Yesterday, Senate Finance Chair Senator Jane Nelson (R-Flower Mound) and Speaker Dade Phelan (R-Beaumont) revealed the two chambers' budget proposals. The base bills will serve as a starting point for the appropriations process. While the two proposals are not identical when it comes to public education, they are very similar.
Public Education remains priority
The most important thing for schools to know is that the Foundation School Program (FSP) is fully funded under current law, thereby honoring the commitments made in HB 3. That includes an additional $3.1 billion to fund enrollment growth for public schools, based on an estimated 36,000 additional students per year of the biennium, and an additional $1 billion to continue property tax rate compression.
While public education was largely spared from cuts, the budget proposals both make reductions in other areas and even with that, they are still presently proposing to spend $7.3 billion more than what the Comptroller estimates will be available to spend. To be clear, this is the starting point of a lengthy process. This initial proposal is a way to establish priorities though, and when you look at the proposals as a whole, public education clearly remains a priority for the Texas Legislature.
Shifting methods of finance
It may also be an acknowledgement of the significant state savings generated through school funding in the current two-year cycle, and most likely the upcoming biennium as well. The budget documents specify $5.4 billion in state savings from TEA in the 20-21 biennium due to "shifts in estimated methods of finance based on updated estimates." In large part that is referring to the state savings from the higher than anticipated local property values and therefore school tax collections that offset the need for state funding. The budget proposal also does not yet account for any further state savings that may occur if and when federal stimulus dollars for schools are once again used to supplant state funding, rather than supplement it.
Non-FSP cuts proposed
A $475 million cut to non-FSP funding for public education was proposed in both budget proposals. The lion's share of that comes from the $312.7 million reduction to funding for instructional materials and technology, along with a $158.4 million decrease in funding for special education related to the state's maintenance of effort.
Economic Stabilization Fund not yet utilized
This budget proposal does not yet contemplate any spending from the Economic Stabilization Fund, or "Rainy Day Fund." The Legislative Budget Board projects that if nothing is spent out of the current $8.9 billion fund, that the balance will be $11.6 billion by the end of the 22-23 biennium. It remains to be seen whether lawmakers will spend from this fund or not.
Recapture continues to grow
The proposals also shed some light on the future of recapture, which is expected to grow by $432.4 million in the next biennium, even with continued property tax rate compression. Recapture is expected to exceed $3 billion per year by 2023. That's a far cry from the $5-6 billion per year projected prior to the passage of HB 3, but $3 billion is still staggering, and the highest amount recapture has reached in a single year.
We will be sending more information and comparisons as these two proposals begin to work their way through the process. If you would like to review the bills, budget documents, and summaries for the House and/or the Senate, those can be found here on the Legislative Budget Board website.
You can also access the Texas School Coalition's statement in response to the initial budget proposals, as this may be a helpful tool when communicating with your local legislators and members of your community.
