This report covers TEA’s video on Compensatory Education, part of a larger series on HB 3. The video can be found here.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. This report is not a verbatim transcript of the hearing; it is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.


What is Compensatory Education?

  • The goal of State Compensatory Education (SCE) is to provide additional resources to reduce any disparity in performance.
  • The purpose of SCE is to increase academic achievement and reduce the dropout rate.


How did HB 3 change Compensatory Education?

The main components of SCE as a result of HB 3:

  • Increases overall allotment from 0.20 to a range of 0.225 – 0.275.
  • Established new allotment methodology accounting for severe economic disadvantage based on the census block.
  • Changes spending requirements:
    • Adds childcare services and life skills programs to the allowable use of SCE funds.
    • Requires 55% of the allotment to be spent on SCE.
    • Requires commissioner to adopt rules on spending requirements, with a focus on streamlined reporting.
  • Requires a compensatory education committee.
  • HB 3 changes the previous funding methodology:
    • Was .20 x basic allotment for each student eligible for national free and reduced lunch.
    • Now will be a tiered multiplier for those free/reduced lunch students based on the tier of the student’s home address census block group.
  • The SCE allotment is based on a tiering methodology to be reviewed periodically.


Identification of Student Information

  • Students are determined to be economically disadvantaged and are reported as economically as such in the PEIMS Fall submission.
  • Identify the student’s resident address.
  • Identify the census block group of that address.
    • TEA will provide a free tool for this purpose to be available before this fall PEIMS submission window.
  • The census block group assigned to the student determines the tier and the weight the student earns for SCE allotment.
  • FAQ: Do I now get compensatory education funding for all students based on their home address tier?
    • Students must first meet the eligibility requirements for compensatory education.
  • FAQ: What if I can’t identify a student’s census block group from the tool that will be created by TEA?
    • Consult census block group maps to make the identification manually.
    • In the event a census block group is not assigned, the eligible student will be assumed into the lowest funded tier, receiving the 0.225 weight.
  • FAQ: What address should I use for determining the census block group for a student with a P.O. Box?
    • The district needs to obtain the physical address of where a student resides.
  • What address should I use for determining the census block group for a student who is homeless?
    • TEA will use the school address.
  • What address should I use for determining the census block for a student when parents have joint custody?
    • Use the parent’s address that makes the student eligible to attend that campus.


Census Tiers

Below are the five categories used in determining census block groups:

  1. Median household income by block group.
  2. The highest average education level of the population.
  3. Percentage of single-parent households.
  4. Home ownership rate.
  5. Other economic criteria determined by the commissioner and advisory committee.


How the categories of census block groups were used to determine Tier placement:

  1. Each of the four categories were ranked and assigned a percentile score from 0 to 1.
  2. The scores were added together and given an overall Socioeconomic score between 0 and 4.
  3. After scoring all 15,286 block groups, they were ranked from lowest to highest.
  4. Census block groups were placed into tiers starting with the lowest scores going into Tier 5 which earns the highest funding weight


  • FAQ: What if a block group doesn’t have a tier assigned due to insufficient census information?
    • A small number of census block groups in Texas have insufficient data to assign a census tier. In all non-standard cases, educationally disadvantaged students will be assigned into the lowest funded tier.


Flow of SCE Allotment Funding

SCE Funding for 2019-2020

  • Starting with the new school year, district payments will be provided based on estimates developed based on campus addresses.
  • Starting with FSP payments in the spring, the FSP payments will likely be adjusted to align with actuals from student information in the fall PEIMS submissions pending rule adoption.


Methodology for Funding Estimates in 2019-2020

  • TEA will initially fund the SCE allotment for 2019-2020 based on the census block group of each campus and the fall 2018 student estimates.
  • An excel document containing estimated SCE allotments by district can be found on the HB 3 website.


Adjusting for Actuals for 2019-2020

  • The Fall PEIMS submission will be used as the determination for each student’s educationally disadvantaged status and census block group.
  • Districts will be required to upload a census block group for each student in membership, in addition to noting whether the student is educationally disadvantaged.
  • TEA is developing a tool to help districts identify census block groups from addresses.
  • Final FSP funding will be based on the census block group uploaded in the Fall 2019 PEIMS.


Future Year Funding Methodologies

  • Beyond 2019-2020, LPE funding estimates will be based on census block groups reported as of the prior year’s Fall snapshot date for educationally disadvantaged students.


SCE Funding with a Community Eligibility Provision (CEP)

  • Rules may be amended for the method of determining the number of students who qualify for an SCE allotment at a campus that participates in a CEP administered by US Department of Agriculture.
  • FAQ: How do we handle CEP students for SCE?
    • Districts are required to collect information to determine if a student is educationally disadvantaged for determining funding for SCE.


Use of SCE Funds

  • SCE funding can be spent on the following:
    • Programs that meet the needs of educationally disadvantaged students.
    • Childcare expenses for students at risk of dropping out of school.
    • Costs associated with a life skills program.
    • Programs eligible under Title I of the Elementary and Secondary Education Act of 1965.
  • FAQ: Can funds be spent on students at-risk of dropping out as defined in TEC 29.081(d)?
    • Students that meet one of the 13 criteria are eligible for the same supplemental services they received before the passage of HB 3.
  • SCE spending requires at least 55% of funds to be used to fund supplemental programs and services designed to eliminate any disparity in performance on assessment instruments administered under the TEC B 39 or disparity in the rates of high school completion between:
    • Students who are educationally disadvantaged and students who are not; and
    • Students at risk of dropping out.
  • FAQ: Will TEA continue to allocate expenditures coded to PIC 99?
  • FAQ: Can I continue to use SCE funds to pay for the second half of a pre-k program?
    • Early Education Allotment is another significant funding stream.
  • The Commissioner will adopt rules regarding the use of funds.
    • Rule proposal expected in October 2019.
    • Rules must allow the funds to be spent on the campus to address the student needs, provide reporting on use of funds, and not restrict uses that were allowable prior to HB 3.
  • The Commissioner will review the reports submitted in the Annual Financial Report.
  • FAQ: What if my district does not meet the spending requirements for this year because of changes in funding?
    • The district will be required to make up the difference the following year.


Advisory Committee

  • An advisory committee will be formed in Fall of 2019 to advise the agency in adopting rules for the SCE allotment.
  • The committee will help TEA amend and adopt:
    • Rules establishing other economic criteria to be considered for the census block groups.
    • Rules for students in certain programs.
    • Methods for counting homeless students.
    • Rules to determine the appropriate weight for certain students.
    • At least every two years review census and student data and make recommendations.