rules codified this requirement for the CEAO to immediately deposit funds received from the Comptroller into the account established for each child.
Transportation Expense Limits
Another area requiring clarification was approved transportation expenses. The initial RFP broadly referenced fees for transportation provided by a fee-for-service provider. The Addendum corrected this to align with the more restrictive SB2 language, clarifying that the program will comply with limits on transportation to and from approved education service providers or vendors. The proposed rules codified these approved transportation costs.
Handbook Responsibility Shift
An interesting administrative change occurred regarding the participant handbook. Senate Bill 2 required the CEAO to post and annually provide a Comptroller-approved handbook. The initial RFP required the Application Services respondent to develop this handbook. However, the Comptroller clarified through the Addendum that the Comptroller's office plans to develop the participant handbook and make it available to all CEAOs. The proposed rules now require the CEAO only to provide notice of the handbook's availability.
The Final Program Structure
The proposed rules formalized the complete operational framework for TEFA:
Eligibility and Applications
A child is eligible if they are eligible to attend a public school (including pre-K programs) but are not currently enrolled in one. The child must also be a U.S. citizen, national, or lawfully admitted. Applicants must submit documentation proving citizenship or legal admission status, Texas residency, total annual household income (typically via IRS transcript), and proof of disability if applicable.
Funding Levels
The total amount transferred to a participating child's account annually equals 85% of the estimated statewide average state and local funding per student. Students with disabilities receive an additional amount, not to exceed $30,000 total, calculated based on the funding a school district would receive for the child's special education program. Participants not enrolled in an approved private school (such as homeschoolers) are capped at $2,000 per school year.
Account Management
The Comptroller transfers funds to the CEAO according to a statutory schedule: at least one-quarter by July 1, at least one-half by October 1, and the total remaining amount by April 1. Any interest or earnings must be remitted to the Comptroller quarterly for deposit into the Program fund. Money remaining in an account is carried forward annually, provided the child remains eligible. Once a child is no longer eligible, the account is closed and remaining money is returned to the Comptroller.
Approved Expenses and Providers
Program money must be used only for approved education-related expenses: tuition and fees for private schools, higher education, or online courses; required uniforms and instructional materials; academic assessment costs; private tutor and therapy fees; transportation costs to and from a provider; and computer hardware and software (capped at 10% of the annual transfer). Funds cannot be used to pay any person related to the participating child within the third degree.
Approved providers include private schools (which must show accreditation, continuous campus operation for at least two school years, and must administer annual assessments to participating children in grades 3-12), tutors and therapists (who must submit proof of credentials and a national criminal history record review completed within the prior two calendar years), and vendors of educational products (who must be registered to do business in Texas).
Public Response: Concerns and Feedback
On September 30, 2025, the Texas Comptroller's office held its first public hearing for oral testimony on the proposed rules. This marked the first time the state heard oral public testimony concerning the program since its authorization. The period for written testimony had concluded the week prior, with approximately 200 education advocates, parents, and private schools submitting comments.
Texans called on the agency to address three primary areas:
Pre-K Funding Discrepancy
The most significant concern involved funding for students attending private preschool programs. The proposed rules stipulated that children attending private preschool programs would receive only $2,000 (the same amount designated for home-school students). Advocates argued these students should receive the full $10,000 awarded to most participating families. Dozens of pre-K providers and bill authors, including state Rep. Brad Buckley, submitted testimony asking the agency to correct this rule, stating that the full amount aligns with the Legislature's intent to provide families with the best early education options.
Documentation for Students with Disabilities
Special education advocates raised concerns about the types of documentation the Comptroller's office would accept as proof that a child has a disability requiring additional support. Students with disabilities are eligible to receive up to $30,000 per child in the program. The proposed rules would allow families to submit a Social Security determination letter or a physician's note as proof of disability.
Advocates pointed out that permitting these documents would not be consistent with federal or state guidelines for determining special education needs. They worried that these forms of documentation do not hold the same weight as an evaluation of a child's needs in an educational setting, potentially giving priority in the program to children who do not have a demonstrated need for special education services.
Accountability and Data Reporting
Advocates insisted the Comptroller must provide the public with detailed information on how taxpayer dollars are being spent. They specifically requested data access concerning students' academic performance, students' race, disability status, and household income, and the schools students attended immediately before entering the program. Maggie Stern, director of community engagement for Our Schools Our Democracy, emphasized that Texans need to know how the $1 billion initial budget (which is expected to increase in the future) is being used.
What Lies Ahead
Following the close of the comment period, the Comptroller's office stated they would review all feedback, make appropriate re
visions, and move toward final adoption of the rules in accordance with state law. The office has until May 2026 to finalize these rules and procedures.
Applications for the TEFA program are now expected to open in early 2026, with the program officially beginning in the 2026-27 school year. Several critical questions remain unanswered:
Will the Comptroller's office address the pre-K funding concern and adjust the rules to provide the full $10,000 to private preschool participants?
What changes, if any, will be made to the documentation requirements for students with disabilities?
What level of transparency and data reporting will the final rules require?
Will additional CEAOs be selected, or will Odyssey remain the sole contractor managing the program?
How will the Comptroller's office and Odyssey ensure the marketplace includes a robust selection of approved vendors across all regions of Texas?
What is clear is that Odyssey will serve as the operational backbone of the TEFA program, wielding significant influence over how families experience school choice in Texas. The company's platform will determine how quickly families can apply and be approved, what educational options appear in the marketplace, how funds are tracked and spent, and what support families receive throughout the process. As the program moves from proposed rules to operational reality, the partnership between the Comptroller's office and Odyssey will shape educational choice for hundreds of thousands of Texas families in the years ahead.
As this transition unfolds, we’ll continue monitoring each stage of implementation, from final rule adoption to the first wave of applications, to help families, educators, and providers understand what these changes mean in practice. Our educational consulting services are designed to support that process, offering guidance tailored to each group’s unique needs. Families will be able to explore ESA eligibility, transition planning, and school selection options, while private schools and educational providers can begin preparing for participation, compliance, and vendor approval.
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