SB 1

                                                                          HOUSE BILL 1
                                                                           By Lamberth
                                           SENATE BILL 1
                                              By Johnson
                                         AN ACT to amend Tennessee Code Annotated, Title 4,
                                               Chapter 49 and Title 49, relative to the Education
                                               Freedom Act of 2025.
         WHEREAS, publicly supported educational freedom has a long history in Tennessee,
with the Hope Scholarship providing funding that follows students to the public or private
institution of their choice; and
         WHEREAS, parents should be free to choose the school that best fits the educational
needs of their specific child; and
         WHEREAS, Tennessee has worked to expand choice through the successful education
savings account pilot program that is now helping primarily underserved, minority students in
three of the State's largest school districts with 99% parent satisfaction with the program; and
         WHEREAS, over the past six years, Tennessee has invested a record $2 billion annually
in additional state dollars for public education; and
         WHEREAS, high-quality educational facilities and high-performing teachers are vital
ingredients for a child's success; and
         WHEREAS, the "Education Freedom Scholarship Act" will empower parents with the
freedom to choose the right education for their child and provide parents a say in where their
taxpayer dollars are spent; now, therefore,
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
         SECTION 1. This act is known and may be cited as the "Education Freedom Act of
2025."
         SECTION 2. Tennessee Code Annotated, Title 49, Chapter 6, is amended by adding
the following as a new part:
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49-6-3501. Short title.
        This part is known and may be cited as the "Education Freedom Scholarship
Act."
49-6-3502. Part definitions.
        As used in this part, unless the context otherwise requires:
               (1) "Department" means the department of education;
               (2) "Eligible student" means a resident of this state who is entitled to
        attend a public school, except for a student enrolled in a home school, as defined
        in § 49-6-3050, or in a church-related school, as defined in § 49-50-801, with
        which the student's parent is associated, registered, or is participating as a
        parent-teacher for purposes of § 49-6-3050(a)(2) or (a)(3);
               (3) "Parent" means the parent, guardian, person who has custody of the
        child, or individual who has caregiving authority for the child under § 49-6-3001;
               (4) "Private school" means a school that is:
                       (A) Located in this state; and
                       (B) A private school, as defined in § 49-6-3001(c)(3)(A), that is a
               category I, II, or III school approved by the commissioner of education in
               accordance with rules promulgated by the state board of education;
               (5) "Program" means the education freedom scholarship program
        created by this part;
               (6) "Public school" means a public charter school, a school operated by
        an LEA, or a school operated by this state with public funds that serves students
        in any of the grades kindergarten through twelve (K-12);
               (7) "Recipient" means an eligible student who enrolls in a private school
        and receives a scholarship for a given school year; and
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               (8) "Scholarship" means an education freedom scholarship provided
       pursuant to this part.
49-6-3503. Creation.
       (a) There is created an education freedom scholarship program to be
administered by the department.
       (b) Subject to appropriations and other available funds, the program must
provide a scholarship to an eligible student who applies for the 2025-2026 school year or
any subsequent school year, subject to the limitations of this part.
49-6-3504. Scholarship availability – prioritization of awards.
       (a) For the 2025-2026 school year, the department shall award a maximum of
twenty thousand (20,000) scholarships, to be awarded as follows, in the order in which
the department receives completed scholarship applications:
               (1) Ten thousand (10,000) scholarships are available for eligible students
       who meet one (1) of the following criteria:
                       (A) The student's annual household income does not exceed
               three hundred percent (300%) of the amount required for the student to
               qualify for free or reduced price lunch, as provided in the income eligibility
               guidelines published by the United States department of agriculture's food
               and nutrition service; or
                       (B) The student is an eligible student as defined in § 49-6-2602 or
               § 49-10-1402; and
               (2) Ten thousand (10,000) scholarships are available for eligible
       students, regardless of whether the eligible student meets one (1) of the criteria
       listed in subdivision (a)(1).
       (b)
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                (1) Beginning with the 2026-2027 school year, the number of
         scholarships available for the respective school year is determined by the funds
         appropriated for scholarships, together with any available funds returned to the
         state treasurer pursuant to § 49-6-3506.
                (2) Subject to subdivision (b)(1), if the number of applications received by
         the department during a program application period exceeds seventy-five percent
         (75%) of the total number of scholarships available for the respective school
         year, then the number of scholarships available for the next school year must be
         increased by an additional five thousand (5,000) scholarships.
         (c) Beginning with the 2026-2027 school year, if the number of applications
received by the department exceeds the number of scholarships available for the
respective school year, then the department shall award scholarships in the following
order:
                (1) An eligible student who received a scholarship in the immediately
         preceding school year;
                (2) An eligible student whose annual household income does not exceed
         one hundred percent (100%) of the amount required for the student to qualify for
         free or reduced price lunch, as provided in the income eligibility guidelines
         published by the United States department of agriculture's food and nutrition
         service, or an eligible student who is an eligible student as defined in § 49-6-
         2602 or § 49-10-1402, in the order in which the department receives completed
         scholarship applications;
                (3) An eligible student whose annual household income does not exceed
         three hundred percent (300%) of the amount required for the student to qualify
         for free or reduced price lunch, as provided in the income eligibility guidelines
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       published by the United States department of agriculture's food and nutrition
       service, in the order in which the department receives completed scholarship
       applications;
               (4) An eligible student who, at the time of submitting a completed
       application, is currently enrolled in a public school, or who is eligible to enroll in
       kindergarten in a public school for the respective school year, in the order in
       which the department receives completed scholarship applications; and
               (5) An eligible student, in the order in which the department receives
       completed scholarship applications.
       (d) In order to receive a scholarship under this part, an eligible student, or the
eligible student's parent, must:
               (1) Submit a completed scholarship application to the department;
               (2) Ensure the provision of an education for the eligible student that
       satisfies the compulsory school attendance requirement provided in § 49-6-
       3001(c)(1) through enrollment in a private school; and
               (3) Not enroll the eligible student in a kindergarten through grade twelve
       (K-12) public school in any school year for which the eligible student receives a
       scholarship.
       (e) The department may award a scholarship to an eligible student in an order
that does not comply with the order prescribed in subsection (a) or subsection (c), as
applicable, if awarding the scholarship out of order is consistent with the outcome of an
administrative appeal adjudicating the denial of the student's scholarship application.
49-6-3505. Scholarship amounts – allowable uses.
       (a) A scholarship equals the base funding amount, as defined in § 49-3-104(2),
and is solely state funded.
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       (b) Scholarship funds must first be used to pay the recipient's tuition and fees, as
described in subdivision (c)(1). Any outstanding scholarship funds available to the
recipient after payment of tuition and fees may be used for one (1) or more of the
educational expenses described in subdivisions (c)(2) – (c)(8).
       (c) Scholarship funds may only be used for the following educational expenses:
               (1) Tuition and fees required by the private school in which the recipient
       is enrolled;
               (2) Textbooks, curricula, instructional materials, and uniforms required by
       the private school in which the recipient is enrolled;
               (3) Tutoring services provided by a tutor or tutoring facility that meets the
       requirements established by the department;
               (4) Fees for transportation to and from the private school in which the
       recipient is enrolled, paid to a fee-for-service transportation provider that meets
       the requirements established by the department;
               (5) Computer hardware, technological devices, and other technology
       fees that meet the requirements established by the department and that are used
       for the recipient's educational needs;
               (6) Tuition, fees, textbooks, curricula, and instructional materials for
       summer academic programs and specialized afterschool academic programs
       that meet the requirements established by the department. This subdivision
       (c)(6) does not include afterschool childcare;
               (7) Fees for early postsecondary opportunity courses or examinations,
       entrance examinations required for postsecondary admission, and industry
       credentials as approved by the department; and
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               (8) Educational therapy services provided by therapists who meet the
       requirements established by the department.
49-6-3506. Unspent funds – account closure.
       (a) A recipient's scholarship account remains open, and all available scholarship
funds remain in the recipient's scholarship account, from one (1) school year to another
unless one (1) of the events described in subsection (b) occurs.
       (b) A recipient's scholarship account must be closed, and all remaining
scholarship funds returned to the state treasurer to be used to award scholarships to
eligible students in future years pursuant to this part, upon the earlier of:
               (1) The recipient's graduation from high school or obtainment of a high
       school equivalency credential approved by the state board of education;
               (2) The recipient's enrollment in a kindergarten through grade twelve (K-
       12) public school;
               (3) The recipient's completion of thirteen (13) school years as a
       kindergarten through grade twelve (K-12) student;
               (4) The recipient's voluntary withdrawal from the scholarship program; or
               (5) The department disqualifying the recipient from participating in the
       program due to the recipient's noncompliance with program requirements.
49-6-3507. Administration of assessments for recipients.
       (a) As a condition of receiving a scholarship pursuant to this part, recipients in
grades three through eleven (3-11) must be annually administered:
               (1) A nationally standardized achievement test that is aligned to the
       respective private school's instructional plan, as determined by rules promulgated
       by the state board of education; or
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                (2) The Tennessee comprehensive assessment program test required for
        the grade in which the recipient is enrolled.
        (b) Each private school that enrolls recipients shall annually administer the test
required pursuant to subsection (a) to the recipients enrolled in the school. Each private
school shall provide the results of the test administered to a recipient pursuant to
subsection (a) to the recipient's parents.
        (c) Each private school shall provide the results of the tests administered to
recipients pursuant to subsection (a) to the office of research and education
accountability in the office of the comptroller of the treasury. A private school may
provide the test results required pursuant to this subsection (c) using aggregated,
deidentified data; provided, that the data must be provided in a manner that allows the
office of research and educational accountability to group and analyze the results by
recipient grade level, household income level, sex, and race. The office of research and
education accountability shall submit an annual report to the education committees of
the senate and house of representatives detailing the results of the tests administered to
recipients pursuant to subsection (a).
49-6-3508. Autonomy of schools that have recipients enrolled.
        (a) A private school that enrolls recipients is autonomous and not an agent of
this state.
        (b) The creation of the education freedom scholarship program does not expand
the regulatory authority of this state, the officers of this state, or the authority of any LEA
to impose any additional rules, regulations, or requirements on private schools that enroll
recipients beyond the rules narrowly tailored to enforce the requirements of the program.
        (c) Private schools that enroll recipients must have the maximum freedom to
provide for the educational needs of recipients without governmental control. A private
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school that enrolls recipients is not required to alter its creed, practices, admission
policies, hiring policies, or curriculum in order to accept recipients.
49-6-3509. Limitations on participation – connection to other education programs.
        (a) Notwithstanding another law to the contrary, the department shall deny a
scholarship to an eligible student for the same school year in which the student is
participating in the Tennessee education savings account pilot program, compiled in part
26 of this chapter, or the individualized education account program, compiled in chapter
10, part 14 of this title.
        (b) A recipient does not retain the right to receive special education and related
services from the LEA in which the recipient resides, through an individualized education
program. Recipients have the same rights under the Individuals with Disabilities
Education Act (IDEA) (20 U.S.C. § 1414) to receive equitable services through an
individualized service plan as all other students enrolled in non-public schools.
49-6-3510. Payment – state or local public benefit.
        (a) A scholarship awarded under this part:
                 (1) Shall not be paid directly to a recipient or recipient's parent; and
                 (2) Is a state or local public benefit under § 4-58-102.
        (b) Funds received pursuant to this part do not constitute income taxable to the
parent of the recipient or to the recipient under title 67, chapter 2.
49-6-3511. Denial of scholarship application.
        Notwithstanding § 49-6-3504 or another provision of this part to the contrary, the
department shall deny the scholarship application of an eligible student who cannot
establish the eligible student's lawful presence in the United States.
49-6-3512. Promulgation of rules.
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              The department shall promulgate rules to effectuate this part. The rules must
       include an administrative appeal procedure for the denial of scholarship applications.
       The rules must be promulgated in accordance with the Uniform Administrative
       Procedures Act, compiled in title 4, chapter 5.
       SECTION 3. Tennessee Code Annotated, Section 49-3-108, is amended by adding the
following as a new subsection:
              (i) Notwithstanding subsections (b) and (c), beginning with the TISA allocation
       for the 2025-2026 school year, an LEA's allocated education funding shall not decrease
       from one (1) year to the next year due to the disenrollment of students from the LEA. If
       an LEA's calculated TISA allocation decreases from the LEA's TISA allocation for the
       prior school year, then the department shall allocate additional funds to the LEA in an
       amount such that the LEA's TISA allocation for the current year is not less than the prior
       school year. For purposes of this subsection (i), "disenrollment" means that the LEA's
       non-virtual average daily membership for the current school year is lower than the LEA's
       non-virtual average daily membership for the prior school year.
       SECTION 4.
              (a) Subject to appropriation, the department of education shall award a one-time
       bonus in the amount of two thousand dollars ($2,000) to each teacher employed in a
       kindergarten through grade twelve (K-12) public school in this state for the 2024-2025
       school year.
              (b)
                      (1) A bonus awarded pursuant to this section is solely state funded.
                      (2) Bonuses paid to teachers pursuant to this section are not part of the
              TISA, as defined in § 49-3-104, and must not be considered salary payments or
              supplements for purposes of § 49-3-306.
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               (c) For purposes of this section, "teacher" has the same meaning as "existing
       educator," as that term is defined in § 49-3-104.
       SECTION 5. Tennessee Code Annotated, Section 4-49-104(e)(1), is amended by
deleting the subdivision and substituting instead:
               (1) Eighty percent (80%) of the privilege tax collected under this section must be
       distributed by the council to the state treasurer for deposit into an account administered
       by the state treasurer for use by local education agencies, as defined in § 49-1-103, for
       the construction and maintenance of public school buildings. When allocating funds for
       such purpose, the state treasurer shall consider:
                          (A) Whether the local education agency is located in a county that is
               designated as an economically distressed or at-risk county by the department of
               economic and community development;
                          (B) The occurrence of any emergency or natural disaster that has
               resulted in significant damage to an existing public school building or facility; and
                          (C) Other demonstrated need, as identified by the local education
               agency.
       SECTION 6. If any provision of this act or its application to any person or circumstance
is held invalid, then the invalidity does not affect other provisions or applications of the act that
can be given effect without the invalid provision or application, and to that end, the provisions of
this act are severable.
       SECTION 7. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
       SECTION 8. Section 5 of this act takes effect July 1, 2025, the public welfare requiring
it. All other sections of this act take effect upon becoming a law, the public welfare requiring it.
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