Comptroller’s office requests 200% to 400% increase for voucher program at joint budget hearing

A Joint Budget Hearing on the Teacher Retirement System of Texas (TRS), the Permanent School Fund (PSF), and the Texas Education Freedom Account (TEFA) program was held Wednesday as state budget writers begin reviewing agencies’ Legislative Appropriations Requests (LARs) ahead of the 90th legislative session, which begins in January 2027. The joint committee includes representatives from the Legislative Budget Board, the governor’s office, the speaker’s office, the House Appropriations Committee, and the Senate Finance Committee. The hearing gave committee members an opportunity to review the funding requests and ask questions as work on the budget begins ahead of session.

TEFA vouchers 

Travis Pillow, assistant director for the Texas Education Freedom Accounts voucher program at the comptroller’s office, provided testimony on the comptroller’s request for additional funding for the voucher program. The comptroller is officially requesting $2.3 billion for TEFA for the next biennium, which would maintain the program at roughly its current level but doubles the current funding. This is because the $1 billion initial appropriation covered only one year of the biennium. The request also identifies an additional $2.1 billion in the agency comments that would be needed to serve the approximately 100,000 students Pillow said are currently on the program’s waitlist. ATPE broke down the comptroller’s request last week in context of the state’s budget concerns and approximately 1,200 school districts.

Pillow’s request and his testimony concerning demand for the program were called into question during public testimony. Several testifiers questioned whether the available data and accountability measures are sufficient to justify such a significant increase in spending.

Some of that testimony came from the ATPE-supported Texas Center for Voucher Transparency, which works alongside the Coalition For Public Schools as a public watchdog initiative of Our Schools Our Democracy (OSOD). One of the many concerns raised was the administrative cost associated with expanding TEFA, with testimony pointing out that Gov. Greg Abbott (R) had recently asked the comptroller’s office to audit school districts to find administrative bloat. Under Senate Bill (SB) 2 by former Sen. Brandon Creighton (R–Conroe), 3% of TEFA funds are allowed for the comptroller’s administrative costs and 5% for the program administrator (certified educational assistance organization Odyssey). Under the proposed $2.3 billion appropriation, those administrative costs could total $184 million. If the Legislature ultimately funds the full $4.4 billion identified in the request, the administrative costs could reach $352 million—more than the entire annual budget of many Texas school districts.

Watch the Our Schools Our Democracy testimony.

Teacher Retirement System budget request

The joint budget committee also received the LAR for the Teacher Retirement System (TRS). TRS Executive Director Brian Guthrie presented the system’s request and its financial outlook, including the impact of teacher pay raises approved by the Legislature in 2025 through House Bill (HB) 2 by Chairman Brad Buckley (R–Salado).

As we reported following the Aug. 18 House Pensions, Investment, and Financial Services Committee interim hearing, those raises created additional liabilities for the pension fund the Legislature did not pay for upfront. This has created an increase in the system’s funding period, a measurement of how many years it would take under current conditions for the fund to have all the money on hand needed to pay all promised benefits to its annuitants. TRS’ funding period has increased from 28 years before the 2025 legislative session to a current 35 years. State law considers a funding period of less than 31 years to be actuarily sound.

As he did Aug. 18 in PIFS, Guthrie told lawmakers that the system’s outside actuary has recommended increasing contributions by 1% to 1.5% of payroll. Gutherie made clear at this hearing that TRS’ investment return rate of approximately 16%, more than double the assumed rate of return, has significantly closed the actuarial gap created by the HB 2 pay raises. The amount needed to fully close the gap will be known upon release of the system’s year-end actuarial report in late November/early December, but it will be significantly less than what would be generated by a 1% contribution increase.

ATPE continues to recommend the Legislature instead make a modest one-time lump-sum payment out of the state’s rainy day fund to address the HB 2-related increase in the funding period. That approach would avoid increasing teacher contribution rates or the state’s contribution rate and would help protect TRS as a defined-benefit system.