Unlike traditional school vouchers, which are typically used to pay tuition directly to private schools, ESAs provide families with state-funded “digital wallets” to cover a variety of approved expenses, including tuition, tutoring and homeschool curriculum. The primary hurdle for these programs is not just policy, but infrastructure, as managing these funds at scale requires a complex operational layer to handle applications, vet vendors and process payments.
One company capitalizing on this movement is Odyssey, a technology platform that helps states run school-choice programs and helps families access and use education funding. Led by CEO Joseph Connor, who has a background in teaching and law, the company administers ESA programs in multiple states including Iowa, Georgia, Louisiana and Wyoming.
In October, the Texas Comptroller of Public Accounts selected Odyssey to implement the Texas Education Freedom Accounts (TEFA) program. With a $1 billion budget and over 150,000 applicants, the Texas rollout represents the largest ESA implementation in U.S. history, according to the Texas comptroller’s office.
Connor recently spoke with the Center for Digital Education about ESAs, digital wallets and what school districts should know about them. The conversation has been edited for length and clarity.
From an infrastructure perspective, what does Odyssey’s platform actually function as on someone’s device?
We primarily do two things: We process all of the applications, and we process all the payments. So, when a state passes a new program, it’s usually assigned to an agency ... and so that agency then is contracting with us, and we essentially are running the platform end-to-end. So, all of the experiences that the parents, the schools and the vendors have, as well as the state staff, all go through the Odyssey platform. We essentially have different portals for them to log in and complete the actions they need to. But from a parent’s point of view, they log onto the Odyssey platform, register, fill out an application ... so it’s super quick. Once they are approved and they’re awarded funding, they then have that in what’s called a digital wallet, so they can log in to see exactly how much they’re awarded.
Does the platform manage and vet providers, and if so, how?
Absolutely ... Every ESA law is different, but for a vendor in a state, typically, what we’re doing are checks. The first one is, whether it’s an LLC, S [corporation] or C [corporation], we’re making sure that they’re in good standing in that state. So, have they registered to do business in that state? Are there any outstanding complaints or liens against that business? Have they provided these types of services before? And then, assuming all of that checks out, then we’re actually looking at what product or service they are providing. ... Our software and team are working with the vendors, making sure all the product offerings and service offerings reflect the roles. And then, when a parent is funded and they can go into the Odyssey marketplace, every single item that they can buy there has already been vetted by a combination of our software and team. In many of our states, they have access to over 100,000 offerings ... We have behavioral therapists who can provide services, we have speech therapists, audiologists, all of that’s available on the platform, and in those cases, with specialized service. We’re actually checking, ‘OK, are you a licensed therapist?,’ ‘are you a licensed speech therapist in the state?,’ or making sure that all of their licensing and everything is up to date there.
It sounds like there are guardrails that exist around what can and cannot appear in this marketplace. Correct me if I’m wrong, but it also sounds great for the practitioners, providers and vendors that are getting this exposure to potential clients.
I think that is probably an underlooked at part of the program. As states pass these programs, as we set up these marketplaces, it is a great opportunity for high-quality small businesses and local businesses to actually provide their services, provide their products. A big issue for any retailer, whether it’s service or product, has always come to discovery, and so by offering people access to, ‘here are local providers with this service,’ it’s been really beneficial for state-based companies, and in many places, the majority of the vendors in that state are local businesses.
Has anything surprised you about how families actually use these platforms once they have access to the funding that is permitted to them?
The data is pretty clear that in the initial years, people are using it to pay for private school tuition. Beyond that, the second largest category is usually electronic products. In many cases ... the program actually prioritizes the groups [that are] in the legislation: Low-income families and special needs get funded first if there’s more demand than there is available funding ... We also see people using that to buy specialized equipment as well. And then the final category, the third largest, would then be services. We see lots of people utilizing tutoring services, especially around elementary age. I’d say reading and math is an especially important tutoring level that we see a lot of people take up. People also use it for standardized testing fees in some states ... The nice thing about the ESA is, it really is supposed to fill those gaps, right? So, if you’re in Texas, you take your $10,000 to pay the $7,000 tuition to your local private school, you have $3,000 left over. You can spend it on these ancillary, supplementary programs that otherwise you might not have access to. And I think that’s kind of been the coolest thing, which is actually being able to see families filling those gaps in things that they otherwise wouldn’t be able to afford, buying additional services.
Do state agencies monitor the types of services these families are using, and/or whether these educational tools are really helpful for them?
Yes, they have access to it. Anything that we can see, typically, administrators for the state agencies can see, and so they can see all the information coming in terms of where spending is happening. I think the interesting thing about it is we’re still in the early days … A coming change is that if we have all that data, how can it inform policy or legislation going forward? Because I think the hope would be that, if a marketplace is set up correctly and has high-quality vendors, parents will act in their kids’ best interest and actually pick high-quality reading instruction, high-quality curriculum, etc. And I think maybe one of the coolest things for states to do would be to actually let that parental choice kind of influence how they do education policy overall.
What kinds of cybersecurity infrastructure and privacy protections have to be built into a system like this?
The first thing you’re thinking about when running these programs [at this scale] is the amount of sensitive information and dollar volume that’s flowing through them. You really are looking at hiring a technology solution … For a lot of agencies, that took a while to figure out. What we recommend for the states is that the technology solution needs to be compliant with any particular state law regarding data security, as well as federal law. So you’re looking at compliance, certainly with FERPA, HIPAA, COPA, and certain data-retention requirements or other things at the state level. And I think … industry best practices would be to be certified in some additional areas.
