Closing Thoughts on HB 3, the Big School Finance Bill

As lawmakers prepare to vote, CPPP offers these final thoughts

As soon as tonight, lawmakers are poised to approve major school finance reforms that CPPP supports on the whole.

House Bill 3 is a step forward on public education, and we appreciate the investment in our schools. We thank Chairmen Dan Huberty and Larry Taylor for their leadership on this issue. In particular, CPPP highlights the following positive elements of HB 3:

  • Increased compensation for teachers and other school personnel;
  • Support for low-income students and English-language learners in dual language programs, and for early education;
  • Some equity improvements for students, including providing districts with greater concentrations of low-income students more funding per low-income student;
  • Increased funding for mainstream special education students and new funding for students with dyslexia or a related disorder;
  • A move toward using current-year property values, rather than prior-year values, to estimate annual school funding, which eliminates the lag time and ensures all districts are funded at intended levels.

Our initial reaction to HB 3 was based on a summary of the bill and not the full bill language. That analysis did not fully account for teacher compensation. We accurately described the House’s original priorities in HB 3: $6 billion for school resources and $3 billion to reduce taxes. But for 2020-2021, when including teacher and other staff salaries, $6.2 billion (about 53%) of the “new money” in HB 3 adds to school resources in some way while $5.2 billion (about 45% of the Texas Plan Investment total) reduces local school property taxes.

Devoting over $5 billion of this school finance bill to “buying down” school property taxes is the wrong priority, and that state commitment gets even bigger after 2021. The bill lacks a sustainable source of funding for our schools in the future, which will put more pressure on other parts of the budget.

The biggest disappointment in HB3 stems from the inequitable tax compression. The result is that some districts will be able to tax at lower rates than other districts to access the same amount of funds. This violates the fundamental principles of school finance equity that have led to notable advances in public education in Texas in the last 25 years.

HB 3 does account for inflation, meaning that state and local spending per student, even after adjusting for the Consumer Price Index, should increase in the next two years. This is admirable and something budget writers should do more often — though for schools, the cost of staff health benefits usually rises faster than the CPI. But in terms of per-student funding, HB 3 does not go far enough to overcome the obstacles for the majority of low income and English language learners.

During the interim and next legislative session, CPPP will continue to work with lawmakers to improve our school finance system and find secure revenue sources to support the good intentions in HB 3.

Follow CPPP through this weekend for updates as the House and Senate finalize school finance legislation.

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