The Texas Education Agency (TEA) released the start of the HB3 in 30 video series on June 27, 2019 discussing the impact of HB3, a major education bill passed in the 86th Session. The videos reported on below focus on the HB3 Overview and Budget Planning for Teacher Compensation.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing, but 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.

 

HB3 Overview

  • Introduction of speaker, Mike Morath, Commissioner of the Texas Education Agency.
  • Legislature just passed HB 3, a comprehensive reform of our school finance system.
  • Morath thanks the people involved in the passing of HB 3.
  • Introduces the new web series from TEA, Hb 3 IN 30. The web series is designed to bring clarity to HB 3.
  • HB 3 is a massive reform of public education in Texas.
    • Supports teachers and rewards teaching excellence.
    • Focuses on learning and student outcomes in major ways.
    • Prioritizes early literacy.
    • Improves college, career, and military readiness.
    • Increases special education support.
    • Expands learning opportunities.
  • It is a lot of money, however it increases funding and equity.
  • HB 3 makes an impact all while reducing and reforming property tax collections throughout the state.
  • Bill is over 300 pages long, that’s why the TEA launched the HB 3 in 30 series.
  • Committed to making sure districts get clearer information about what HB 3 requires so that the quality of implementation is truly transformative.
  • Each week from now until October TEA will release a video and a series of resources that will dive into one aspect of the bill. Videos and resources will be available on the website.

 

HB3 in 30: Budget Planning for Teacher Compensation

Introduction of speaker, Leo Lopez, associate commissioner for school finance.

Minimum Salary Schedule Increase (and TRS Implications)

  • Basic Allotment increased from $5,140 to $6,160
    • Minimum salary schedule is linked to the basic allotment
    • Results in noticeable increases to each step of the minimum salary schedule (MSS)
      • Providing these increases is mandatory
      • MSS-related increases are not dependent on the amount of the HB3 “gain”
    • These increases along with the repeal of the Cost of Education Index (CEI) impact TRS Contributions (State vs. Local Share)
  • In the new MSS, all districts have the same salary schedule for employees. From 0 to 20+ years, it ranges from $33,660 to $54,540.
  • When compared to the prior MSS, the increase ranges from $5,580 to $9,030.

TRS Contributions for Charters and Districts of Innovation

  • HB3 created uniformity in TRS Contributions above the MSS
    • Charter schools are now required to pay. the state contribution on a portion of a member’s salary that exceeds the statutory minimum
    • Similarly, the bill clarified that districts of innovation (DOIs) that exempt themselves from the MSS cannot exempt themselves from paying the state contribution on the portion of a member’s salary that exceeds the statutory minimum.

TRS Contributions Prior to HB3 and SB12

  • Traditional school districts and charter schools + districts of innovation had different contributions.

TRS Contributions After HB3 and SB12

  • Created uniformity in the payments of all schools.
  • All Schools and Charter Districts
    • Teacher with 0 years experience makes $40,000
    • Greater than the new state minimum salary of $33,660
    • The State pays the TRS Contribution (7.5%) on the salary up to the MSS level resulting in a TRS Contribution of $2,524.50 paid by the state.
    • The district or charter school must pay the TRS Contribution of $475.50 (7.5%) for the salary above the MSS.
    • Total TRS Contribution is $3,000.

FAQ

  • Districts have to increase salaries up to the MSS unless exempt from MSS via the DOI plan.
    • HB3 did not change or relax district requirement to comply with the MSS.
  • The new salary rates are effective for the 2019-2020 schoo year. The first paycheck for impacted employees that reflects days worked under their new contract should reflect the increased rates of pay.
    • Consult with the TRs and/or district attorneys when making compensation decisions.

MSS – District Next Steps

  • Districts must ensure that local salary schedules comply with the new MSS for all relevant employees subject to Chapter 21 of the TEC for the 2019-2020 school year.
  • Districts must confirm with TRS the appropriate month to switch to the new MSS. This will depend on when teacher contracts begin and end.
  • DOIs and charter schools must ensure that they are remitting the appropriate amount of TRS Contributions related to salaries above the MSS.

Calculation of the 30 Percent

  • The 30 Percent is a requirement under HB3 that all school districts and charter schools are required to pay 30% of their gain from the bill toward compensation increases.
  • HB3 created a new spending requirement related to compensation for school years when the BA increases
    • 30% of any year-over-year entitlement gains must be used
    • 75% for compensation increases to classroom teachers, librarians, nurses, and counselors, with increased compensation for veteran teachers (entering 6th year or longer of teaching)
    • 25% may be used for other employee categories except administrators.

30 Percent Breakdown

  • Compensation increases are for full-time employees rather than administrators
  • This requirement applies in any future school years where the BA is increased.
  • 75% (of the 30%)
    • Must be used to increase compensation paid to classroom teachers, full-time librarians, full-time counselors certified under Subchapter B, Chapter 21, and full-time nurses.
    • Districts and charter schools must prioritize differentiated compensation (which includes benefits such as insurance premiums) for classroom teachers with more than 5 years of experience
  • 25% (of the 30%)
    • May be used as determined locally to increase compensation paid to full-time district employees, except administrators
    • This category may also include the categories of employees captured under the 75%.

Calculation of the 30 Percent

  • First: Calculate 2018-2019 M&O Funding per ADA (Chapter 42 State Aid + Local M&O Taxes – Recapture)
  • Second: Calculate 2019-2020 M&O Funding per ADA (Chapter 48 State Aid + Local M&O Taxes – Excess Local Revenue)
  • Third: If #2 > #1, then multiply the “gain per ADA” by the projected 2019-2020 ADA to arrive at the “total gain” from HB3
  • Fourth: Multiply the result from #3 by 30%.
    • The compensation increase amount is not computed by multiplying the BA increase by 30%.
    • Hardship Grants from HB21, Formula Transition Grants from HB3 and ASF should all be included.

FAQ

  • The legislation specifically uses the phrase “prioritizing differentiated compensation…” for experienced teachers. HB3 establishes an expectation that compensation increases given to experienced teachers would be higher than other compensation changes planned for the new school year, and equal compensation increases to all educators would seem inconsistent with this statutory language.
    • All districts are required under HB3 (Article 5, Section 5.008) to report to the legislature on each salary increase by employee’s position and amount.

Increasing Rates of Pay vs. Hiring More Staff

  • Increasing rates of pay for existing employees
    • Funds used to increase rates of pay for existing teachers, or increased rates of pay for teachers employed during the year, would count toward the 30% requirement.
  • Increasing numbers of teaching staff
    • While hiring additional teaching staff would result in additional expenditures, only spending associated with compensation rate increases count toward the 30% requirement.
    • Money spent on newly created positions up to prior pay levels would not count toward the 30% requirement.

FAQ

  • The statute does not differentiate between allocating funds for compensation increases based on budgeted vs. actual amounts.
    • Agency enforcement of spending requirements, when districts attempted them in good faith but when the efforts were found insufficient when accounting for actual funds, has typically involved requiring a cure in the following year.

Interplay of the MSS with the 30%

  • HB3 contains 2 requirements related to compensation:
    • MSS
    • 30%
  • District compliance with the MSS increases can be used to count toward the 30% requirement, and vice versa, but please note:
    • Districts must fully comply with both requirements
    • The 30% has differentiated compensation as a requirement that may not be addressed solely by compliance with the new MSS.
    • If a district’s gain is negative or zero, the district must still comply with the MSS increases.

Next Steps (TEA and District)

  • TEA will post the School Finance Excel Template to the TEA Website by July 1
  • Districts should download the TEA school finance template to help them estimate their 2019-2020 revenue per ADA
  • Districts should consult with attorneys before making decisions related to compensation increases and/or TRS Contributions