States are increasingly allowing public school students to find the right school for them. Since 2020, eight states have adopted strong K-12 cross-district open-enrollment laws, allowing students to transfer to public schools other than their assigned schools when open seats are available. Twenty-three states now have robust open enrollment policies.
These policies are hugely popular. EdChoice-Morning Consult polling from Sept. 2025 showed that about three out of four parents with school-aged children support open enrollment.
Many educators and state lawmakers also support improving open enrollment laws, yet they often ask a common yet important question: How does the funding work?
The simplest solution is to add open enrollment transfers to the enrollment counts of the receiving school district. This means that the receiving school district will receive increased state funding for each transfer student it admits.
Because districts often have significant discretion in identifying their available capacity, they don’t have to hire new staff or build new facilities to accommodate open enrollment transfers, only accepting transfers so long as seats are available. Capacity limits ensure that district enrollments don’t exceed a “tipping point” that would cause them to take on new costs.
This is true in states with the best open enrollment laws. For example, of the 16 states with strong cross-district open enrollment laws, state law in half of them identifies one or more factors that districts must use to measure capacity, giving districts notable latitude. Otherwise, state law just outlines guidelines for how districts could.
However, individual state education funding formulas may have peculiarities that policymakers want to address. In these cases, state lawmakers can adopt simple funding mechanisms that allow education funding to follow students across school district boundaries to their new schools.
For example, state lawmakers in Wisconsin included a separate funding mechanism to make education funds portable. The receiving school district counts open enrollment transfers in its membership and receives a uniform amount per pupil. During the 2024-25 school year, this uniform amount was nearly $9,000 per student and nearly $14,000 per student with disabilities.
Wisconsin’s open enrollment funding mechanism has been a success. Program participation grew from 2,400 students during the 1998-99 school year to nearly 62,000 during the 2024-25 school year, an increase of more than 2,400%.
However, Wisconsin’s solution may not work for every state, especially those where most education funds are raised locally through property taxes.
For example, in New Hampshire, only about one-in-four state and local education dollars are portable, with local funds accounting for 75% of the funding. However, New Hampshire House Bill 741, introduced in 2026 by Rep. Paul Terry and state Sens. Keith Murphy and Victoria Sullivan, aims to address this funding problem by making both state and local education funds more portable. If codified, the receiving school district would get 80% of the average cost per pupil from the sending school district.
This is no small sum, even in New Hampshire. Depending on the transfer student’s sending district, receiving school districts could receive more than $35,000 per student, or at least $14,000, with an average of nearly $20,000 per student statewide.
This is more than enough to cover the marginal cost of educating a transfer student who fills a seat that would have otherwise sat empty in a classroom. In these cases, the funds accompanying transfer students add to a receiving district’s coffers without increasing the district’s overall costs.
Thankfully, most states don’t need to implement a separate funding mechanism to establish a strong open enrollment program. Existing funding mechanisms do the trick in most states. However, Wisconsin and New Hampshire’s solutions offer a path forward to policymakers working in states where education funding isn’t directly tied to enrollment.
From the States
Mississippi gears up for a school choice battle, New Hampshire considers an expansive open enrollment proposal, and New Jersey establishes a cell phone ban in schools.
In Mississippi, the state Senate passed Senate Bill 2002, introduced by Sens. Dennis DeBar, Jr., Kathy L. Chism, and Brice Wiggins, which would allow students to transfer to public schools outside their assigned districts without permission from their assigned district. Speaker Jason White and Rep. Jansen Own introduced an omnibus education bill, House Bill 2, in the lower chamber, to the same effect. However, it would also ensure that transfer students couldn’t be charged public school tuition and would implement transparency provisions at the state and local levels. The proposal would also establish a private school scholarship program that recipients could use to pay for private school tuition, tutoring, and other approved education expenses. During its first year of operation, the program would provide nearly 13,000 scholarships valued at $7,000 per student. The House passed House Bill 2, sending it to the Senate.
New Hampshire Sens. Timothy Lang, Daniel Innis, James P. Gray, Victoria Sullivan, Keith Murphy, Howard Pearl, Jason Osborne, and Reps. Gregory Hill and Erica Layon introduced Senate Bill 101-FN, which would expand the state’s open enrollment policy to allow students to transfer to any public school with open seats. If codified, New Hampshire would receive a B- grade rather than an F grade in Reason Foundation’s best open enrollment practices and rankings.
New Jersey Gov. Phil Murphy signed Senate Bill 3495 and Assembly Bill 4882 into law, restricting the use of cell phones and other internet-connected devices in schools. Under the new law, school districts must adopt policies restricting device use and aligning with guidelines issued by the Commission on Education, effective for the 2026-27 school year.
The Florida Senate approved Senate Bill 318, sponsored by Sen. Don Gaetz, which would change how the state funds its universal education savings accounts program. If codified, this reform would move the “funding out of school districts’ Florida Education Finance Program calculations and instead fund those scholarships separately within the state formula,” The Capitolist reported. Other changes would include expanded application windows, reduced administrative fees, a shift to monthly rather than quarterly scholarship payments, and increased auditing and reporting requirements.
What to Watch
Seven states plan to opt into the federal tax-credit scholarship program; and the U.S. Supreme Court may once again grapple with the legality of religious charter schools.
Arkansas, Alabama, Idaho, Louisiana, South Carolina, Missouri, Alaska, Virginia, and Iowa announced their intention to participate in the new federal tax-credit program, bringing the total number of committed states to 15. So far, four states, Hawaii, Oregon, New Mexico, and Wisconsin, have indicated that they will not participate. Set to launch in 2027, the new law allows individual taxpayers to contribute up to $1,700 annually to an approved scholarship-granting organization. Scholarship recipients may use these funds to cover approved education expenses, such as private school tuition, tutoring, or school uniforms.
The debate over the legal status of religious charter schools could soon return to the U.S. Supreme Court. In 2025, the Supreme Court reached a 4-4 decision on the constitutionality of Oklahoma’s religious charter school after Justice Amy Coney Barrett recused herself from the case, possibly because of her close personal ties to Nicole Stelle Garnett, who advised the Oklahoma school involved. However, new cases may not warrant such actions. Currently, a Christian non-profit has sued the Knox County Board of Education in federal court after the board denied its charter school application because the applicant wouldn’t affirm that it was a “nonsectarian, non-religious school,” as required by state law.
The Latest from Reason Foundation
How New Hampshire’s open enrollment proposal would impact students and school funding
Examining the K-12 open enrollment laws passed in 2025
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