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Senate Finance met on February 6 to hear LBB and agency presentations on the Article III agencies below:

  • Texas Education Agency
  • Permanent School Fund Corporation
  • Teacher Retirement System
  • Optional Retirement Program
  • Windham School District
  • School for the Blind and Visually Impaired
  • School for the Deaf
  • Special Provisions for the Texas School of the Blind and Visually Impaired/Texas School for the Deaf

This report spotlights discussions on the Texas Education Agency, the Permanent School Fund Corporation, and the Teacher Retirement System. Link to archive of hearing.

This report is intended to give you an overview and highlight the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible.

 

Opening Comment

  • Kolkhorst – During Article II meeting on Friday will we take public testimony?
  • Chair Huffman – No, will be the Tuesday after president’s day

 

Texas Education Agency LBB Presentation

Maggie Epson, LBB

  • Link to the presentation
  • Will overview Foundation School Program funds
  • Recommendations include $72.5b in All funds; 13% more than 2022-2023
  • Other Funds increase of $10.9b, GR decrease of $2.1b
  • Funds for tax ratification elections $100m for 2024 and $200m for 2025
  • No change to basic allotment; assume changes to the golden penny yield to 126.21 and 129.25 in 2025
  • For student growth 2024-2025 estimate 3.1% ADA
    • WADA will 63k per fiscal year
    • Updates to these and will have a conference committee
  • Increase to the instructional facilities allotment; recommend to $100m statutory cap
  • 2022-2023 base adjustments
  • West – New facilities allotment? Is zero?
    • $100m cap; actual funding will be determined by the agency
    • Is zero because there are no new facilities projects; the old are already covered
  • Enrollment decline savings $2.1b
  • Property tax growth $4.1b in savings, tax compression cost $1.7b
  • $900m for settle up; mostly for cost of attendance in 2023 being overestimated
  • Whitmire – Significant enrollment declines are statewide? More focused in one area?
    • Chair Huffman – Commissioner Morath will answer that
  • Perry – Weighted average is up, but ADA is going down; have had 2.3m cross the border and 1/3 are pre-k to 12; how are we having an enrollment decline?
    • Chair Huffman – Commissioner Morath will answer that
  • Foundation school program costs
  • $2.5b cost for 63 additional WADA
  • $15b for property tax relief; all funds cost $3.1b
  • $9.7b in all funds transferred to the property tax fund; any impacts that might have to recapture is not included
    • Chair Huffman – Total school districts paying recapture could continue to rise
  • District property value growth $6.4b
  • Chair Huffman – Transfer does have a rider, but is opened ended as to how we do that
  • $2.2b settle up savings
  • $57.6b for FSP GR $29.9b
  • Was a property tax savings; state compression percentage decrease due to property value increase and enrollment decrease
  • Kolkhorst – HB 3 worked for a 50/50 local state share
  • Chair Huffman – Will see that is not happening
  • State share of FSP 43.1% 2024 and 42% in 2025
  • Zaffirini – Could expand on the Teacher Incentive Allotment; expand?
    • Varies on a number of economic disadvantaged and has a rural weight on top of that
  • Perry – Has been hard for teachers in my district to get this together; have found no path to engage on that allotment
  • Chair Huffman – Have spoken with Morath on how to make the TIA more accessible
  • School districts are either in 5 golden pennies or at 5.8 copper pennies
  • Texas Special Education Funding Commission published their final report in December 2022
  • Campbell – Explain the Special Education Funding Commission’s recommendations on an education savings program?
    • TEA would be better equipped to answer that question
  • West – Asks about the Teacher Incentive Allotment
    • Weights are tied to comp ed weights; teachers would receive a higher level
    • is an extra 3k to 32k
    • Disadvantaged and rural is maximum amount

 

Scott Lewis, LBB

  • Technology and instructional $1.04b; 307m increase from 2022-2023
    • Excludes $317b unexpended balance
  • Administrative set aside for EMAT approximately $2b
  • GR funding to non FSP $717m increase due to one time funding 2022-2023
    • PTEC, TCLAS, and other grants
  • $600m in additional funds to districts for new safety initiatives
  • Federal funding streams; ESSER II and III ending during 2024-25
  • Maintenance of IDEA Act; $75m needed 2024-25 could be addressed in supplemental bill
  • $33m increase to supplemental special education program
  • Kolkhorst – COVID funding totals $20.5b; have schools spent all of that? Timeline?
    • Some ESSER II and III will end in upcoming biennia; agency will be able to speak to how much was pulled down
  • Kolkhorst – Want to ensure we do not pay for recurring costs with federal funds
  • Zaffirini – Going to get information on how much federal funds were used in lieu of state funds?
    • Agency will speak on that
  • Strong Foundations Program base funding full continuation of $150m
  • Student Assessment Program base funding at $238m in All funds
  • TEA will continue to implement changes to the STAAR test
  • A-F accountability ratings were released in August 2022 after being on pause due to the pandemic
  • Title I A increase $175m and National School Lunch program $91m
  • Rider 3 revised foundation
  • Rider 58 consolidates PTEC, TSTEM, and related programs
  • Rider 75 contingency language for stat change to the supplement special education program
  • New riders include new cybersecurity program $55m and intent riders for the property tax relief fund and funding ]
  • Deleted riders Permanent school fund and others associated with expired programs, no longer required contingency
  • Exceptional items; $15.5m
  • Local designation; administrative flex
  • Literacy achievement academies
  • West – A-F accountability; more schools were FNR in 2022?
    • Went from 14 to 16 districts
  • West – Notes more schools are A and less are B
  • Campbell – School Marshal Program increase in $1m; wrote a bill to expand this program
  • Paxton – Base bill includes $15b in property tax relief including $2.2b reduction for recapture; aim to eliminate recapture all together; have school district runs?
    • Could compile data on recapture by district
  • Paxton – How have Special Education Funding Commission’s recommendations been incorporated including the grant program?
    • Formula changes have not been contemplated in this bill
  • Hall – Just because there are federal funds out there does not mean we have to spend?
    • Is the amounts available to the state; TEA could speak to the states’ distribution
  • Campbell – $15b in property tax relief from the homestead exemption?
  • Chair Huffman – Part of it; excess mostly from sales tax and severance taxes
  • Whitmire – Will be in a mess; will need future funding to maintain the exemption
  • Bettencourt – Are in a growing economy and property tax legislation last session is baked into this; have a bill to take exemption from 40k to 70k
  • Hinojosa – Pass through grants?
    • Will be continued funding as it is in the current biennia

 

Texas Education Agency Presentation

Mike Morath, TEA Commissioner

  • Introduced budget does fully fund entitlements
  • Have a huge increase in budget commitment by the legislature
  • HB 3 mechanism increased Tier II golden penny yield; equals a per pupil increase
  • Is a great deal of property tax relief in the introduced bill
  • Included intent riders related to supporting compensation for teacher and restored Instructional Materials Allotment to normal levels after they dropped during COVID
  • Supplemental Special Education Services Allotment; fully funds demand; expiration statutorily
  • $600m to school safety is high priority
  • PSF Corporation is now in its; compensation for paying staff in the agency
  • Are a number of LAR items not addressed in the base bill,
    • Deferred maintenance in TEA for IT as system has crashed previously
  • Kolkhorst – ESSER funds; had anything to do with allocation via a formula?
    • ESSER I, II, and III came with federal formulas; state had 10% discretionary funds which
  • Kolkhorst – Have a breakdown of how much went to what school district? Want that
    • As of January 6, $8.8b has been unspent
    • Some received no funds; HB 1525 base for all school districts
  • Kolkhorst – Spending is one time?
    • Track by category and believe 50/50 one-time versus recurring
  • Kolkhorst – Have met all budget statutory requirements?
    • Have gone above and beyond including the $600m for school safety
  • Kolkhorst – Decline of teacher to student ratio?
    • Overall lost a lot of students due to COVID, but did not downsize staff
    • Is a difference between overall versus individual classrooms
  • Kolkhorst – Teacher attrition rate is high? Teacher pay has gone up?
    • Yes
  • Kolkhorst – School districts have had issues with HB 4545; fully funded?
    • Set up an entitlement out of ESSER funds
    • State set aside billions to support tutoring efforts; districts reported $60m spent statewide – a small amount of what was set aside
    • Wise for the legislature to identify a dedicated funding stream
  • Kolkhorst – In the past, those that were not raised to the $1.50 cap were punished; HB 3 undid the compression we did to get them to receive funding the way that they should
    • Will have to look into that
    • Per pupil entitlement was frozen pre compression and was sustained through HB 3; have a glide-down transition from ASATAR
  • Kolkhorst – Not just those, will talk to you offline
  • Kolkhorst – Enrollment versus ADA thoughts?
    • Is a key legislative decision; enrollment is predictable and more budget stability, but ADA creates a financial incentive to find lost children
    • Legislature could find a way for more budget stability
  • Nichols – ADA versus enrollment; ADA no longer has teeth
  • ASATAR (additional state aid for Tax Reduction program) districts were on a 5 year glide path to end under HB 3
  • Kolkhorst thinks it is not just about just ASATAR districts
  • Kolkhorst – asked about enrollment vs attendance based
    • Enrollment based is much more discernable, a bit more budget stability
    • On attendance, every day a student shows up to school counts
    • ADA creates a financial incentive for districts to go find lost children
  • Nichols – hears the tools schools had to get them back in the classroom has gone away
    • Hears the same thing from district leaders, hands are tied regarding truancy
  • Nichols – asked about TIA and the challenges setting it up
    • Thinks there is a need for seed funding to help with these challenges and that funding would disproportionality help rural districts
  • Negative enrollment bubble due to declining birth rates, believes enrollment will trend negative for Texas for the next decade
  • Districts will experience this radically differently; for example Frisco and Prosper ISD differ in that they do see enrollment growth
  • People moving here have less children and everyone having less children these days
  • Provided slides for details including slides of declining birth rate, the actual count by grade level, still seeing inbound migration
  • Provides this to show the amount spending on public education, if enrollment is flat and declining then appropriators have more flexibility
  • Bettencourt – seeing a substantial change in enrollment which leaves room for things like additional funding for special education commission grants, compression of tax rates is good across the board for all including districts in recapture
  • Bettencourt – asked about a method to trim recapture
    • Only works if you move something from tier 2 into tier 1
  • Bettencourt – asked if there was a recommendation on recapture that won’t break the bank
    • Need equal taxing effort to generate equal benefit
    • As you increase per pupil budget, it brings down recapture
    • Also bringing down floor
  • Bettencourt – per pupil rate is up and obviously tax rates are being compressed so question is …what can be done for additional compression
  • Bettencourt – seeing the state has a math problem, significantly in 4th grade
    • Agrees there is a math problem and would say its more than 4th grade
    • Math is linear
    • Discusses curriculum sequence with milestones along the way and ongoing diagnostic as they continue
    • If they have not given teachers that kind of well-structured instructional materials then there will be an impact, generational impact
  • Bettencourt- there needs to be more emphasis in math
  • Hall – decline in enrollment, just not spending money because we have it regarding federal funds
    • Unique federal funds in that locals and TEA provide assistance to shift funds from one bucket to another so they were able to build up fund balances
    • There will be a fiscal cliff coming up but most districts are anticipating and engaging in planning to allow for a smooth taper
    • Its not a bad thing that fund balances increased during COVID
  • Hall – inquired about federal funding details
    • Walks through several funding sources and requirements with them
    • Title has some strings attached and in special ed get about 17 pennies on $1
  • Hall – concern about data gathering and testing from federal government, why not just get the federal government out of education
  • Hall – solidarity amount educators is concern of violence in classrooms in lower grades, what can we do to figure out why it is happening and what can be done about it
    • Questions would be how much teacher is supported and resources available from district
    • This is a significant driver of discussion on teacher vacancy task force and it is a driver for teacher dissatisfaction
  • Hughes – appreciates discussion on TIA, asked about average teacher pay compared to average rural teacher pay
    • Small midsize allotment helps address but in rural area have far more teachers than larger systems
    • Suggest should small and mid-size formulas get more attention
  • Hughes – asked about appraisal district and setting values and wants to know how this works
    • Usually its about after several years’ worth of problems, small numbers of districts get in trouble for this and for one district the issue was caused by the appraisal district
    • Will get the members more details on this
  • Whitmire – asked about diversity and what is grade, ranking is relevant
    • Texas ranking on NAEP is in handout
    • Notes outcomes of system not accounting for student population, the Urban Institute adjusts and says we are in the top
  • Whitmire – asked if decline in enrollment includes options parents are taking that is not public education? Are we losing enrollment in education or public education?
    • Will get him details on those numbers
    • Did see a massive exit to alternative form of education
  • Whitmire -what truancy tools that have been lost?
    • Most truancy work happens between school districts and local law enforcement
    • There was a class C misdemeanor that is harder to issue
    • Whitmire – it was a fine and it being abused to hundred of thousands a year
    • Whitmire – says it was an abusive system in the past, decision was not to criminalize hardship
  • Whitmire – in discipline, seems to be going back to a mental health issue
  • Whitmire – discusses apartment leases lending to students moving from area to area
  • Whitmire – would argue strongly that it makes no sense to write a ticket for people suffering family hardships, says it is complex to be in the classroom these days
  • West – internal state audit office, performance issues regarding ed prep programs
    • Educator preparation rules is what he oversees in his office
    • Every ed prep program goes through an accreditation review, one that has generated a lot of news in the last year because it is the largest goes through process of cure
  • West – asked about issue of complaint process
    • Cannot oversee customer service of ed prep programs
  • West – asked about amounts on report, decline or increase
    • Asked for additional details to determine where to look, 4 year graduation rate for African American students
    • West – wants to know why projecting an decrease instead of an increase?
    • Will review and get back to Senator
  • West – asked about TIA, LBB report page 13 and item 7, asked about compensation
    • There is a base amount, 5 tiers in comp ed
    • Explained the weights
    • Rural campus bumps up two levels, campus with 80% in most disadvantages that happens to be rural would draw down more – bumped up by two tiers
    • If you have students in urban an rural and urban is severe poverty and rural is moderate, TIA will bump up rural two notches in spectrum of poverty which gives teachers in rural Texas a slight advantage
  • West – had a performance question on A-F listing in documents, pg 25
    • Far fewer Ds, not campus numbers but districts
    • Usually districts that have small numbers of campuses moving, saw 2 more F districts but far fewer D campuses
  • West – does this include same F districts from previously
    • Will get information on that
  • West – any public schools in state of Texas teaching CRT
    • Legislature has defined the concept including not able to teach one race is superior to another race
    • Answer is complex due to number of classrooms, its impossible to know what happens in each classroom
  • West – are you aware of any issues?
    • Complaints are booming, has looked at complaints and some do seem bizarre
    • TEA reaches out to district to see if they are taking action to address, they only get involved if district does not address
    • Do see instruction a reasonable person would define odd, see some identified as concern in some of the complaints
    • West – would like to know about some of the things he has seen
  • Perry – school discipline story, says the issue is real, teachers being assaulted and there are some bills to address it
  • Perry – several bills out there, SB 245 challenges what to do with the littles and wanted to know about pilot programs last session
    • Had provided pilot funds for districts standing up disciplined learning environments, thinks the practice has promise but does not have funding
  • Perry – said one campus of first year teachers walked out over first graders
  • Perry – ASATAR districts
    • Function of district that has high entitlement, key thing is the amount of funding district receives on per pupil basis
    • Perry – concerned could end up back in court if put more money toward ASATAR
  • Perry – On discipline and violent students and filed bills to address this including SB 245; were
    • Is when districts have high entitlement per pupil
  • Perry – Teachers deserve help with that TIA rural allotment
  • Campbell – How with the number of those who have illegally immigrated here how is that not reflected in the school population
    • Is an increase projected, but is lower than past projections
    • Do not collect data on immigration status of children
    • While they are in custody, there are under the federal government
  • Campbell – Guaranteed yield of golden pennies?
    • HB 3 requirement for an increase in the golden penny yield
    • In Tier II first 5 golden pennies are available via school board vote and 3 remaining pennies is a tax ratification election
  • Campbell – Can we take cell phones away? Do we need to pass a law?
    • They can and do; you could pass a law to do that if you wanted
  • Campbell – How do we address recapture?
    • Massively reduce compressed tax rate; expensive proposition
  • Campbell – How do we know schools’ fund balances? Average fund balance? Should schools have that or not?
    • Reported annually AFR to TEA; total fund balance end of FY22 was $23b
    • Have cash on hand because there are monthly obligations
    • Rural districts underspend M&O to save into their fund balance
    • Larger districts typically use it for large expenditures
  • Chair Huffman – Why would Houston ISD have the largest fund balance?
    • Could be avoiding a fiscal cliff; districts are shifting fund buckets to avoid an ESSER cliff
  • Chair Huffman – They could use these funds to
  • Campbell – Was a recommendation for an education savings account for special education; what would a funding mechanism look like?
    • Could be a single item, or funded by tax credit program, or set up as a formula
  • Paxton – Have had discussions that TEA set the standard on what the grade levels should look like; funding for what you are working on concerning instructional materials in the base budget?
    • No; base budget has $250m to sustain materials bought during COVID
    • Do a disservice to teachers by not equipping them in the classroom; need to equip them with rigorous instructional materials via appropriations and statute
  • Paxton – Planning on filing legislation this week giving TEA legal authority to promulgate cybersecurity rules for school districts with DIR; how would that look?
    • Partnership with TEA and DIR could provide basic rules framework including standards for maintaining data and working with vendors
  • Zaffirini – How has the Teacher Incentive Allotment affected retention and student outcomes?
    • Incentive pay does not help with how hard teachers work; pay adjustments cause them to be teachers longer
    • Teachers are designation because they have high levels of student achievement
  • Zaffirini – Have there been negatives such as decreases in moral?
    • Have not seen that consequence; one has been assistant principal and principal pipeline has slowed
  • Zaffirini – How does Supplemental Special Education Funding Program compare with others?
    • Outcomes data is difficult to discern; have high parent satisfaction data
  • Zaffirini – Benefits of transition from placement to service intensity model?
    • Smart recommendation of the commission; is a current cost misalignment which is more difficult in rural or smaller districts
  • Zaffirini – If went to the service intensity model would resolve issues with the federal government?
    • Would need a funding infusion to avoid any issues with the federal government
    • Will be fined by the federal government $74m for funding shortfalls in previous years
    • Have appropriated the money to us in previous sessions, but have not been able to pay them yet
  • Zaffirini – Some teachers have said HB 4545 funds are not getting to them; how address this?
    • Would be a complete shift in how we fund
  • Zaffirini – Asks about the $600m for school safety?
    • Ask the legislature consider a per campus funding floor; might require a statutory change
  • Zaffirini – $15b and raising exemption would affect average property tax owners’ bill?
    • LBB can put something together for you
    • Bettencourt – Will be substantial; from 5 largest ISDs savings could be from $600
  • West – Where are we addressing mental health? Should we look at this issue at a state level
    • Counselor to student ratio has gotten slightly better after HB 3
    • Introduced budget fully funds TCHATT
    • Would either need to tell districts how to spend their money or create a separate funding bucket with restrictions
  • Chair Huffman – Notes HISD has $1b in reserves and if mental health is an issue, then they could allocate some of that
  • Hinojosa – Cost to change funding model based on number of students registered?
    • If converted all ADA funding formulas $3b per year if you make no other changes in state law for new costs
    • Could leave regular allotment ADA and convert CTE, Tier II, bilingual allotment, etc. to be enrollment based
  • Hinojosa – Hear rules are too complicated for the Teacher Incentive Allotment; ask you look at that
  • Kolkhorst – Have a lot of work to do concerning mental health after COVID; school districts want flexibility
  • Kolkhorst – Are assessment tools some districts utilize without parents’ knowledge
  • Kolkhorst – With health data needs to be held privately and need to ensure we empower a parent/guardian with an opt-in
  • Kolkhorst – Think more children are coming back to the classroom? Still doing remote learning?
    • Have returned to normal looking classrooms; SB 15 facilitated some hybrid/full-time virtual programs
  • Kolkhorst – Increase in the golden penny yield; any in Tier II?
    • Are 8 golden in Tier II
  • Kolkhorst – Fractural funding issue; need to address those who were punished for being under $1.50 in 2005
    • After HB 3 if you were below the threshold, pennies were swapped
    • Kolkhorst – Look forward to working with you and Creighton to remedy this

 

Windham School District Presentation

Kristina Hartman, Superintendent Windham School District

Robert O’Banion, CFO Windham School District

  • Base budget shows increases from our original LAR
  • Resubmitted exceptional item request including $4.2m for program expansions
  • Nichols – Benefits fall under ERS?
    • Yes
  • Nichols – Any pre-existing issues?
    • Could have been at one time, but have not heard anything recently

 

TEA and Windham School District Public Comment

Patty Quinzi, Texas-American Federation of Teachers

  • Teacher salaries have declined by 4% on average in the last ten years; some were high was 13-14% like in HISD
  • Are 10k teacher vacancies; TEA needs to disseminate this data
  • HB 3 did provide some state funding, but most of that was tax cuts
  • See that incentives do not work
  • Need a COLA that keeps up with inflation
  • Is alarming that we will not see a line item on how much charter school costs

 

Pamala McPeters, Texas Classroom Teachers Association

  • Appreciate the benefit enhancement for retirees
  • State is at a breaking point and talented teachers have already exited or are considered leaving
  • Reason for attrition rates are inadequate compensation and working conditions
  • Recommend an across the board pay raise of 10k
  • Recommend increased contributions to health insurance
  • Ensure resources are available including skilled personnel to address behavioral issues
  • Recommend a COLA

 

Yamacita Thompson, American Heart Association

  • Need to allocate funds for CPR and AED training for students before high school graduation
  • Vital especially for rural areas as there is a longer response time
  • Thanks Sen. Perry for their leadership in these endeavors
  • Kolkhorst – Interested in this topic; would be useful
  • Perry – This training makes sense; need to do a better job

 

Taylor Williams, American Heart Association

  • Need adequate CPR training for high school students; need hands on training

Christine Bussey, National Association of Social Workers

  • Appreciate continued mental health funding
  • Often early intervention can help students, but many schools do not have the resources to do so
  • Are no delegated dollars to fund mental health support; need to create a mental health allotment
  • West – Agree with you; know any other school systems who have a mental health allotment?
    • Will get back to you

 

Chandra Villanueva, Every Texan

  • Main concern is that it prioritizes tax cuts over investments in kids
  • Are able to increase the basic allotment, but chose not to
  • Property tax cuts benefits the richest Texans; do little to nothing to those who are lower income/renters
  • Golden penny is still lower than before HB 3

 

Shannon Hoffman, Hogg Mental Health Foundation

  • Appreciate new and continued mental health investment
  • Need to address needs earlier and create communities before crisis occur
  • Texas can join states like Ohio and Florida who have created a mental health allotment
  • Nichols – Child mental health consortium funding helps at the campus level without costing schools; bottleneck will be the number of mental health professionals you can recruit
    • TCHATT is a great resource for some schools, but personnel can benefit smaller schools
  • Kolkhorst – Uses for the fund?
    • Want to mimic school safety allotment, but have it separate so there can be a wide array of allowable uses; would not be a requirement
  • Kolkhorst – Look forward to coordinating with you in the future; need these assessment tools to be utilized with parents involved
    • Is necessary to have the family involved
  • Perry – Concerned about some of these assessment tools having adult content
  • West – TCHATT is a great program, but is not the only one; workforce shortages should not be the reason we do not establish a mental health allotment
  • West – Those with behavioral issues we are just going to put them away at a program housed by TEA or are we going give districts the flexibility to address those issues
  • Perry – Before we design a new mental health allotment need to see how much we are spending on mental health supports
  • Perry – A lot of how we fix these behavioral issues are these daily programs

 

Steven Aleman, Disability Rights Texas

  • Special education enrollment has increased in the state; projected to continue to go up
  • Need to follow through on the recommendations in the Special Education Funding Commission’s report
  • Bettencourt – Is legislation in draft form from the commission

 

Christy Rome, Texas School Coalition

  • Recapture is estimated to exceed $5b
  • These increased funds to offset property tax does not equate to funds going to the classroom
  • To keep up with inflation would need an increase of $900m to the basic allotment
  • Bettencourt – Have specific recommendations?
    • Early Agreement Credit that existed before HB 3 could be transferred into an Early Payment Credit
    • Increasing the amount of golden pennies
  • Bettencourt – Have been looking at converting a penny or two; thank you for testimony

 

Nancy Humphrey, Plano ISD and Texas School Alliance

  • Revenue has not increased with property values
  • Recapture was $165m in 2019-2020 and increased to $211m last year
  • Most pressing issue is funding to manage inflationary cost pressures
  • Recommend legislature indexes basic allotment to inflation

 

Lauren Rose, Texas Network of Youth Services

  • Recommend dedicated funding to support mental health services in our schools

 

Chloe Berk, American Heart Association

  • Need to allocate funds for CPR and AED training for students before high school graduation

 

Desurae Matthews, Texas Mobile STEM Lab

  • Thanks for funding the Mobile STEM lab
  • Request a modest increase in the allotment by $3m for this biennium
  • Including a one-time infrastructure investment and to support ongoing operations to support an additional 90 schools per year

 

Cindy M, Self

  • Teacher at Pflugerville ISD
  • Need to invest in our students and personnel
  • Request increasing the state’s share of funding to school districts
  • Recommend increasing salaries across the board
  • Zaffirini – Asks about the Teacher Incentive Allotment
    • Only one of two teachers who are eligible; has not been received well by teachers
    • Only eligible because I teach math
  • Zaffirini – TIA does enough to incentivize teachers?
    • No, is for teachers who are already doing well
  • Zaffirini – How are teachers making ends meet?
    • Many have other jobs

 

Mary Lynn Pruneda, Texas 2036

  • Best and most equitable way to raise salaries is through the basic allotment
  • TIA is doing well, but should consider raising the way TIA teachers are paid
  • Putting $2.4b into Golden Penny yield, but could use this money to raise basic allotment instead
  • Curriculum might be a location for one-time investments with high-yield, has potential for high ROI & could better prepare kids for STAAR exams

 

Kimberly Sayers, Communities in Schools of Texas

  • CIS is the largest behavioral health provider in TX, CIS leverages state support with additional fundraising and private investments; for every $1 in state funding, CIS provides $3 in services
  • Present after Uvalde shooting and helped in recovery efforts
  • Number of students facing mental health challenges will only increase; CIS has expertise and infrastructure, requesting an additional $25m/year
  • Perry – CIS’s role is to connect kids with developed social services within the community?
    • In some affiliates, also provide counseling with some affiliates
  • Perry – When someone refers a child, you don’t impose behavioral health services, but do you have conversations with families? How often do families turn services down?
    • Would need to find datapoints; majority consent for services to family and children
  • Perry – Critical, don’t want to be duplicative; CIS is the connector to services
    • Sometimes CIS is the counseling; model is to provide wraparound services
  • Zaffirini – Where does the service value beyond state funding come from?
    • Comes from fundraising, private investing, etc.

 

Jon Sanchez-Casas, Operation Warm

  • Operation Warm provides warm coats to children
  • Appreciates focus on parents, kids more likely to succeed if parents are engaged; Operation Warm works to build relationships that involve parents
  • Requesting $40k/year, $80k/biennium, to match private sector contributions & provide warm coats & shoes

 

Celso Baez, Self

  • CIS was crucial in early development

 

Amanda Brownson, Texas Association of School Business Officials

  • Basic allotment is a very good way to make investments and bridge funding gaps
  • Districts also concerned about uncertainty in funding; prorating in FSP makes budgets uncertain
  • Anything done to provide stable funding would be helpful
  • West – What would you recommend we increase basic allotment to?
    • Going back to BRE, it said inflation has grown 14.5% since 2019, would be about a $900 increase to adjust for inflation
  • West – So you’re recommendation is to increase basic allotment taking inflation into account?
    • Yes, most flexible, predictable and helps the most districts
    • Would recommend Average Daily Membership to capture changes in enrollment throughout the year
    • There is a lot you can do between fully enrollment-based funding and what we’re doing now with attendance, districts are struggling to project revenue in a context with many absences
    • Could move some programs to enrollment while leaving others attendance-based; could also have a floor with overhead based on attendance
    • If you think you can’t raise basic allotment and move to enrollment based funding, should explore the middle ground

 

Marlena Gygos, Young Adult Leadership Council, TNOYS

  • With funding, schools could educate students on how to protect their own mental health

 

Monty Exter, Association of Texas Professional Educators

  • Submits ATBE’s priorities document to the committee
  • Can address ongoing needs like funding for a pay raise, increase in basic allotment, increase in employer share in health care funding
  • One-time expenditures would be paying for infrastructure for school safety, endowing programs already in law like ed prep, and COLA

 

Permanent School Fund Corporation LBB Presentation

Mathilde Mogenson, LBB

  • Link to presentation
  • $98.5m, increase of $53m related to ramp up in agency operations over upcoming biennium, also increasing FTE levels by 24
  • $45.6m to biennialize 2023 base budget, $7m for performance incentive compensation
  • PSF balance as of August 2021 $55.6b, increase of $8.9b
  • PSFC current lease is expiring in 2023, LBB presentation provides details on future options
  • Many ISDs are being denied guarantee due to PSF hitting federal cap
  • Rider recommendations include transfer from TEA’s Rider 20
  • Exceptional item requests total $5.6m

 

Permanent School Fund Corporation Agency Presentation

Holland Timmins, PSFC

  • SB 1232 was passed in the last session to address inefficiencies in bifurcated structure of PSFC; designed to optimize asset allocation & eliminate cash drag
  • Transition is going extremely well, as of this year assets, staff, and funding were all transferred to the PSFC
  • SB 1232 implementation will continue through the biennium
  • First request is for a fiduciary rider; would allow for an increase to protect fiduciary duty of PSFC to fund
  • Current facility is not renewing leases after Oct 2023, no contiguous state office space available for reorganized PSFC; first looked at Bush building, but signed lease for space in June 2022 & request5ing funding to be paid from PSF funds to support lease
  • Chair Huffman – Not understanding why accommodations offered at the Bush building were not adequate? Other funds have gotten into issues over new office space, if PSFC had let TFC know they could occupy Bush building by Summer 2023
    • Their indication to us was a need for an answer by October 2021, had no information of cost at that point
    • Service space would be shared, insufficient meeting & conference rooms, insufficient office space for portfolio managers
    • Office space would be on different floors
    • Each team is in for 2-3 days, have 2-0 more people than seats in the office
  • Chair Huffman – Where are you now?
    • Moody building
  • Chair Huffman – Is there enough space at the Bush building for everyone to show up to work? Understand you were on different floors, didn’t want to be separated?
    • Contiguous workspace is optimal, have not received any info back from the Bush building
  • Chair Huffman – LBB doc says TFC could accommodate PSFC if decision was made before 2023, makes me believe it is still feasible
    • First that I’ve heard about this, haven’t received any communication from TFC
  • Chair Huffman – Would like you to explore the possibility of using Bush building & report back
    • Happy to do so

 

Tom Maynard, PSFC Board Chair

  • Board spent a lot of time on facilities, low bid is not necessarily the best bid
  • Chair Huffman – But this is a brand new state building
    • Aware of that, my understanding is staff did their due diligence with TFC
    • PSFC is not exactly a state agency, also a major investment fund
  • Chair Huffman – What funds the PSFC?
    • Public assets
    • PSFC Board wants best working conditions for the staff
  • Chair Huffman – Should look at our staff & how close they work
    • Understand, connectivity and ability to collaborate was important; understanding with Bush building that staff would be spread out throughout building
    • Staff did due diligence, but will go back; understanding was that they weren’t accommodating for our staff & wouldn’t allow us to modify
    • Happy to have the conversation

 

Teacher Retirement System LBB Presentation

Mathilda Mogensen, LBB

  • Link to the presentation
  • 2024-24 all funds $7.2b; decrease of approximately $500m due to removal of federal funds and additional annuity payments
  • $433.8m increase related to payroll and increase $300m to the state contribution rate
  • Increase in $46m to TRS Care
  • Decrease in $701m million due to the 13th check
  • Decrease $721.3 in federal funds to TRS Care and TRS Active Care
  • Total other finds $105m increase related to administrative operations
    • To increase salaries and add more than 181 FTEs
  • Decrease $21.3m FY22 settle-up
  • Assume 3.6% annual payroll growth and 6% in higher education
  • Project a 22% increase in premiums without additional funding
  • Chair Huffman – Patched this last session with COVID money
  • Kolkhorst – Last time premiums went up for TRS Care was when?
    • Last time was 2017; was an overhaul of the system and increased state/member contributions
  • Kolkhorst – Active Care? Some districts are tied to that no matter what?
    • Brian Guthrie, TRS – State provides $75 per member per month and districts contributed $150 per member per month; most districts contribute more/less
    • Brian Guthrie, TRS – Medical inflation averages 5% per year so premiums have gone up consistently; minimum contribution now accounts for 25-30% of the cost
  • Kolkhorst – Would have to put in $1.4b to match?
    • Chair Huffman – Correct, would keep them where they are
    • Brian Guthrie, TRS – Legislation last session allowed districts to opt in/out and incorporated regional ratings
  • Schwertner – Last time there was an increase in premiums?
    • Brian Guthrie, TRS – Active Care was 2021 and every year before
  • Chair Huffman – Reforms in 2017 helped reduced costs?
    • Brian Guthrie, TRS – Correct; may need supplemental appropriations in the future
  • Recommend new rider 21 fund a benefit enhancement if the trust fund is actuarily sound
  • One exceptional item $1.4b and two rider requests
  • Kolkhorst – If we made the increase of $1.4b, school districts would not have to pay more?
    • Brian Guthrie, TRS – Correct
  • Kolkhorst – In base bill have funded all 8.25% is that the constitutional ceiling?
    • Brian Guthrie, TRS – Maximum state contribution is at 10%
  • Kolkhorst – What is the cost in funding at 8.25%?
    • Is a $323.9m increase for this biennium; can get that to you

 

Brian Guthrie, Executive Director Teacher Retirement System

  • Overviews the programs and functions of TRS
  • Austin, San Antonio, Houston opt out of Active Care
  • We are actuarily sound
  • Assumed rate of return is 7%; had a negative return last year
  • Are required to update actuarial assumption by February 28; need to meet that in order to consider a benefits enhancement
  • As of last week fund value is $186b; believe we will meet that threshold
  • A lot of legislation has been filed concerning a benefits enhancement, but cannot come up with what that would cost until after February 28
  • One-time 1% across the board COLA that is uncapped upfront cost would be $1.1b
    • Upfront cost is the preferred method by actuaries
  • Are alternatives the committee could consider such as paying this over the next 12 years
  • Previously have increased the funding period and had the fund finance that on its own; would increase funding period by a year
  • Chair Huffman – A 3% COLA would be a $3.3b cost?
    • Correct
  • Could also look at providing a COLA for those who have been retired longer
  • Overview of the last two supplemental payments; were paid upfront by the legislature
  • Additional rider requesting inclusion regarding opening more regional offices
  • Zaffirini – What measures could we take so a COLA would not effect the actuarial soundness?
    • Would need to be financed upfront or over 12 years
  • Zaffirini – 13th check versus a COLA?
    • Are both beneficial; COLA more beneficial in the short-term
  • Zaffirini – Average annuity per month?
    • Just over $2k a month; many members are struggling with that amount
  • Kolkhorst – What was the cost of the 13th check?
    • In 2021 13th check was $2400
  • Last year Active Care received a total of $638m in federal funding to offset premiums
  • Without additional funding, need to make up the delta
  • Could address in a number of ways: have included the first option as an exceptional item
    • $1.4b would allow to hold premiums constant again; would be good for the next two years, but would have the same issue next session
    • $875m to hold premium increases to medical trend
    • $600m this biennium and $400m next biennium could increase premiums above 5% and below 10% could phase in increase
    • Could fund through supplemental bill
  • Hughes – State’s share flows through the funding formula?
    • Correct
  • Hughes – COVID relief funds went to all teachers?
    • Just those in Active Care
  • Hughes – Help us understand why that happened?
    • Large amount of federal funds were sent to the state and had link costs that were incurred to reimbursement costs
    • Not involved in administration of health care plans not in Active Care
  • Hughes – What are proxy advisory firms?
    • Own a lot of stock and public shares via a proxy firm; have 64k votes a year
    • Not voting shares for any political gain/outcome and they typically do that well
    • ISS and ERS got two votes wrong and have worked with them to remedy that issue
  • Hughes – Noticed their recommendations have taken a political edge?
    • Yes and now have a customized policy
  • Hughes – Feel they have gotten that message?
    • Yes they have
  • Hughes – Move to use corporate votes to shift policy?
    • Not taking a position either way; SEC has made it easier for activist type resolutions to get in front of a board for a vote
  • Hughes – Does this concern you?
    • It would if they have not created the custom policy for us
  • Kolkhorst – Where would you rank our fund?
    • 7th in North America; top 20 in the world
  • Kolkhorst – What would it cost if we voted all our proxies?
    • Would be a significant increase in resources needed; would be more than we pay ISS
  • Kolkhorst – Are still invested with BlackRock and State Street
    • State Street is our custodial bank and pay them several million for those services
    • BlackRock totals sevens of billions
  • Bettencourt – How much are we spending with ISS?
    • $300k; the amount of research they do on each proposal have a huge staff
  • Bettencourt – After our hearing about ESGs unconvinced ISS would change any business policy
  • Hancock – This policy is not in place?
    • Have not implemented a good governance policy for other states; our policy is in place
    • They have been engaged with us to make sure they provide us with everything we need
  • Hughes – Recall at the ESG hearing we asked for documents from these companies; have still not received those documents
  • Hughes – What would happen if you did not vote the proxies?
    • Would not be doing the pension fund or members a service; shares are power
  • Chair Huffman – Would be a dereliction of your fiduciary duty
  • Hughes – Will be watching ISS