Three Major Funding Sources Beyond TISA
HOPE Lottery Scholarship
State lottery revenues fund postsecondary scholarships for Tennessee students attending in-state colleges and universities.
Federal Grants
Targeted federal funding for specific populations including low-income students, English Learners, and students with disabilities.
Education Freedom Scholarships
Tennessee's new voucher program providing $7,295 scholarships for private school tuition, funded by online gaming revenues.
The Tennessee Education Lottery Scholarship (HOPE)
The Tennessee Education Lottery Scholarship (HOPE) program is a well-known source of financial aid for Tennessee students pursuing higher education. Funded entirely by revenues from the state lottery, it provides scholarships to students attending eligible in-state colleges and universities.
This program is a key part of the state's Drive to 55 initiative, which aims to equip 55% of Tennesseans with a degree or certificate by 2025.
💡 Important Note
While HOPE funds are designated for postsecondary education and do not directly finance K-12 school operations, the health of the lottery program is a critical part of the broader education funding conversation. Any projected funding shortfalls can influence legislative priorities.
Federal Grants and Programs
The federal government provides significant funding to Tennessee schools, typically in the form of grants targeted at specific student populations or educational needs. This funding is distinct from TISA and often comes with specific requirements for how it can be spent.
Key Federal Funding Areas
- Targeted Support: Federal funds are often directed toward supporting economically disadvantaged students, English Learners, students with disabilities, and other specific subgroups.
- ESSER Pandemic Relief: In recent years, school districts received a large (though temporary) influx of federal relief funds through the Elementary and Secondary School Emergency Relief (ESSER) program, supporting technology purchases and learning acceleration.
- Title I Grants: Federal funding for schools with high percentages of low-income students.
- IDEA Grants: Federal support for students with disabilities and special education services.
🏛️ State & Federal Dynamics
The relationship between state and federal funding isn't always straightforward. In 2025, Tennessee's decision to decline participation in the federal SUN Bucks program meant forgoing an estimated $75 million in federal funds for summer grocery benefits. This highlights how state-level decisions can directly impact the flow of federal dollars.
The Education Freedom Scholarship (EFS) Act
One of the most significant new funding mechanisms in Tennessee's education landscape is the Education Freedom Scholarship (EFS) Act. Passed in 2025, this program — often referred to as a universal school voucher program — allows families to use taxpayer dollars for private school expenses.
How the EFS Program Works
- Funding Source: The EFS program is funded by revenues from online gaming. State law earmarks 80% of these specific tax dollars for K-12 education needs under the EFS Act.
- Scholarship Details: For 2025-26, the program offers 20,000 scholarships worth approximately $7,295 each for tuition and/or fees at registered private schools.
- High Demand: The program saw immense interest upon launch, with over 33,000 applications submitted within hours — far exceeding the 20,000 available spots.
EFS Eligibility Tiers
1 Priority Tier (10,000 Scholarships)
Reserved for students whose annual household income does not exceed 300% of the federal poverty level, OR for students with disabilities.
2 Open Tier (10,000 Scholarships)
Available to any eligible student, regardless of household income, after Tier 1 allocations are made.
While the EFS program does not directly fund public schools, it represents a significant allocation of state-managed funds toward private education. Its existence is central to any discussion about Tennessee's overall education spending priorities.
