KBRA Releases Research – Texas School Vouchers May Pressure Public School Districts Over Time

NEW YORK--(BUSINESS WIRE)--KBRA releases research discussing the potential impact of Texas' new Educational Savings Account (ESA) program (i.e., private school vouchers) on public school district credit quality.

Key Takeaways

• The voucher program will provide around $10,000 annually for each eligible student toward private K-12 education and higher amounts for students with disabilities. Assuming $1 billion in expenditures for the program in the 2026-27 school year (SY) and a simple $10,000 allotment per student, the program would support around 100,000 students, which is about 1.6% of the approximately six million students enrolled in all forms of K-12 education across the state last year.
• The Legislative Budget Board anticipates that the program could grow to $5 billion per year by fiscal year (FY) 2030, underscoring the potential for more substantial reductions in public school student enrollment over time. Actual outcomes will depend on the number of students who opt in, the level of funding appropriated for the program in future years, and how quickly private schools can expand their capacity.
• Most voucher funding may initially go to students already outside of the public school system, but districts will lose enrollment-based funding for each incremental student that foregoes public school enrollment.
• The state’s strong demographics should offset a portion of lost funding for many districts by stabilizing enrollment. However, schools lacking a strong competitive position could lose a meaningful number of students and enrollment-based funding over time.
• KBRA does not anticipate that voucher-related enrollment losses will result in pronounced near-term credit deterioration for districts across the state, but the shift will compound existing pressures in the sector, driven by the ongoing depletion of federal pandemic funds and minimal inflation-adjusted increases in public school district funding in recent years.

Click here to view the report.

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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