This article was originally published by Our Schools Our Democracy, a 501(c)3 nonprofit dedicated to protecting Texas public schools. Small edits have been made for clarity.
Last week, the Texas Comptroller’s office announced that New York-based company Odyssey will administer Texas’ new voucher program, an education savings account (ESA) to be called Texas Education Freedom Accounts (TEFA). The comptroller announced that Odyssey will “manage an end-to-end platform that … will help guide families through the application process and allow them to pay tuition to schools and shop for eligible educational resources via an e-commerce marketplace.”
Texas’ voucher law authorizes the selected “certified educational assistance organization” (CEAO) to receive up to 5% of the $1 billion allocated to fund Texas’ voucher program in the current biennium – a potential total of $50 million of taxpayer dollars to Odyssey for operational expenses alone.
Odyssey in Other States
Odyssey has administered voucher programs in states including Georgia, Iowa, Louisiana, and Wyoming. Meanwhile, Odyssey lost its Idaho contract to a competitor after numerous operational problems.
Texas’ voucher law does require an audit of the CEAO by a private entity and the state auditor (Sec. 29.363), but does not appear to ensure that the audits are public and does not make it mandatory to include certain key information in the audit such as reviewing individual transactions approved by a CEAO.
Public reporting on Odyssey has raised repeated questions about the company’s operations and ability to run other states’ voucher programs in almost every state where Odyssey has operated. Odyssey currently manages voucher programs in four states that awarded an estimated $261 million in vouchers – only about 25% of the $1 billion that the Texas program will spend in year one alone.
It’s questionable whether Odyssey has a track record to manage such a large program like Texas’ – which is almost four times more than the funding for voucher programs Odyssey currently manages – given publicly reported operational problems:
ProPublica reported on Idaho’s voucher program as part of a wide-ranging look at the “Wild West” of school voucher programs, noting that:
“Odyssey won the contract in 2022, [to be paid] $1.5 million per year. A year later, the state ordered an audit after receiving reports of spending on clothes, TVs, smartwatches, and other non-educational items. The audit found that only a tiny sliver of purchases was inappropriate, but it ordered Odyssey to pay back the state for $478,656.22 in interest it had collected from unspent federal funding for the program.”
In the same article, ProPublica’s Alec MacGillis reported that “the director of the Idaho State Board of Education, Joshua Whitworth, wrote to Odyssey’s CEO, [Joseph] Connor, listing problems, including ‘ongoing customer service concerns,’ sales taxes charged in error, and vendors being owed payments since January 2024.”
The Des Moines Register, meanwhile, reported on an audit of Odyssey’s Iowa contract by the Iowa Department of Education. The audit found that the initial contract with Odyssey was later amended to include “additional costs including transaction fees …Those fees include 25 cents per $100 in qualified educational expenses processed through the Odyssey system, 5 cents per ESA transaction, a $100,000 ‘standalone system fee’ and reimbursement for payment processing fees.”
That 2024 audit found that by fiscal year 2027, the additional costs would have the state paying double the original contract amount.
Last year, the Louisiana Legislature’s budget committee raised concerns about a contract between Odyssey and the State Department of Education, citing its length (three years) and cost ($11.3 million). As reported by Nola.com, Louisiana Rep. Jack McFarland, vice chair of the budget committee, said: “There were questions about the vendor’s ability to deliver the services.”
The Last Word
Texas AFT agrees with the conclusions of Maggie Stern, director of community engagement at Our Schools Our Democracy:
“Given Odyssey’s track record of operational mismanagement and misuse of state funds in much smaller voucher programs, Texans should sound the alarm about the comptroller’s decision to entrust Odyssey with $1 billion of our taxpayer dollars and the educational outcomes of our children. We urge the Comptroller to ensure that discretionary information is included in a thorough and public annual audit on how Odyssey manages Texas’ voucher program. When private companies receive public funds, they should be accountable and transparent so that parents, policymakers, and the public can fully evaluate the actions of the vendor.”
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