In 1998, then-Governor Don Sundquist proposed charter school legislation. House Bill 2553 would have allowed local boards to charter schools. Rejected charters could have appealed to the state.[1] The bill died in a House subcommittee.[2] In 2000, Tennessee legislators introduced two bills to address the problem of overcrowded schools. H.B. 2706 and Senate Bill 2248 would have allowed eight districts that were categorized as "high-growth" to contract with private schools to enroll students who wanted to transfer.[3] Neither bill was successful.

In a Chattanooga Times and Chattanooga Free Press survey taken in September 2000 in Southwest Tennessee, 54 percent of respondents favored "school vouchers that allow parents to use part of the taxes they pay for public education to pay for private school tuition." Thirty-five percent opposed vouchers.[4]

The Memphis Opportunity Scholarship Trust (MOST) is a privately funded scholarship organization, formed in 1998, that serves students in the Memphis area and operates in conjunction with the nationwide Children's Scholarship Fund (CSF). MOST scholarships help low- and moderate-income families pay private school tuition. They are awarded in amounts up to $1,500 or 75 percent of the tuition fee, whichever is less, and are guaranteed for four years. In 2000, the CSF matched MOST's $3 million in scholarship awards. Since the program's first year, the number of MOST recipients has grown: 156 scholarships were awarded in 1998, 750 in 2000, and 860 in 2001. In 2001, 1,200 students were on the MOST waiting list.[5]

Chattanooga also has a privately funded voucher program, CEO Chattanooga, which provides partial scholarships for urban students (targeting students in underperforming schools) to attend private school. The program, which operates with Children First America, offers scholarships worth up to $1,700.[6] More than 200 CEO scholarships were awarded in 1998. In 1999, CEO Chattanooga joined with the Children's Scholarship Fund to provide 500 additional scholarships. Currently, more than 3,200 students are on the CEO waiting list. Studies show that students have been more successful after receiving scholarships. An April 2000 survey found that 54 percent of recipients had improved their academic performance.[7]

Knoxville also has a scholarship fund operated in conjunction with Children First America.[8] Prior to 2001, CEO Knoxville awarded 75 scholarships totaling $112,000.[9]

In 2001, Memphis parents started the first out-of-state chapter of Eta Sigma Alpha, a home-school honor society initiated in Texas to "give home-school students an advantage when applying to college." By December 2002, Eta Sigma Alpha had 20 chapters in the United States, and an application for a second chapter in Tennessee was under review.[10]

On July 4, 2002, then-Governor Don Sundquist signed H.B. 1131, creating Tennessee's charter school program.[11] Tennessee offers three types of charters: schools for students who were previously in schools that had failed to make "adequate yearly progress"; programs that are "designed to address the needs of students with special needs, as specified by the Individuals with Disabilities Education Act"; and converted public schools.[12] The Tennessee law stipulates that at least 75 percent of a converted public school's enrollment must be composed of students from a school that had not met state performance standards or students who are eligible for the free or reduced-price lunch program.[13] The local school board governs charter approval and manages charter school funding, which is 100 percent of the per-pupil expenditure from the local education agency (LEA) in which the charter is located. Rejected applicants may appeal to the state.[14]

In 2003, S.B. 1368 and H.B. 1302, a companion bill, were introduced to provide excise tax credits for donations to tuition scholarship organizations. Taxpayers could not designate a particular student as a beneficiary of a scholarship or award more than $5 million to a single scholarship organization. The scholarship organization would be authorized to give scholarships of up to $3,500 for tuition, textbooks, and transportation to a private school, or $500 to attend a public school out of the district. The bills did not receive any action prior to adjournment.[15]

Three bills were introduced in 2003 to offer college scholarship opportunities to home-school students. H.B. 475 and S.B. 144, a companion bill, would fund the scholarships with proceeds from the state lottery. Public and private school students would be eligible for the scholarships as well and would receive the funds before entering college. Home-school students would not receive the scholarship money until after the end of their freshman year.[16] H.B. 1178 would also create scholarships from lottery proceeds; home-school students would have to outscore public and private school students on the SAT or ACT to be eligible. The legislature did not act on the bills prior to adjournment.[17]

S.B. 1909 and H.B. 1982 were introduced in the summer of 2003 to change the state's home-school law. Under current law, a home-school student can be instructed only by a parent or legal guardian. The bills would allow another adult family member to teach a home-school student.[18] The bills were sent to committee in early 2004 and no action was taken.[19]

The state legislature considered S.B. 1368 and H.B. 1302 again in 2004. The legislation originally enabled individuals to take a tax credit worth up to 75 percent of a contribution to a scholarship organization serving students who qualify for the free and reduced-priced lunch program. During consideration, the bills' parental choice provisions were eliminated and replaced with a tax deduction for contributions to public school support organizations. The governor signed the legislation on June 8, 2004.[20]

State Attorney General Paul G. Summers issued an opinion in March 2004 that indicated charter schools do not have to show "an eligible student population" in order to be chartered.[21] The language in companion bills H.B. 3380 and S.B. 3216, introduced in 2004, would change the state's charter law in accordance with this opinion, broadening the pool of eligible charter students from those attending low-performing schools to students eligible for the free or reduced-price lunch program, high-risk students, or students in need of special language services (such as ESL).[22] H.B. 3380 stalled in the House Education Committee, and S.B. 3216 did not move from the Senate Subcommittee on Education at the end of the session.[23]