How to use a terraform variable in userdata

I am trying to pass a variable containing an ssh_public_key from my main.tf file to userdata, but it is not being added to the users authorized_keys file (The user is created however). If I hard code the key in the userdata.yaml file, it works fine, so I am wondering if I am passing variables correctly to the templatefile() function or perhaps I am using them incorrectly in the userdata file.

userdata.yaml

#cloud-config
users:
  - default
  - name: testuser
    sudo: ALL=(ALL) NOPASSWD:ALL
    ssh_authorized_keys:
      - $public_key
    shell: /bin/bash

packages:
  - jq

main.tf

...
resource "vsphere_virtual_machine" "master_nodes" {
  count = length(var.master_ips)
  ...
  extra_config = {
    "guestinfo.userdata" = base64encode(templatefile("./userdata.yaml", {
      public_key = master_public_keys[count.index]
    }))
    "guestinfo.userdata.encoding" = "base64"
  }
  ...
}

I believe you're missing:

${public_key}