School Choice and Blackbaud Software

There has been a lot of discussion about “school choice” programs across the U.S. and how they impact students, families, and public funding in general. But there is limited conversation about how schools must adapt to accept these funds. How much money is involved? How do you factor state-funded scholarships or school vouchers into your financial aid program? How do you receive and allocate those funds in the business office? What changes do you have to make in your processes?

The answers to those questions depend on your state, which program the family uses, and what software is in your school’s tech stack. Let’s explore each of these factors.

How much assistance are states providing?

More than thirty U.S. states, Puerto Rico, and the District of Columbia now have at least one school choice program, but no two are exactly alike. While primarily for tuition at private and independent schools, many programs also accommodate books, tutoring, transportation, and other school-related expenses. States may offer public funds in the form of tax-credit scholarships, vouchers, education savings accounts (ESAs), or a combination of those options.

Programs differ from state to state. Here are a few examples:

• Ohio’s EdChoice Scholarship program awarded more than 89,000 private school vouchers last year—triple the number of previous years. The state awarded each K–8 student up to $6,166 and high school students received up to $8,408. While there is no income limit, voucher amounts are awarded on a sliding scale and are for tuition only. The school must submit each student’s scholarship application, the families provide income documentation, and the state disburses funds directly to the school.
• Iowa is phasing into near-universal eligibility for its Students First ESAs in the 2025–26 school year, offering up to $7,826 to cover private school tuition, fees, and other educational expenses such as textbooks and tutoring. ESA funds stay with the state until a student’s parent or guardian approves payment to a participating private or independent school.
• Arizona reports that its Empowerment Scholarship Account—a program open to all Arizona K–12 families—has aided more than 83,000 students at $7,000–9,000 each with even higher amounts going to students with special needs. Funds are put into a virtual account or prepaid debit card for families to use for private school tuition, tutors, or approved online education and homeschooling expenses.
• Florida has among the most state-funded programs benefitting private and independent school students. Step Up for Students details several options including scholarships prioritized by income, which averaged $8,100 per student in the 2024–2025 school year. The state ESA for students with unique abilities provides $10,000 on average. Florida also offers an ESA designed for homeschooling and programs to support tutoring and transportation. Families use an online portal to request payments or reimbursements from their designated ESA.

How do you track the ever-changing landscape?

Legislation is constantly evolving, and school leaders need to stay informed. The Education Commission of the States and EdChoice track state funding sources for private school choice with detailed profiles of existing voucher programs, education savings accounts, and scholarship tax credits. They track state education policies—including enacted and vetoed bills and pending legislation—and maintain a state legislation watchlist in various educational areas, including school choice. They also list requirements for private schools to participate in state-funded programs.

School participation is optional.

While these programs offer additional support for families and may encourage a broader range of private school applicants, some schools find their state’s program requirements and restrictions at odds with the school’s mission, pedagogy, and priorities. Concerns include:

• Certain states require schools to accept a voucher as full tuition for the student, regardless of the school’s cost to educate. Research shows that most families using school choice programs already had their children enrolled in private school, so program participation could impact net tuition revenue.
• Some schools report extensive paperwork and months-long payment delays, resulting in less initial operating revenue and heavier workloads in the business office.
• Regulations and standardization may open schools up to more stringent government oversight, potentially jeopardizing the programs and curricula that make each private school unique.

The National Association of Independent Schools (NAIS) offers a list of considerations about participation.

How do school choice programs impact tuition and financial aid?

Some independent schools participating in state-funded programs consider it an opportunity to positively impact their financial sustainability. Here are three ways they are doing it:

1. Reducing school-funded financial aid. Since a high percentage of students using school choice programs are already enrolled in private education, some schools are adjusting their financial aid policies. Financial aid in K–12 is a tuition discount as opposed to actual funds exchanged, so participating schools may be able to discount less. If unrestricted funding was bolstering their financial aid programs, those dollars can now be used for faculty salaries, benefits, programming, or operational purchases—like upgrading their school’s K–12 software technology.
2. Raising tuition. Almost every private and independent school has a gap between net tuition revenue and its cost to educate a student. Tuition discounting widens that gap. The rise of school choice programs has empowered some schools to do something they have delayed for a long time: raise tuition. They help all families apply for available vouchers and ESAs knowing state funds can cover the increase.
3. Marketing school choice participation. Schools that choose to participate in their state’s choice programs are highlighting newfound affordability on their websites, social media, and in recruitment materials. This allows them to reach further into the community—both demographically and geographically—to drive enrollment.

School choice, tuition, and financial aid policy changes deserve careful consideration, and each school must weigh the benefits and drawbacks for its particular situation. Decision-makers should include the board of trustees, school leadership, and legal counsel.

How do you manage school choice funds in Blackbaud software?

If you use Blackbaud’s K–12 Solutions, we encourage you to work with your auditors, accountants, and Blackbaud services team to configure Blackbaud financial aid, enrollment, tuition, and accounting software according to your school’s needs. Every state program is different, so there is no one setting that fits every situation.

From a broader perspective, there are different ways to account for school choice funding. It all depends on the timing and nature of your state’s program and the structure established in your school.

If you know the voucher/ESA amount ahead of contract completion:

• With Blackbaud Financial Aid Management™, your school can track all forms of scholarships and tuition discounts in one place and account for state vouchers and ESAs when determining need-based awards. An admissions or business officer can create a “budget” for state funds in the financial aid system and link that budget to a financial aid type in Blackbaud Enrollment Management System™. You can even import student lists into Blackbaud Financial Aid, create any number of budgets for scholarships and need-based awards, and allocate funds and discounts to appropriate students.

• The benefit to using our financial aid and enrollment systems is that families and administrators can see all forms of financial aid on the integrated enrollment contracts, which then flow into your tuition and billing subledger—Blackbaud Tuition Management™ or Blackbaud Billing Management™, whichever your school uses—and feed into Blackbaud Financial Edge NXT^®, your general ledger and the single source of truth for financial operations at the school.

Blackbaud’s Total School Solution connects your entire school—from admissions, financial aid, and accounting to academics, fundraising, and more—in one secure system. It’s available to new customers or current Blackbaud users can “complete the suite” to enable all utilities.

If you need to add the amount after the contract is finalized:

• If the state funds wouldn’t influence any need-based aid the school provides, the business office can enter the amount into Tuition or Billing Management, the families see that credit in their payment portal, and that information feeds into Financial Edge NXT.

• If the student already received a need-based tuition discount, the school could use Blackbaud Financial Aid to recalculate that need to include what the state is providing, potentially increasing net tuition revenue.

• Ask legal counsel how to account for after-contract revelations. State laws vary, so ensure your school has appropriate disclaimers and policies that allow you to reevaluate need-based awards if a family presents a new state voucher or ESA after they’ve signed their initial contract.

If the state uses direct deposit to the school:

• The business office can record the deposit in Financial Edge NXT—using a project code assigned to each type of state funding—and then assign the appropriate amount to each covered student’s account in Blackbaud Tuition Management.

How do you track and report on state funds?

Since Blackbaud Tuition Management and Billing Management act as subsidiary ledgers to Blackbaud Financial Edge NXT—the general ledger—we recommend using a project code in whichever systems you use so the business office can track the discount not only at the account level, but also at the project level.

Financial Edge NXT is designed to organize, track, and report different fund sources. By using a distinct project code, you can get the reporting you need for your state at the push of a button. Work with your Blackbaud team to create those reports.

There is no “one size fits all” approach.

Choice funding works differently in different states and sometimes there are various programs within the same state. Just like every private and independent school is unique, your approach to state funding will be, too. If your school chooses to participate in state-funded programs, start with your internal accounting team and your auditor. Then reach out to your Blackbaud account executive or customer success manager to explore how we can help set your school up for success.