Texas Lege Signs Off On School Finance, Property Tax Relief Bill

Squeaking in just before May 27 and sine die, lawmakers in the state House and Senate passed a school finance bill that will provide raises for teachers, pre-K, and property tax relief.

The final OK comes a day after Gov. Greg Abbott, Lt. Gov. Dan Patrick, and House Speaker Dennis Bonnen announced that the two chambers had managed to come to a compromise on competing bills to hammer out school finance and property tax relief measures.

“We would not be here today, making the announcement we are about to make, without the tireless efforts of the members of the Texas House and Senate,” Abbott told reporters gathered at the Governor’s Mansion Thursday. All three had promised at the beginning of the legislative session that the focus would be on school finance reform and property tax relief.

“We’re here to tell you we’ve been all together and we’ve stayed all together,” Bonnen said. “We didn’t get here without being a team.”

Saturday night, all 139 House members, and all 30 state senators voted to approve the final compromise version of House Bill 3. The bill, which includes $6.5 billion in public education funding and teacher pay increases and $5.1 billion to lower school district taxes, will head to Abbott’s desk to be signed into law.

Among the items in the bill will be funding for full-day pre-K and an increase in per-pupil funding. More than $5 billion will help lower school district taxes up to 13 cents per $100 valuation.

The bill also aimed to reduce recapture payments (or Robin Hood) that wealthier districts (including Highland Park ISD and Dallas ISD) make to the state by about 47 percent.

Last week, lawmakers said that the new bill would increase the state’s share of public education funding to 45 percent from 38 percent and would lower recapture payments by $3.6 billion over two years.

Legislators also said it would increase the state’s share of public education funding to 45% from 38%. They said it would lower school districts’ cumulative recapture payments, which wealthier districts pay to subsidize poorer districts, by $3.6 billion over two years.

The bill will also allow districts to create a merit pay program if they wish, giving more money to teachers who are highly-rated. The motion was not in the House bill, but was in the Senate version, and teachers unions argued heavily against it.

What wasn’t exactly included? A set $5,000 per teacher that Patrick promised at the beginning of the session. Instead, additional funding per pupil is available for “dynamic teacher compensation.” While the Senate bill gave a firm number, school districts lobbied (and Bonnen agreed) to give schools the local control to decide compensation based on their particular circumstances. School districts will be required to use part of their increase in per-student funding on pay increases and benefits for teachers, librarians, nurses, and counselors, and smaller raises for all employees as districts need to do so.

The compromise bill also allocates funding to increase spending on improving dyslexia assistance, educating low-income students, as well as giving incentives to districts to offer dual language programs.

The final estimated cost of the bill, according to figures released Friday by the Texas Education Agency, is slightly more than $11.5 billion. It will raise per-pupil funding from $5,140 to $6,160.

The other key component of the compromise bill was property tax relief, which was addressed by providing a governor on tax revenue growth. School districts with property values growing 2.5 percent or more would see lower tax rates kick in automatically. The bill also requires a study on other potential sources of funding for future school district tax cuts and how that would impact taxpayers and the districts.

It’s estimated that the bill will lower tax rates by about 8 cents per $100 valuation on average in 2020, and 13 cents in 2021. It is estimated that these changes will cost the state $13.5 billion in 2022 and 2023. It is unclear how sustainable the reduction will be over time, or where the money will come from in the budget.

To see House Bill 3, click here.