As Tennessee lawmakers reportedly consider expanding universal school choice under the Education Freedom Scholarship (EFS), the state Department of Education is simultaneously accepting bids from third-party companies to provide a School Choice Program Management System that would be used to manage all of its school choice programs, with the bidding process starting in September 2025.
Tennessee’s current contract with Student First Technologies (SFT) began in 2023, and though it was amended last year to include the state’s new universal school choice program, Chalkbeat reported last year that Tennessee’s “first choice” to administer its Education Savings Account (ESA) program in Davidson, Hamilton, and Shelby counties was actually ClassWallet.
While Chalkbeat noted that the state and ClassWallet “failed to reach terms” last year, company CEO Jamie Rosenberg told the outlet, “ClassWallet would welcome the opportunity to bring our mission to Tennessee and maximize the impact of school choice for families and students there.”
ClassWallet was initially selected for a no-bid contract to manage Tennessee’s nascent ESA program for the three counties in 2019, leading to an attempted no confidence vote by Republicans in the General Assembly against former Tennessee Education Commissioner Penny Schwinn, but legal challenges blocked the program from being implemented until 2022, when Tennessee launched the bidding process that saw the selection of SFT.
The 2019 contract came just three years after the company raised $1.5 million in a round of seed funding, reportedly led by a company named Idea Bulb Ventures, a Chinese venture capital firm that has since been rebranded as Sinovation Ventures. The company went on to raise $2.3 million in a fundraising round in 2018, followed by $95 million in 2023.
Sinovation Ventures has its own tie to Tennessee through its chairman, Kai-Fu Lee, who The Wire China reported in January 2025 spent much of his childhood in Oak Ridge.
Despite being the child of Taiwanese immigrants, the outlet described Lee as a “Beijing-based venture capitalist,” who who was once tapped for his connections to China.
“I viewed him as somebody who had the kind of drive and initiative that would help us pull together the research lab in China,” Microsoft Research founder Rick Rashid told the outlet of Microsoft’s decision to hire Lee for the company’s operations in China.
Rashid told The Wire China, “Once he came on board, he immediately started building relationships within the academic community and the technical, scientific parts of the Chinese government.”
Now reportedly considered an “AI guru” by some, the outlet noted that Lee spent most of the last decade publicly predicting that China would lead the world in artificial intelligence. Xiao Qiang, a Chinese internet expert based at the University of California, Berkeley, told the outlet that Lee’s investments in the field stand to benefit the Chinese Communist Party’s security apparatus.
“In China, the number one priority for AI is social control and they’ll use it for that,” Qiang told the outlet. “Kai-Fu Lee has invested in companies producing these surveillance technologies, collecting data and processing it. From my perspective, he is a player in Chinese digital authoritarianism.”
In the years following the investment by Lee’s fund in the education company, ClassWallet has drawn criticism from both sides of the political aisle. Democrats in Arizona demanded answers after a data breach reportedly put names and disabilities of students in jeopardy in 2023, while a Republican state lawmaker in Arkansas said in January 2024 that some parents “lost a little faith” in the state’s school choice program due to problems with ClassWallet and SFT.
Arkansas State Representative Fran Cavenaugh (R-Walnut Ridge) questioned, “If we had such a good experience with Class Wallet, how come we ended up going with this other vendor, that to be honest we didn’t have a good experience with?”
Later that same month, Oklahoma Governor Kevin Stitt, a Republican, announced that the state was suing ClassWallet after it allegedly failed to prevent education funds from being misspent.
More recently, The Missouri Times reported in August 2025 that Missouri Treasurer Vivek Malek, another Republican, was investigating Missouri’s contract with ClassWallet after the data breach in Arizona.
ClassWallet and SFT were not the only two who bid in response to the 2023 request for proposals in Tennessee. Other vendors who submitted bids included Merit International, Odyssey, and LiftForward Inc. At the time, skeptics questioned whether SFT, a newcomer in the field, would be capable of meeting Tennessee’s needs.
Polling from last year found a majority of all Tennesseans, including Democrats, supported lifting the cap on the state’s universal school choice program. Enrollment for new families is scheduled to start on January 13.
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Tom Pappert is a 2025 recipient of the Dao Prize and the lead reporter for The Tennessee Star. He also reports for the Star News Network. Follow Tom on X. Email tips to [email protected].
Photo “After School” by Harrison Keely CC4.0.
