House Appropriations S/C on Article III RFI Responses – Charge 2

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This report covers the responses Appropriations S/C on Article III received for their RFI for Charge #2, relating to evaluating ongoing costs associated with implementing HB 3. The RFI for this charge can be found here, and the full list of responses can be found here.

The HillCo report below is a summary of information intended to give you an overview and highlight of the various topics included in the responses. This report does not cover the entirety of each response but aims to provide an overview of the testimony submitted.

Texas Education Agency (pages 2-51)

TEA responds to posted questions from the Public Education RFI on charge 1:
Can the state delay implementation of the teacher incentive pay program to push it out to the next biennium? If so, what would be the impact on the current budget, as well as budget implications for the 2022-23 biennium?

Implemented Teacher Incentive Allotment with 26 districts, 800 expressed interest
Current estimate of cost to state for this biennium is $88M; LBB estimates savings of $58M

Does the state have any obligation to ensure that newly awarded salaries are carried forward from year-to-year all other conditions being equal?

Communicated to the field this provision was intended to provide permanent increases in teacher pay
For Ch. 21 positions, pay may not be characterized as supplemental to avoid requirements to maintain rates for a contract term

TEC, Sec.21.402(e-1): teacher cannot receive a lower minimum salary one year to the next; if a district provided one-time increases to meet HB 3 requirements, would not require district to carry compensation going forward

Is the state capable of providing the additional financial resources to school districts can maintain the new salaries awarded post-HB 3?

Barring legislative action that would reduce formula funding; FSP formulas should continue to provide similar levels of revenue to districts

What impact does the “no new revenue—tax cap” of 2.5% have on a school district’s ability to continue the pay raises or changes in salary schedules adopted for the 2019-2020 school year?

Does not cap revenue; limits amount the local share of tier one can grow in a year

Tax compression does not impact district’s bottom line or ability to salary increases; impacts the amount of state funding that must be provided

Outlines significant funding changes in implementation for year 1 including decreases in recapture and mainstream weight increases
Certain allotments, including the Teacher Incentive Allotment, Transporation Allotment, Compensatory Education Allotment are estimated to have lower funding due to either COVID-19 or enrollment is lower than expected
Most significant difference is Formula Transition Grant, +$400M, as 2019 property values grew by 10%, which allowed large “lag” amounts under prior law
TEA has completed, or is in the process of completing, 37 out of 55 rules pertaining to HB 3

Implemented Teacher Mentor Program Allotments funds stipends for mentors and costs associated with mentorship; 67 districts approved to receive allotment, $1,800 per mentee
Implemented Teacher Incentive Allotment; 26 school districts, distributed $40 million to 3,650 teachers
Implemented Do Not Hire Registry and Misconduct Reporting Portal; 1,850 former educators and employees on the registry
Implemented Early Education Allotment; additional 0.10 weight for each student in ADA grades K-3 who is educationally disadvantaged or Limited English Proficient, 2019-2020 cost was $796M, 2020-2021 estimate is $800M, may be significantly less due to COVID-19
Implemented Full-Day High-Quality Pre-K; for 2019-20 school year, 249,226 students enrolled, approved 192 full-day Pre-K waivers

Implemented Improving Reading Outcomes; established Reading Standards Advisory Board to monitor HB 3 reading initiatives
Implemented Reading Academies; each teacher and principal in grades K-3 required to complete academies 2020-2021, 20,000+ educators enrolled
Commissioner adopted TX-KEA and mCLASS Texas as reading diagnostic instruments
Implemented Dyslexia Allotment; districts and open-enrollment charter schools receive weight of 0.10 multiplied against the basic allotment for students with Dyslexia or related disorder, cost $136M for 2019-2020 school year
Implemented Improving Literacy Through Dual Language; incentivized funding for dual language, cost $199M for 2019-2020 school year

HB 3 required new teachers, pre-K-6th, to show proficiency in the science of teaching reading
Implemented Blended Learning Grant Program; awarded grants to 25/41 applicants, program expected to dramatically increase due to COVID-19
Implemented College, Career, and Military Readiness Plans; requires districts and open-enrollment charter schools to adopt college, career and military readiness
Implemented Outcomes Bonus and CTE Funding Expansion; CCMR Outcomes Bonus estimated funding need of $225M, adds reimbursement to district to offer one free college and one free industry exam per student estimated $20.5M for SAT/ACT/TSIA, estimated $12.1M for IBC
Implemented HB 3 increase for Special Education; weight moved from 1.1 to 1.15 for students in mainstream setting, established Special Education Advisory Committee, allotment increased by $52M, slightly higher than legislature estimate

Implemented Additional Days School Year; funding support for school systems that want to add instructional days to elementary school calendars, launched a survey for cost estimate but no results before report was due
Implemented New Compensatory Education Spectrum; increased from 0.20 to a range of 0.225-0.275 per student, cost $5.09B
Implemented Fast Growth Allotment; 0.04 for each student in ADA, cost $302M
Implemented changes in Gifted and Talented; G/T now funded within district’s allotment, $6,160, report G/T expenses, certify district has compliant G/T program
Implemented Transportation Funding Changes; $1.00/mile reimbursement in General Appropriations Act, estimated $284M, significantly less than legislated estimate because of COVID-19

Recapture for school year 2019-20 reduced from $3.82B to $2.43B
Formula Transition Grants; 284 LEAs received $441M, $400M higher than estimated due to unprecedented property value growth, estimate is $665M for 2020-21 school year
Outlines tax rates before and after HB 3, school districts’ self-reported local taxable values grew by an average of approximately 4% statewide
Outlines new requirements for local tax increases, will know how many districts increased their Tier Two pennies in Feb 2021
Unintended consequences include PTECH and New Tech Funding, Formula Funding for SPED for open-enrollment charters, Regional Education Service Center Staff Supplement, Taxes: incorporating first year tax relief, local property values used to calculate local compression, compressing taxes limited to the 90% differential

Legislative action on these items will ensure adjustments are addressed in statute

Aldine ISD, Garland ISD, Grand Prairie ISD, Hays CISD, Hutto ISD, Lockhart ISD, Mesquite ISD (pp. 52-54)

Grateful for school finance reform provided by HB 3; cannot “change course” from the funding and investments from last session
Created planning committees for full-day high-quality pre-K, increased dyslexia screening, dual language programs, and identifying methods to increase post-secondary attendance

Cannot repeat reading proficiency declines due to last recession funding cuts

Districts have planned targeted support for students experiencing poverty
Includes graphs detailing declines in educational success after 2011 budget cuts to education
COVID-19 disrupted learning, but also provided clarity on where schools should focus on improvements
Overviews Early Literacy Allotment as a method of combatting opportunity gaps between low and higher-income students; funding cuts will only widen the gap further

Should maintain compensatory education funding at its intended HB 3 level
Highlights CCMR Outcomes Bonuses as method of incentivizing greater educational outcomes rather than purely based on grades
Includes graph detailing the impact of “summer slide” on educational outcomes and opportunity gap between low- and high-income students
Highlights Teacher Incentive Allotment places a premium on teachers, incentivizes greater educational outcomes

Dr. Bruce Gearing, Leander ISD (pp. 55-56)

Highlights deficit faced by district and possible increases in the deficit as a result of less-than-adequate funding from HB 3
Significant gap between funding for pay increases for teachers provided by HB 3 and actual cost of implementation by LISD
Notes gap between cost of and funding for reading academies mandated by HB 3
Highlights gap between provided funds and real cost of full-day pre-K programs

Overviews Fast Growth allotment and describes how it leaves out fast-growing but large districts like Leander, creating unfair funding outcomes
Requests legislature inspect these issues and continue fully-funding HB 3

Chandra Kring Villanueva, Every Texan (pp. 57)

Overviews changes made by HB 3 to M&O Property Tax rate

This mandated decline in property taxes results in huge costs for the state, as Texas would subsidize lower rates
Rejects the principle that school districts must receive similar levels of revenue at similar tax rates; going forward, districts receive similar revenue at varying rates
Changes take focus of state resources away from funding education and towards funding lower tax rates
Recommends freezing all M&O tax rates at current level to avoid future budget shortfalls of up to $4.6 billion

Texas Conservative Coalition Research Institute (pp. 58-60)

Overviews changes made by HB 3 that resulted in high projected costs of $11.6 billion for the 20-21 biennium
HB 3 provided $2.7 billion in property tax relief by compressing M&O tax rates, and funded this relief through general revenue surplus. This is a significant cost moving forward and something the legislature should focus on resolving
79th legislature provided property tax relief, but it was funded by a franchise tax
Ongoing reductions in recapture from districts relies on continued compression of M&O rates

If the legislature commits to no tax increases, they must also commit to tax cuts over time
References previous TCCRI report on school finance
Several options for transforming school finance to be more equitable while also eliminating recapture without changing Texas Constitutional provisions
Recommends eliminating M&O tax completely and replacing its revenue with revenue from an increased statewide sales tax (eliminating exemptions, including real estate sales, and raising rates)
Recommends eliminating local M&O rates and replacing it with a statewide M&O rate

Recommends replacing the M&O tax with a hybrid of a lower statewide M&O tax and higher sales tax (including real estate sales)
Supports compression efforts by HB 3 but it needs further exploration into alternative funding methods

Texas 2036 (pp. 61-65)

Highlights three key issues the legislature should focus on when considering changes to HB 3

Academic achievement gaps based on race and class
Data-proven educational reform targeted to workforce needs
Civil Rights achievement of HB 3 provisions and necessary continued commitment

Overviews declines in national rankings of Texas educational outcomes, especially highlighting the gap between low- and high- income students (and as it relates to race)
COVID is impacting retention rates for content and skills learned this academic year

COVID impacts low-income and students of color the worst
Overviews research that supports HB 3 provisions to enact full-day pre-K programs as a reduction of the opportunity gap between students
Reality of modern world is that postsecondary degree is essential to get a job in the workforce
Highlights statistics showing low college completion rates for Texas students
Highlights losses in key job markets and major unemployment among vulnerable populations as a result of the pandemic

HB 3 encourages students to achieve postsecondary degrees through programs like the College, Career, and Military Readiness Outcomes Bonus
HB 3 reimburses districts for holding SAT/ACT tests
Education must work proactively to ensure all students have access to opportunity, but that has not always been the case; White Texans are twice as likely to make $50,000 or more per year than black or Hispanic Texans
Highlights reasons for student achievement gaps, including inequitable distribution of resources, experienced teaching staff, and lack of access to technology
HB 3 established the Teacher Incentive Allotment to address some of these issues, as the program specifically encourages more experienced teachers to work in poorer districts/schools, and results already show the program working

The Compensatory Education Allotment also works to fund higher-poverty schools more, based on levels of poverty, which will improve access to resources and technology
Recommends the legislature continue to fully fund HB 3 and support it going forward

The Equity Center (pp. 66-67)

Legislature must make the preservation and funding of HB 3 it’s primary goal for the 87th session

There are numerous ways the legislature can meet reduced revenue realities while still fully funding the Foundation School Program, including

Enacting Medicaid/Foundation School Program payment delays
Delaying transfers to Texas Highway Fund
Delaying district-by-district property tax compression

Recommends the legislature significantly reduce or eliminate the balance level of the Economic Stabilization Fund to offset potential revenue shortfalls

LBB expects every cent of M&O tax compression to cost the state approximately $500 million
Legislature has done each of these actions before, it is not unprecedented

The Association of Texas Professional Educators (pp. 68-72)

Recommends Legislature use “every tool” to ensure the progress made by HB 3 is not set back by budget cuts; this includes the use of 100% of the Economic Stabilization Fund

Goal of necessary budget cuts should be to minimize the impact on vulnerable populations, including at-risk or economically disadvantaged students, which means preserving programs that primarily serve student outcomes; this includes programs like Foundation School Program, as well as programs serving students funded outside FSP like Communities in Schools and Windham School District
Recommend making strategic cuts to programs primarily serving adults or serving less critical needs, such as Teach for America or physical fitness assessments
Should cuts to K-12 become necessary, recommend focus first on testing and accountability, charter school expansion, and continued rollout of Teacher Incentive Allotment
Overviews ATPE member concerns with emphasis and weight placed on standardized testing in academics
Highlights specific standardized tests that could be eliminated and allow Texas to still comply with federal law

COVID requires testing and accountability to be reexamined, as the pandemic makes it impossible for states to administer these exams
Urge the State of Texas and U.S. Department of Education to waive requirements for 2020-21 STAAR and TELPAS and take advantage of opportunity for significant savings in test admin
Time and resources would be wasted on flawed data and punish students, educators, and schools
The commissioner could obligate the state to pay an additional $66M or more per year for charter expansion
Recommends expanding veto power of the SBOE over commissioner’s ability to grant charters

Legislature should place a moratorium on granting charters new operators or expansion amendments during the next biennium
Suggests considering capping charter enrollment until recovery from recession occurs
Recommending Legislature ensure funding is provided to maintain educator salary increases under HB 3 and encourage districts to use additional funds for permanent raises
Outlines objections to a merit pay program for salary increases
Support differentiated pay programs that reward teachers for extra work or challenging/high-need positions

Opposes systems that rank teachers based on measures of student performance that are one-dimensional or inaccurate, i.e. TIA
Outlines potential costs of TIA and suggests these funds should be used for COVID relief instead
Recommends halting implementation of TIA until state and district budgets have stabilized
Recommends limiting TEA agency-level spending and reach and reallocating these funds to districts; suggests that TEA has encroached on roles of school districts
Recommends Legislature continue funding scheduled increases to the state’s contribution rate for TRS

Lonnie Hollingsworth, Texas Classroom Teachers Association (pp. 73-77)

Recommends fully funding FSP, including hold harmless funding for losses in ADA due to the pandemic
Provide inflationary adjustment to basic allotment
Provide enforceable tool for settle-up for compensation increases provided by HB 3

Identify ongoing costs of TIA and divert funds directly to teacher compensation by a mechanism that is not governed by TEA rules
Uncertainty of census blocks creates issues in projecting FSP entitlements
Outlines disagreements on what is classified as “attendance” with remote learning and the issues that arise with funding when TEA is given this unilateral power with the commissioner
TEA required districts to use funding from CARES Act for the ADA hold harmless, funding was used to offset state general revenue that would have been expended for FSP funding in FY 2020

Saved the state approx. $1B that would have been spent on public education

Savings should be used to fully fund HB 3 for FY 2021 and provide another hold harmless for ADA losses
Uncertainty surrounding minimum compensation increase from HB 3 in districts left educators without any remedy for districts that did not comply with compensation requirements
TEA is advising districts to use projections of revenues budgeted at the time they set compensation increases
Recommends that TEA be required to compare actual expenditures from school districts so that Legislature can determine if districts complied with TEC section 48.051(c)
Recommend the statute be revised to require districts to settle-up increases for teachers and other employees before end of school year when more reliable information is accessible

Recommends identifying projected cost for TIA, delay implementing teacher incentive pay program, retain funding for teacher compensation, and revise designation system to distribute funds
The cost of the TIA program should be outlined separately in appropriations bill to determine its worth
Due to TEA oversight, TIA has become a program tied to STAAR test performance, rather than its intended local level development
COVID-19 will make it even more difficult to appropriately ascertain student-growth
Recommends Legislature revise teacher designation system before district have implemented and committed to any funding under current statutes and TEA rules

Texas State Teachers Association (pp. 78-80)

Teacher designation rule forces districts to use STAAR exam scores as student growth component, districts that try to use other research-based methods are disadvantaged
Supports the differentiated pay that recognizes advanced education and professional development, like automatic designation for National Board-certified teachers
Applauds reading initiatives like reading academies but suggests funding be expanded to cover reading academies to ensure quality in professional development across the board

Comprehensive reading academies are rated far more effective but cost $3K-$6k per teacher
Blended academies are more affordable at $300 per teacher but lack a lot of meaningful quality
Failure to fund reading academies will likely lead to disadvantages in education for higher poverty districts
Charter school on average receive $1,200 more per student from FSP than the same student would have cost in their normal school district because they always have small and mid-size allotment, regardless of the size
Demands funding structures be equitably designed and do not advantage open-enrollment charter schools

Bob Popinski, Raise Your Hand Texas (pp. 82-84)

Many are concerned with COVID-19 economy shortfalls, education will take a hit and funding increases from HB 3 will be rolled back
Now, more than ever, schools need sustained and increased support from Legislature to adapt to new learning environments
Suggest using the $1.2B provided by CARES Act for low-income students be restored to the FSP and not used for other holes in state budget

Estimated increase in state funding requirements for HB 3 for 2022-23 biennium is $2.1B, which corresponds to the state cost of the law’s 2.5% automatic school district tax compression
Automatic property tax compression will cost the state an estimated $1B each year
Asks committee to consider delaying the automatic M&O property tax compression until state revenues stabilize
The LBB estimated the funding advantage of charter schools to cost the state approximately $882M for the 2018-2019 biennium and has declined to make future estimates
Student enrollments in charters cost the state significantly more

Recommends considering the cost of rapid growth in charter authorization and expansion before cuts to public education are made

Texas School Coalition (pp. 85-86)

State investment in education needs to continue and increase in sustainably and cover the increased costs of compressed property taxes, rather than compression resulting in less funds
Asks committee to consider, if budget cuts need to be made, the additional costs associated with new HB 3 programs for schools and ongoing costs for these programs be suspended temporarily to provide funding for core instruction programs

Recommends Committee provide leniency in discretion for districts on funding ongoing costs with new requirements and mandates by HB 3

Dana Harris, Austin Chamber (pp. 87-88)

Policymakers need to focus on advancing state 60×30 goals to meet current and future labor market demand and keep economy strong
Individuals without postsecondary credential are more vulnerable to unemployment before, and now even more so, with the pandemic

Maintaining investment in HB 3 is critical for Texas to remain economically competitive in its workforce
Asks committee to maintain investment in HB 3 and avoid cuts or delays in funding that would impact programmatic or structural changes in provisions to implement
Outlines many of the HB 3 programs that it believes positively benefit Texas economy and workforce
Examines costs of these programs in comparison to UI wages that totaled $21B for 2020 thus far; those with higher degrees of education are less likely to need UI wages

Autism Society of Texas, (pp. 89-91)

Supports the Special Education Finance Advisory Committee Recommendations, found here
SPED funding should be based on the individual students’ needs regardless of instructional setting
Funding should be based on individual services and support needed for student success, regardless of setting
Segregating students with autism from general education settings is harmful for their educational outcomes

Incentivized by current funding schemes focusing on setting rather than services
Recommends prioritizing the development and implementation of a funding system based on student need rather than instructional setting
Recommends altering mainstream and homebound funding to rebalance amounts LEA’s receive for special education relative to general education
Recommends increasing contact hour multiplier for instructional arrangement to 41
Recommends creating a reimbursement fund for initial special education evaluations to offset cost

Recommends providing funding weights for related services that vary in number, intensity, and cost
Recommends distinguishing among levels of support provided in the mainstream setting based on varying student needs, and implement funding based on these distinctions
Recommends reviewing budget riders to identify new revenue for special education
Recommends increasing direct spending requirement percentage for special education to ensure LEA budget dedicates sufficient resources for special education
Recommends surveying LEAs to determine if Texas should continue the TEA’s IDEA High Cost fund

Recommends limiting the state’s use of short-term grants focused on specific disabilities or projects to prioritize general special education funding
Recommends coordinating the dyslexia and special education allotments to maximize use of state funding resources

ChildrenAtRisk (pp. 92-99)

Chronic Absenteeism occurs when a student misses 10% or more of school days within a given academic year for any reason, which is 18 days in a 180-day academic year

Students who are chronically absent in pre-k, kindergarten, or first grade are less likely to reach appropriate reading levels by third grade. Students who fail to reach appropriate levels by third grade are four (4) times more likely to drop out of high school
Students chronically absent in any year between eighth and twelfth grade is 7 times more likely to drop out of high school
Statewide chronic absenteeism averages at 12.48%, but varies by region
Different populations or demographics are also impacted differently, with 70% of pregnant students being chronically absent, 17% of special education students, and both white and black students having rates above the state average (13.5% and 14% respectively)
Includes graph showing rates of chronic absenteeism by grade level in 2019

Includes graph showing rates of chronic absenteeism by demographic indicators in 2019, such as low- versus high-performing campus and teacher-student ratios
Higher teacher-student ratios appear to correlate with higher absentee rates
Recommends amending education code to define chronic absenteeism in Texas
Recommends classifying students who are chronically absent as “at risk” of dropping out (as a new category of at-risk student) to make funds available to schools for intervention
Recommends requiring the TEA report chronic absenteeism as an indicator

Concerning Charge II

Overviews purpose of HB 3
Highlights Pre-K Partnerships as alternate method districts can pursue to provide full-day pre-k and prevent private childcare businesses from going out of business
TWC has allocated $10 million to expand Pre-K Partnership
HB 3 requires districts to explore partnerships with high-quality childcare providers for Pre-K facilities before constructing their own new spaces

Includes figure and table showing percentages of districts by geographic location that received waivers from State
Recommends collecting data to track number and type of Pre-K Partnerships
Recommends offering alternative paths for high-quality childcare providers to offer public school Pre-K
Recommends providing incentives to districts that partner with childcare providers

The Commit Partnership and 18 Signatories (pp. 100-105)

Overviews passage of HB 3 and highlights specific issues reformed, such as funding disparities
COVID-19 will present challenges, but legislature must overcome them and continue funding HB 3 provisions
HB 3 programs are a minimal investment for significant returns and key to economic recovery from the pandemic

Much of the cost of the bill is found in the $5 billion spent on property tax relief and the $3.6 billion in lost recapture

Talk of cutting programs like the $140 million Teacher Incentive Allotment will not save the state significant amounts of money comparatively

HB 3 is needed to solve specific issues facing education exacerbated by COVID

Overviews decline of Texas educational performance nationally and includes chart displaying the downward trend of student success
Includes chart displaying reading gaps among different demographics in Texas, urges maintaining HB 3 programs to close these gaps

HB 3 is interconnected, and delaying or defunding any program will impact other programs reliant on it

Delaying HB 3 degrades the entire system, not just specific programs

Anonymous Submission (pp. 106-107)

Cites CDC research regarding development of the brains of young children
Unintended side effect of full-day pre-k is that childcare centers who rely on three and four-year olds for most revenue will not be able to sustain business based only on toddlers and infants who require their care

Recommends state shift funding to ensure sustainability of high-quality childcare facilities in private sector
Recommends creating stronger incentives and requirements for partnerships with high-quality community childcare programs and school districts
Recommend that high-quality pre-k standards are updated to institute a maximum class size of 22 with a student-teacher ratio of 11:1

EarlyMatters and Partner Organizations (pp. 108-111)

Highlights specific HB 3 programs believed to help ensure all students receive quality early education, including the early education allotment, among others
These reforms make Texas a leader in early childhood best-practice policy
Overviews statistics about unpreparedness in early education in Texas
Includes chart highlighting disparities in 3rd grade reading level by demographic in Texas
Early Education Allotment critical for low-income and English-language-learning students to provide funding for full-day high-quality pre-k

HB 3 mandates full-day pre-k, which is critical for increasing equity by early on closing achievement gaps and opportunity differences
Disaggregated early math and reading proficiency goals provide better accountability to ensure all students are supported in early education
HB 3’s focus on supporting teachers and teacher education/training initiatives ensures greater quality of instruction for all students
Maintaining funding for HB 3 even more important now given disparities exacerbated by the COVID pandemic
Includes chart showing decline of Texas in national education rankings following education cuts post-2008 recession

HB 3 reverses this decline, but only if we continue funding it and commit to upholding it despite budgetary constraints

Intercultural Development Research Association (pp. 112-115)

Highlights importance of early education like pre-k and childcare for English-language-learning students and measures in HB 3 to support these programs
Highlights importance of Dual Language Allotment created by HB 3 and importance of increasing funding for English-learner-students in future

Early education allotment created by HB 3 key to provide funding for early education opportunities to improve educational outcomes for all students
Overviews budget and educational implications of COVID-19 pandemic
Recommends use of the “Rainy Day Fund” to maintain funding for HB 3 and public schools
Recommends protection of weighted student-based funding amounts and allowable spending uses in school finance formulas, particularly for early learners and vulnerable student groups
Recommends encouraging federal government to approve and issue additional stimulus funds directed towards education and social services

Recommends identification and development of new revenue streams, such as restoring franchise tax, increased tax on retail services, updated tax rates on alcohol and cigarettes, and repealing natural gas tax breaks
Identifies several areas of revenue within the school finance formula to sustain state financial resources, including delaying compressions of the M&O tax, saving at least $5 billion; repealing restrictions to local property tax revenue growth; or delaying the Teacher Incentive Allotment to the next biennium in favor of comprehensive increases for teacher salary schedules for a saving of $140 million