House passes school finance bill now debates budget without federal funds

39 days remain in the 87th Regular Legislative Session.

House passes school finance bill

Yesterday, the Texas House debated HB 1525 by Rep. Dan Huberty (R-Humble), also known as "the HB 3 Clean-Up Bill." And today the House officially passed the bill and sent it over to the Texas Senate without an amendment regarding fund balances.

There were a total of 14 amendments adopted. You can access summaries of all amendments to HB 1525 here. You can access our section-by-section of the bill that goes through all the details here. Please note that document doesn't yet reflect the changes made by these amendments, but we will have it updated soon.

The amendment mentioned in the email sent earlier this week by Chairman Chris Turner (D-Arlington), in regards to district employee compensation was altered/updated during the debate. Turner amended his amendment so that the requirement to maintain a certain level of compensation applies only to an employee's salary from the 2019-2020 school year, and the requirement only applies if a district is not needing to reduce the employee's salary for reasons of financial exigency.

As a reminder, this bill includes some important provisions:

Applies a fix so that small and mid-sized districts to again receive CTE funding, which Rep. Trent Ashby (R-Lufkin) asked Huberty to commit to maintaining in the bill throughout the process, which he did.
Changes to the overall CTE funding weight that incentivize approved and higher level CTE courses. FTEs in non-approved courses qualify for a funding weight of 1.1, approved courses for levels 1-2 qualify for a weight of 1.28, and approved courses for
Changes to the Fast Growth Allotment to base that weight on the volume of new students enrolled rather than the percentage of enrollment growth; if a district grows by more than 250 students over a six year period, they would qualify for a 0.34 weight for each student above 250.
Allows recapture to be netted against state funding
Prohibits "tax swaps" and imposes penalties for districts found to have performed tax swaps

As mentioned previously, there was no amendment offered pertaining to limitations on fund balance. However, Huberty offered comments on the topic and said that school districts collectively have $21.5 billion in fund balances, including $6.6 billion that exceeds the cost of operating costs for 110 days, and $2 billion in excess of operating costs for 180 days. He also said that $15.5 billion of the total is undesignated. Huberty said he is trying to “get some sunshine on this issue.”

Further, Huberty said that following the passage of HB 3, fund balances increased by $600 million, about which he said “it’s insane the amount of money schools are putting in their bank accounts.”

Rep. Ken King (R-Canadian) questioned Huberty on this topic and questioned how districts could be expected to maintain salaries as required without the ability to maintain a fund balance to do so. He also pointed out that if the state and schools go through cuts like experienced in 2011 ever again, the districts can’t afford to operate and pay staff as required by law, without reserves to accomplish that.

House to debate budget bill today

The House is currently debating Committee Substitute for Senate Bill 1, the General Appropriations Act, as well as HB 2, the Supplemental Appropriations Act today, neither of which appropriate any of the $18 billion in federal funding available for schools through ESSER 2 or 3.

Amendments to be considered were pre-filed for both those bills. You can take a look at our summaries of the amendments that were pre-filed that pertain to public education in some way.

The amendments to bring to your attention for Thursday include:

Holland Amendment on page 140 would prevent the Commissioner of Education from placing conditions on the receipt of federal funds based on payment to or purchase of service from any particular entity.

Rodriguez Amendment on page 141 would enhance the "Morrison Rider" already in the bill by directing that the use of ESSER funding should not supplant state funding for education and adding that the federal dollars for schools may not be restricted by the state in any manner other than what is stated in federal law.

Herrero Amendments on pages 152 and 153 would prohibit appropriated funds from being used for a nonpublic school choice or public education voucher program. Related, the Toth amendment on page 154 would do the exact opposite and allow the use of appropriated funds for the purpose of nonpublic school choice.

Middleton Amendment on page 248 would prohibit any political subdivision from compensating a lobbyist with any public dollars. Entities would be ineligible to receive appropriated funds that do so.

Howard Amendment on page 256 would require public hearings of House Appropriations and Senate Finance Committees to approve appropriations of federal funding that may be received in an amount that exceeds $1 billion.

Morrison Amendments on pages 257 and 258 would prohibit appropriation or spending of federal COVID relief funding except as authorized by legislative appropriation enacted during a regular or special session of the Texas Legislature. (These amendments have many co-authors and were also filed on HB 2).

VanDeaver Amendment on page 260 would prohibit appropriated funding (including federal funding) to be used for nonpublic school choice (in any form).

Huberty Amendment on page 264 would require the Commissioner to work with districts to assist them in prioritizing certain strategies for use of federal funds. It would require Commissioner to prioritize schools with high percentages of students not performing satisfactorily on state assessments or with historic achievement gaps for any grants. Additionally, it specifically outlines the use of the state set-aside for the ARP funding, providing specific purposes for Commissioner use.

Federal Funds Update

Thanks to Geronimo Rodriguez, President of the Austin ISD Board of Trustees and Leader ISD President Trish Bode, along with other Central Texas trustees including John Havenstrite, President of the Eanes ISD Board of Trustees for the commentary published in the Austin American-Statesman this week, Texas schools need the COVID-19 funding that Congress intended. You can view it as a PDF here.

Our friends in the philanthropic community have also called for state leaders to release the federal funding to schools, stating in their letter "we urge you to provide the resources our schools and colleges need to address disruptions in learning as soon as possible."

We also have a new video that combines the voices of teachers, counselors, trustees, and other important members of our school communities that clearly state the need for these federal funds. Please consider sharing this within your community. It's available on our social media:

Texas Teachers Talk About Need for Federal Funding

Post-Legislative Update

We're planning our first in-person gathering in over a year and we hope you will participate (either in-person or through our hybrid virtual option). Please mark your calendar for Wednesday, June 9, from 10:00 a.m. until 2:00 p.m. in Dallas at the DoubleTree by Dallas Love Field.

You can register via the link below to attend in person and also find the info you need to make hotel reservations for a discounted rate if you plan to stay overnight. We will have more details about registering to participate virtually in the coming weeks.