HB1881 SB1585 / Increases household income cap to provide more Education Savings Accounts.

This act, as amended, makes two broad sets of changes. First, it repeals Tennessee Code Annotated § 49-1-908, an obsolete literacy-reporting requirement that the Department of Education, State Board of Education, and Tennessee Higher Education Commission already fulfilled in 2022 and 2024. Deleting that section simply removes deadwood language and has no substantive effect on schools or funding.

Second, it significantly revises the Education Savings Account (ESA) statutes. Beginning July 1, 2026, students in grades 3–11 who receive an ESA must annually take either TCAP tests for math and English or a nationally standardized test aligned to their school’s instructional plan. The department will also sample ESA recipients in grades 3–8 for data analysis, and every June 30 the Office of Research and Education Accountability must receive de-identified, aggregated test results disaggregated by grade, income, sex, and race, then report those findings to the legislature.

Amendments also tighten ESA eligibility and scholarship-to-ESA conversion processes. The household income cap for ESAs is fixed at four times the federal free-and-reduced-price-lunch guidelines. If scholarship applications exceed available scholarships, the department may convert unused scholarship applicants into ESA recipients under the same eligibility rules. Several administrative subsections governing application windows, procedural details, and overlapping scholarship and ESA programs are removed or consolidated, and the State Board must issue emergency rules to implement these changes for the 2026–27 school year.