67 days remain in the 87th Regular Legislative Session.

We are still waiting for information about federal funds sent to Texas for the specific purpose of K-12 Education through ESSER II ($5.5 billion enacted December 27, 2020) and ESSER III ($12.4 billion enacted March 11, 2021).

Senate Finance Committee Chair Senator Jane Nelson (R-Flower Mound) wanted everyone to know that state leaders are still waiting for information too. In order to help the Senate Finance Committee manage expectations about the availability of federal funds, she asked Sarah Hicks, the Governor's Director for Budget and Policy, to provide the committee with an update yesterday. Hicks explained that there are many unknowns and questions to be answered. She spoke globally first about all the other federal funds that will be coming to Texas, and then spoke specifically about the funds for public schools. The funding for schools is expected to be available before the other federal funds. However, about that funding, Senator Nelson expressed concerns over the strings that may be attached, stating "That twelve billion sounds real attractive, but there's some real significant maintenance of effort requirements that we need to look at very carefully before we accept that money."  

In response to a question from Senator Royce West (D-Dallas) regarding the $5.5 billion in ESSER II dollars, Hicks stated that "although they have not drawn them down, they are available" [to TEA]. West asked if those funds are also available for supplantation and Hicks stated that "there were various guidelines on those funds; again by the letter of the law, I think that supplantation is possible, but there are maintenance of effort requirements on it that make it not an automatic because there are certain requirements that still have to be met with state funds."

To that, Nelson explained that Texas has submitted a waiver request and we are waiting for a response on that request. "But there are definitely maintenance of effort requirements for that pot of money. It requires a certain level of funding for both public education and higher education. HB 3 from last session would meet the public education requirements, but we don't meet the higher ed requirements, so we've submitted a waiver request."

The lack of information isn't holding up the budget proposals though. The Senate indicated plans to pass a budget bill without the inclusion of federal funds (even the ones currently available, yet not drawn down by the state).

Based on our research, we've been able to find at least 38 other states in the US that have provided per-LEA allocations from ESSER II to serve as preliminary planning amounts for schools in those states, and some have begun to flow those dollars to schools. Michigan shared ESSER III per-district allocations this week. We also found that at least 35 states have provided schools with information or guidance about the allowable use of those dollars. 43 of the 50 states have shared some kind of information about ESSER II and/or ESSER III with their schools. Texas has not taken any of these actions yet.

The US Department of Education has provided this Fact Sheet on ESSER II that some districts may find helpful. Additionally, the allowable uses clearly spelled out in the federal legislation have become the allowable uses in many of the states moving forward with sending this money out for use in their schools. Click here to read the 15 allowable uses specified in the federal law. (But please keep in mind that Texas has already applied for at least one waiver and if granted, could make up their own set of rules.)

So we don't yet know how much, when, or what will be allowable with funds in Texas, but this will hopefully give you an idea so you can begin making plans for how to best address the needs in your district. Please communicate those needs and and your plans to your local legislators in the House and Senate.

We would also love if you would take a moment to share those thoughts and plans with us. We won't hold you to your responses, but it would be very helpful to get some idea in regards to the plans your district is considering at this point in time.

The House Public Education Committee heard the “HB 3 Clean-up Bill,” HB 1525 by Rep. Dan Huberty (R-Humble) on Tuesday. (We sent an explanation/summary of the bill last week, and you can also access our section-by-section of the bill.) The author provided an overview of the bill and specifically addressed the issue of the unintended consequences for small and mid-sized districts by saying “We know there are additional fixes that need to be put in place. We want that money to be in addition to…” However, he also emphasized that talks with appropriators would be required if they opted for the more expensive fix.

Rep. Steve Allison (R-San Antonio) asked specifically about the bill's repeal of districts’ ability to charge or pay tuition. Huberty explained that the issue was brought to him by other districts and that it was a policy call. He deferred to TEA for any specifics.

Michael Lee of the Texas Association of Rural Schools (TARS) and Greg Gibson of the Texas Association of Midsized Schools (TAMS) both testified about the unintended consequence of HB 3 that hurts small and mid-sized districts each time a new student is added to their CTE program. They advocated for a change to the “fix” included in the bill as filed, that would function in the same way that special education funding does, so that funding would be provided in a manner that does not cause any district to lose funding. The Texas Association of School Administrators (TASA), South Texas Association of Schools (STAS) and Equity Center echoed those sentiments.

Texas School Coalition President Kyle Lynch of Seminole ISD testified on behalf of the Coalition. He also echoed those same sentiments and concerns about the proposed fix for small and mid-sized districts. This is especially troubling for any district that would become more reliant on the Formula Transition Grants, which will expire and set up a fiscal cliff for many districts. Lynch also addressed concerns over the provisions of the bill that cause a district to pay a surprise double recapture payment in the same school year, the provisions of the bill that would repeal a district’s ability to receive or pay tuition, and the provision in the bill that would cause any excessive taxes collected by a district to be sent to the state through recapture (rather than a remedy that could return those dollars to taxpayers).  

Amanda Brownson, on behalf of the Texas Association of School Business Officials (TASBO), raised concerns about the provisions in the bill that not only prohibit tax swaps (from M&O to pay for I&S purposes) and the retroactive nature of these provisions. She also mentioned that there are times when transfers are necessary so the district does not default on debt. TASA and STAS raised similar concerns.

Greg Smith, on behalf of the Fast Growth School Coalition pointed out that the changes proposed to the Fast Growth Allotment in the proposed bill did not change district eligibility for the allotment, and he suggested establishing an enrollment floor and replacing the three-year period with five-year period.  

Huberty closed on his bill by telling the committee that since the passage of HB 3, school district fund balances collectively increased by $600 million. He also reported that districts collectively have $6.6 billion in reserve that exceed the cost to operate districts for 110 days.  Huberty said that he believes if we’re going to pick at these small things, we should also talk about the big things.

Please note that the $6.6 billion figure Huberty referenced represents the total fund balance (over 110 days) including: Unassigned, Assigned and Committed. It could certainly be argued that Assigned and Committed funds are not available to be spent on the district's operations.

The bill was left pending as Rep. Huberty continues to work with stakeholders on a committee substitute. The Committee also heard nine other bills, which were also left pending.

There were six bills (heard last week) that were passed by the committee and sent to the full house. Those included:

The House will convene at 10:00 a.m. and the Senate will convene at noon.

The Senate Education Committee will meet at 9:00 a.m. to take up and consider seven bills on topics including charter schools, excused absences, a student's right to transfer to school offering in-person instruction, electronic administration of assessment instruments, and fiscal management.

The Senate Natural Resources & Economic Development Committee will meet at 9:00 a.m. and consider nine bills, including Senator Brian Birdwell's (R-Granbury) SB 1255, which would reauthorize Chapter 313 Agreements and extend their use through 2032. However, the bill would also remove renewable energy from the list of eligible projects.

The House State Affairs Committee will meet at 8:00 a.m. to hear a number of bills, including HB 749 by Rep. Mayes Middleton, relating to the use by a political subdivision of public funds for lobbying activities.

To view any House committee hearings click here to watch live or view archives.

Or to see a Senate hearing click here to watch live or view archives.

The Senate Finance Committee will meet on Monday at 10:00 a.m. In addition to the (mostly tax-related) bills posted, it is possible that the Committee could vote on the Committee Substitute for SB 1 (the General Appropriations Act), as the committee finalized and adopted all workgroup recommendations today. That's an important step in the budget process, and if it doesn't happen Monday, the committee could vote any other day of the week once the final draft is ready. The budget bill is not expected to include any of the federal funds (even those currently available).

The House Ways and Means Committee will meet on Monday, at 10:00 a.m. They will hear 16 bills, including Rep. Jim Murphy's HB 1556. This bill would reauthorize Chapter 313, while also making changes that would significantly reduce the revenue that would be available to school districts participating in these Agreements. Click here to find more information on this bill.

The House Appropriations Committee will meet on Monday at 11:00 a.m. to consider and adopt the subcommittee recommendations in each article of the budget. Budget work continues in both chambers. If the committee doesn't finish their work on Monday, they will begin again on Tuesday at 7:30 a.m.

The House Public Education Committee is expected to meet on Tuesday, March 30, at 8:00 a.m., though that meeting is not yet posted.

The Texas School Coalition will host another virtual legislative update for members on Wednesday, April 7, at 2:00 p.m. We hope you can make plans to join us. Click on the link below to register for the event and add those details to your calendar.