Tennessee governor pitches school voucher expansion as state revenues stagnate

Tennessee Gov. Bill Lee once again announced that he wants universal school vouchers throughout the state

Nearly five years after narrowly convincing lawmakers to allow a select number of families to use tax dollars for private schooling, Tennessee Gov. Bill Lee on Monday stood before the GOP-dominant Legislature with a much more ambitious pitch: Make school vouchers universal throughout the state.

It's a proposal that would be ambitious for any governor in Tennessee, a state that has traditionally been skeptical of using public money for private schools. However, this year, Lee is also facing stagnant state revenues and a staggering last-minute $1.6 billion expenditure regarding a business tax that was thrown together to prevent a looming lawsuit.

That's because last fall, state officials became aware of a potential legal challenge over the structure of Tennessee's 90-year-old franchise tax, with some 80 businesses that came forward to request a refund, according to the Lee administration. To avoid a potential lawsuit, Lee's team wants to offer businesses an ongoing $410 million tax break and $1.2 billion in refunds to businesses.

Lee maintains that the state still has enough money to spread around more school vouchers to families, properly fund public schools, distribute pay raises to state employees and even set aside more money for the rainy day fund.

"Because we have budgeted wisely through years of extraordinary revenue growth, Tennessee is now equipped to resolve this tax issue and make Tennessee an even better place to live, work and raise a family,” Lee said.

The governor floated his school voucher proposal during his annual State of the State address. The speech outlined his top priorities over the upcoming months, which include legislation designed to protect songwriters, performers and other music industry professionals against the potential dangers of artificial intelligence; and a bill to allow parents more control over their kids' social media activity. Additionally, the governor said he wants to increase the number of state troopers and invest more in conserving Tennessee's state parks and waterways.

In total, the governor's office detailed a $52.6 billion spending plan for the upcoming fiscal year, a modest 0.5% bump from the year prior.

The speech, just under an hour long, was punctuated by frequent interruptions as people yelled from the galleries, pushing back against the governor’s remarks — ranging from shouts for gun control to Medicaid expansion to better funding for public schools. The heckling sparked an increase in standing ovations from Lee's cabinet members and many Republican lawmakers. At one point, the governor paused his speech to speak directly to the crowd, urging that “civility is a strength, not a weakness.”

A majority of those in the galleries ignored the governor, however, and continued their interruptions until the very end. Still, no one was kicked out. Some attempted to shout out support for Lee: One person yelled “Let the governor speak!," and another screamed, “Minorities love the governor!”

Lee's school vouchers push has quickly attracted the most attention. School choice advocates have quickly lined up to praise the idea, while public school advocates counter that expanding vouchers will only further hurt struggling schools.

Key GOP legislative leaders are largely on board with Lee's voucher proposal, but it's still largely unknown what the rest of the GOP supermajority will want to get the legislative bill across the finish line.

Back in 2019, when Lee first asked lawmakers to consider expanding school vouchers, the plan was to allow parents of students in certain low-income districts with three or more schools ranked in the bottom 10 percent to receive $7,300 from a government-authorized account to pay for approved expenses.

After much editing, Republicans just barely passed a program that only applied to Democratic strongholds in Davidson and Shelby counties, which encompass Nashville and Memphis. Lee's victory came as some GOP members received assurances that it would never apply to their own districts.

The program, known as education savings accounts, has since added Hamilton County, where Chattanooga is located.

It currently awards eligible families around $9,100 in public tax dollars to help cover private school tuition and other preapproved expenses for up to 5,000 low-income or disabled students.

Under Lee's ambitious expansion plan, the state would create a new tier of school vouchers called “education freedom” scholarships. The first year of the program would cost $144 million to offer 20,000 scholarships to Tennessee families. Half of those scholarships would be available to families who meet certain income requirements, while the rest would be open to anyone.

Democratic lawmakers were quick to condemn Lee's voucher proposal.

“I grew up understanding that education is supposed to be the great equalizer for all people in this state, but today, you heard Governor Lee propose a private school voucher scheme that will give wealthy families a $7,000 tax break for their kids to attend private schools,” said Sen. London Lamar, a Memphis Democrat.

Lamar pointed out that many Republicans remained seated while Lee outlined his voucher proposal.

“Our tax dollars should be used for our public school system,” she said.

Programs funded through vouchers, tax credits or scholarships have been around since the 1990s and are now available in the majority of states. Whether students who change schools with the use of taxpayer money achieve better educational outcomes is in dispute.

Initially, the programs were designed for lower-income students, but that’s changing. Since last year, nine states have adopted programs that are phasing out, eliminating or significantly raising income limits.