The Senate Finance Committee passed Senate Bill 1, the General Appropriations Act, out of committee on a 15-0 vote. The full Senate could take up the bill as early as Thursday of this week.
The bill adopted by the committee is largely similar to the bill that was filed. HB 3 is fully funded--including funding for enrollment growth and continued property tax compression. However, the bill doesn't contemplate the use or amount of the federal funds for education at all.
This morning the House Appropriations Subcommittee adopted the decisions for Article III, including public education, which also does not appropriate any of the funds from ESSER II or ESSER III.
However, this morning the Committee did adopt a rider by
Rep. Geanie Morrison (R-Victoria) that specifically says “no public education funds provided to the State of Texas by the federal government in response to the coronavirus pandemic shall be used to reduce state funding for local education agencies.” The rider does not appropriate any funds, but it does speak to intent. This is an important signal from the House Committee.
Here is where you can find this rider (and all the others). The Morrison Rider is on page 9 of the PDF.
Article III Subcommittee Chairman Terry Wilson (R-Marble Falls) said this rider was a clear priority expressed by his Subcommittee.
Rep. Armando Walle (D-Houston) asked for clarification as to why none of the federal funds were included in Article III. The Legislative Budget Board’s (LBB) Aaron Henrickson explained that the state is awaiting clarity regarding the Maintenance of Effort and Maintenance of Equity requirements in the federal law. Walle asked if ESSER II dollars are available now, and Henrickson responded that ESSER II dollars are available now, but have not been pulled down by TEA for use by schools because they need additional clarification before doing so.
Henrickson went on to explain that the Maintenance of Effort requirement relates to the state share of funds spend on public and higher education must be proportional to the funds spent in FY 17, 18, and 19. Those three years are compared to FY 22 spending for the December bill and compared to FY 22 and 23 from the federal legislation passed in March. The issue is that the state is not certain whether the Maintenance of Effort applies to public and higher education together or separately. There is no concern over meeting those requirements for public education, as increased spending under HB 3 makes that an easy mark to reach. However, the requirement when applied to higher education could potentially require $1.2 billion in increased state GR spending for higher education, which would cause an issue for the state.
The Maintenance of Equity requirement, found only in the American Rescue Plan Act adopted in March, relates to how funds how funds flow to certain districts to ensure no school receives less than they would have in FY 17, 18, and 19. This requirement affects distribution of funds, but not the amount.
Henrickson also confirmed that Governor Abbott has already submitted an application for a waiver from the requirements in the bill passed in December.
Rep. Justin Holland (R-Rockwall) inquired about when we could expect an answer on that waiver request and explained that schools are trying to plan for summer and fall, so this information on funding would be helpful for them to know now. He also asked what plans exist to ensure that House members can be involved in decisions if the money does not flow to the state until after the legislative session concludes. Chairman Greg Bonnen (R-Friendswood) explained that the Legislature will be considering legislation to potentially allow the legislature to continue to play a role in that process, even outside the session.
Rep. Donna Howard (D-Austin) pointed out that the Morrison rider clearly says the state can’t supplant the funds, but then questioned whether the waiver that has already been submitted is for the purpose of supplanting the funds. Henrickson said the waiver seeks to answer two questions: whether the state is eligible to receive the federal funds at all and whether the funds can be supplanted.
Howard also asked about other states that have already been drawing down ESSER II funds for their schools and whether we could look into the clarification these other states must have received that we have not. Henrickson responded that other states may budget differently and not have the same issues with the Maintenance of Effort requirements as Texas.
With decisions now made, the House Appropriations Committee will wait for SB 1 to be passed by the Senate before moving forward with their version of the budget bill.
