86th Legislative Session Update #17 – FINAL

The 86th Legislative Session is Over

Major Issues – Almost all of the session’s important issues were addressed. Here is a run-down of the major priority issues for Governor Greg Abbott, Lt. Governor Dan Patrick, and Speaker Dennis Bonnen taken up by the 86th Legislature:

Governor Greg Abbott designated 5 issues as emergency items including:

  • School finance reform and increasing teacher pay – passed as HB 3
  • Increased school safety – passed as SB 11
  • Greater access to mental health care services – Texas Mental Health Care Consortium passed in SB 11; HB 8 school mental health training and curriculum passed; and HB 19 mental health and substance abuse resources for school districts passed
  • Property tax reform – passed as SB 2
  • Expanded disaster response and readiness programs – 28 disaster relief and recovery bills passed including HB 5, HB 6, HB 7, and SB 6 (others are listed at the end of the report)

Lt. Governor Patrick’s Priorities – Lt. Governor Dan Patrick outlined his 30 priorities:

  • SB 1 – State Budget by Jane Nelson (R-Flower Mound) – passed as HB 1
  • SB 2 – Property Tax Reform by Paul Bettencourt (R-Houston) – passed
  • SB 3 – Across-the-Board Pay Raise for Teachers by Jane Nelson (R-Flower Mound)- SB 3 did not pass but HB 3 includes a payraise for teachers
  • SB 4 – School Finance Reform by Larry Taylor (R-Friendswood) passed as HB 3
  • SB 5 – Increase the Homestead Exemption by Paul Bettencourt (R-Houston) did not pass
  • SB 6 – Disaster Response Act by Lois Kolkhorst (R-Brenham) passed Lt. Governor Patrick said, “In the wake of Hurricane Harvey, the Texas Senate and I began working immediately to address the aftermath of the storm. I issued 25 interim charges to 9 different Senate Committees, who held over 200 hours of hearings. SB 6 is one of the most important bills we are sending to Governor Abbott this session. It will dramatically improve our disaster response expertise and protocols at the local level and reflects our unwavering commitment to ensuring we’re prepared for future natural disasters. It will impact generations of Texans in the years to come.”
  • SB 7 – Flood Disaster Plan and Matching Fund by Brandon Creighton (R-Conroe) passed
  • SB 8 – Statewide Flood Plan by Charles Perry (R-Lubbock) passed
  • SB 9 – Enhance Election Security by Bryan Hughes (R-Mineola) did not pass
  • SB 10 – Texas Mental Health Care Consortium by Jane Nelson (R-Flower Mound) SB 10 did not pass, but provisions included in SB 11
  • SB 11 – School Safety by Larry Taylor (R-Friendswood) passed Lt. Governor Patrick said, “In the wake of the Santa Fe High School shooting last year, we knew we had to take swift action to prevent future tragedies from occurring. SB 11 will implement a comprehensive package of strategies to help prevent school shootings. Our goal is that no child will ever feel afraid at school and our prayer is that no Texas family will ever experience the grief that follows a school shooting. The safety of our children remains paramount – the future of Texas depends on it.”
  • SB 12 – Retired Teachers’ Security Act by Joan Huffman (R-Houston) passed Lt. Governor Patrick said, “I have repeatedly told our retired teachers that my goal is to keep the Teacher Retirement System (TRS) solvent forever, and today, we have accomplished that goal. Senate Bill 12 is now on its way to Governor Abbott’s desk. SB 12 takes a principled conservative approach to pension reform and will bring actuarial soundness to TRS. Other than a parent, no person is more important to the development of our children than our teachers. Standing by our retired teachers and ensuring that Texas doesn’t get mired in mounting pension debt must always remain top priorities for our state. SB 12 will also provide a 13th check for retired teachers in 2020. TRS is the 13th largest pension system in the world. It provides benefits to over 420,000 people.”
  • SB 13 – Ethics Reform by Brandon Creighton (R-Conroe) did not pass
  • SB 14 – Expand Rural Broadband by Robert Nichols (R-Jacksonville) passed
  • SB 15 – Protecting Local Free Markets by Brandon Creighton (R-Conroe) did not pass
  • SB 16 – Police College Loan Forgiveness by Kelly Hancock (R-North Richland Hills) passed
  • SB 17 – Protecting Religious Liberties by Charles Perry (R-Lubbock) did not pass, but SB 1978 protecting membership in, affiliation with, and support provided to religious organizations passed
  • SB 18 – Protecting Campus Free Speech by Joan Huffman (R-Houston) passed
  • SB 19 – Protecting Second Amendment Rights by Bryan Hughes (R-Mineola) did not pass, but the companion, HB 302 passed
  • SB 20 – Stop Human Trafficking by Joan Huffman (R-Houston) passed About SB 20, Lt. Governor Patrick said, “SB 20 reaffirms our commitment to ending human trafficking in Texas and our determination to bring all human traffickers to justice. I congratulate Sen. Joan Huffman for her leadership on this issue and her vigilant commitment to ending this horrible crime in our great state. There are over 234,000 victims of human trafficking in Texas at any given time. SB 20 reforms the way we combat human trafficking and strengthens penalties for offenders.”
  • SB 21 – Raise the Smoking Age to 21 by Joan Huffman (R-Houston) passed
  • SB 22 – Defund Abortion Providers by Donna Campbell (R-New Braunfels) passed
  • SB 23 – Texas Born-Alive Infant Protection Act by Lois Kolkhorst (R-Brenham) passed as HB 16
  • SB 24 – Alternatives to Abortion Information Act by Eddie Lucio (D-Brownsville) passed
  • SB 25 – Higher Education Credit Transfer by Royce West (D-Dallas) passed
  • SB 26 – Honoring State Parks Commitment by dedicating sales taxes on sporting goods to the Parks and Wildlife Department and Texas Historical Commission by Lois Kolkhorst (R-Brenham) passed
  • SB 27 – Stop Government Overreach/attorney’s fees for frivolous regulatory actions by Bryan Hughes (R-Mineola) passed
  • SB 28 – Stop Frivolous Government Lawsuits/oversight over political subdivisions’ contingent fee contracts by Joan Huffman (R-Houston) passed as HB 2826
  • SB 29 – Stop Taxpayer Funded Lobbying by Bob Hall (R-Edgewood) did not pass
  • SB 30 – Taxpayers Right to Know and Bond Transparency by Brian Birdwell (R-Granbury) passed

Speaker Bonnen’s Priorities – In his swearing-in speech, House Speaker Dennis Bonnen outlined his priorities:

  • Public School Finance Reform – passed as HB 3
  • Texas Children – Passed as HB 2764 (training for Department of Family & Protective Services caregivers); and SB 355 (strategic plan on implementation of resources provided to foster parents); and HB 1 increases funding for foster care providers and increased staff positions to maintain lower caseloads per worker
  • Human Trafficking – passed as HB 292 (peace officer training), HB 403 (training for school personnel), HB 3800 (reporting human trafficking cases) and SB 20 (prostitution and trafficking prevention)
  • Property Tax Reform – passed as SB 2
  • Health Care – passed as HB 2048 providing a more stable source of funding for trauma care

BUDGET HIGHLIGHTS:

CSHB 1 by John Zerwas (R-Fulshear) and Jane Nelson (R-Flower Mound) is the general appropriations bill for the 2020-2011 biennium.

  • It appropriates $118.859 billion in general revenue funds;
  • $6.19 billion in general revenue dedicated funds;
  • $86.439 billion in federal funds; and
  • $39.165 in other funds;
  • All funds total of $250.652 billion (compared to $216.758 billion in the 2018-2019 biennium; $216.399 in the 2016-2017 biennium and $196.9 billion in the 2014-2015 biennium).
  • The conference committee report on HB 1 was adopted by the Senate by a vote of 31 to 0, and passed the House by a vote of 148 to 1. Representative Jonathan Stickland (R-Bedford) cast the only “no” vote.

Specifics of HB 1:

School Finance and Property Tax Reform (contingent on HB 3) – $11.5 billion in General Revenue (GR) Funds above current law funding for public schools to increase public education funding, including salary increases for classroom teachers and other educators, provide school district property tax relief, and reduce recapture. Components include:

  • $6.5 billion for increased school funding, including: an increase to the Basic Allotment to $6,160, funding to provide salary increases to teachers, librarians, counselors, nurses and other school employees; full-day prekindergarten for eligible students; and major structural reforms to the school finance system. Districts and charters are required to spend at least 30 percent of their funding gain from the increased Basic Allotment on salary increases;
  •  $5.0 billion for property tax relief through the compression of school district tax rates. Tier 1 tax rates are compressed to at least 93.0 percent, with additional compression beginning in fiscal year 2021 in districts where property value growth exceeds 2.5 percent; and
  • as a result of the school finance reform in HB 3, recapture payments are projected to decrease by $3.5 billion during the 2020-21 biennium from what they otherwise would have been under current law.

Medicaid – Funding for the 2020-21 biennium includes $66.5 billion in All Funds (AF), including $24.7 billion in GR and $0.1 billion in General Revenue-Dedicated (GRD) Funds, for the Texas Medicaid program.

  • This amount is an increase of $0.8 billion in AF and a decrease of $1.9 billion in GR from 2018-19 biennial levels. Increased AF funding for Medicaid client services supports caseload growth, maintains fiscal year 2019 average costs for most services, and provides funding for cost growth associated with average costs established by the federal government.
  • Funding also is provided to support community-based long-term-care, including 1,628 additional waiver slots to reduce interest lists, attendant wage and rate-enhancement program increases, and rate increases for consumer-directed services and certain waivers. Rate increases also are provided for inpatient services and labor and delivery services provided by rural hospitals, intermediate care facilities for individuals with intellectual disabilities,
  • Texas Health Steps private-duty nursing, and certain therapy services. More favorable Federal Medical Assistance Percentages result in a higher proportion of the program being funded with Federal Funds, more than offsetting increased GR demand associated with caseload and costs, resulting in an overall decrease to GR of $2.0 billion.

Transportation – Funding provides $31.1 billion in AF for all functions at the Department of Transportation, which includes the following amounts:

  • an estimated $5.0 billion in funding from anticipated state sales tax deposits to the State Highway Fund (SHF) (Proposition 7, 2015);
  • $3.9 billion in funding from oil and natural gas tax-related transfers to the SHF (Proposition 1, 2014); and
  • all available SHF funding from traditional transportation tax and fee revenue sources, estimated to be $9.3 billion for the 2020-21 biennium.

Disaster Recovery, Infrastructure Resiliency, and Flood Infrastructure – The supplemental appropriations bill provides $3.5 billion from the Economic Stabilization Fund to fund initiatives that address damage to the state due to Hurricane Harvey, provide state participation and facilitation of the draw-down of federal aid programs for local government recovery efforts, and invest in long-term infrastructure projects intended to lessen the effects to Texas from future disasters. Funding includes the following areas:

  • Hurricane Harvey relief to public schools through the Foundation School Program – $806.5 million is provided to the Texas Education Agency to provide funding to school districts and charter schools affected by Hurricane Harvey, including funds for additional compensatory education-eligible students, facilities remediation costs, and amounts to hold schools harmless for revenue losses due to the loss of students and local property tax revenue due to the disaster;
  • Hurricane Harvey-related facilities damage recovery at institutions of higher education – institutions including University of Houston campuses, Lone Star College, and the University of Texas at Austin Marine Science Institute are appropriated $74.8 million for assistance to repair damaged facilities; and
  • Hurricane Harvey-related response reimbursement and facilities damage recovery at state agencies – $350.5 million is provided to state agencies, including the Department of Public Safety, the General Land Office, the Health and Human Services Commission, and the Texas Forest Service, primarily either to reimburse agencies for response costs incurred during the immediate aftermath of Hurricane Harvey, or to provide facilities repair funding.

The supplemental appropriations bill provides $1.68 billion in funding for the Texas Infrastructure Resiliency Fund and the Flood Infrastructure Fund, contingent on the enactment of SB 7, for the following purposes:

  • state participation in the nonfederal match for federal Harvey recovery programs – $838.0 million in state funds to assist local entities in drawing down federal disaster recovery funds under the Federal Emergency Management Agency’s (FEMA) Public Assistance and Hazard Mitigation grant programs, and long-term infrastructure projects by the U.S. Army Corps of Engineers; and
  • flood infrastructure – $840.0 million to the Water Development Board to develop and fund projects under the State Flood Plan.

The supplemental appropriations bill provides $150.0 million to the Texas Soil and Water Conservation Board to fund the repair and improvement of earthen dams.

Behavioral Health – Funding includes $4.4 billion in AF ($3.3 billion in GR and GRD) for non-Medicaid/Children’s Health Insurance Program (CHIP) behavioral health services. Funding supports programs at 23 agencies across six articles, and includes the following areas:

  • funding for inpatient client services at state hospitals and community hospitals;
  • deferred maintenance projects at state mental health hospitals;
  • outpatient services provided through local mental health authorities and local behavioral health authorities;
  • substance abuse prevention, intervention, and treatment services for adults and children;
  • mental healthcare and substance abuse treatment for incarcerated offenders;
  • mental healthcare services for veterans; and
  • other services.

This amount includes funding at the Texas Higher Education Coordinating Board for the Child Mental Health Care Consortium (contingent upon the passage of SB 11).

Child Protective Services – Funding of $3.8 billion in AF, including $2.2 billion in GR, is provided for all Child Protective Services (CPS) functions at the Department of Family and Protective Services, which is an increase of $226.3 million in AF and $167.5 million in GR from the 2018-19 biennial base.

  • CPS funding includes a total of $1.9 billion in AF and $904.2 in GR for client services programs, including foster care, adoption subsidies, permanency care assistance payments, relative caregiver monetary assistance payments, and day care, which includes funding for rate increases for foster care providers, and increased funding for additional full-time-equivalent (FTE) positions to maintain lower caseloads per worker for most caseworkers and to reduce caseloads per worker for conservatorship caseworkers.

School Safety – Including amounts in the supplemental appropriations bill and funding contingent on enactment of legislation, funding for school safety programs includes an additional

  • $343.5 million in AF, including $132.6 million in GR, and $210.9 million in Other Funds from the Economic Stabilization Fund (ESF), and $0.8 million in Federal Funds at the Health and Human Services Commission and public and higher education agencies and institutions. All Funds amounts include the following:
  • Health and Human Services Commission – $8.9 million to expand Children’s Community Mental Health and $4.6 million for grants to mental health professionals at local mental health authorities, contingent on enactment of HB 19;
  • Public Education – ESF funding of $100.0 million for school safety infrastructure enhancements, $100.0 million for the school safety allotment provided in SB 11; $10.9 million for school district reimbursement of post-disaster expenditures; and $2.0 million in GR for customized school safety programming; and
  • Higher Education – $99.0 million for the Child Mental Health Consortium, contingent on enactment of SB 11; $5.0 million for Texas Tech University Health Sciences Center’s Telemedicine Wellness Intervention Triage and Referral Program; and, at Texas State University, $9.1 million for the School Safety Center and $4.0 million for Advanced Law Enforcement Rapid Response Training.

Higher Education Formula Funding – Higher education formulas are supported by

  • $8.1 billion in GR and $1.4 billion in GRD.
  • Included in these amounts are an increase of $915.5 million in GR and a decrease of $10.8 million in GRD, which primarily is statutory tuition, from the 2018-19 biennium.
  • GR increase includes $485.9 million in new funding, plus $429.6 million reallocated from non-formula support item and hold harmless funding to support the new mission-specific formulas for The University of Texas (UT) Southwestern Medical Center at Dallas, UT Health Science Center at Houston, UT Health Science Center at San Antonio, and the UT Medical Branch at Galveston. 2020-21 biennial rates for all of the higher education formulas are increased from the 2018-19 biennial rates, except for the core operations portion of the public community and junior colleges formula, which is maintained at 2018-19 biennial funding levels.

Teacher Retirement and Health Benefits – The supplemental appropriations bill includes a total of $1.1 billion in AF above current law requirements for retirement benefits at the Teacher Retirement System (TRS), contingent on the enactment of SB 12.

  • This amount includes $524.0 million from the Economic Stabilization Fund (ESF) to increase the state share for the 2020-21 biennium to achieve actuarial soundness and $589.0 million from the ESF for an additional one-time payment to certain TRS annuitants.
  • Funding in HB 1 provides $4.1 billion in AF for the current law state contribution to retirement benefits of the TRS, including $4.1 billion in GR, $48.8 million in GRD, and $9.1 million in Other Funds from the Teacher Retirement System Pension Trust Fund. Retiree health insurance funding totals $1.1 billion in AF.
  • Funding includes $879.4 million in GR to provide a statutorily required state contribution to TRS-Care of 1.25 percent of public education payroll. Funding also includes $230.8 million greater than statutorily required amounts in GR to maintain plan year 2019 TRS-Care premiums and benefits for the 2020-21 biennium.

Human Trafficking Prevention and Law Enforcement – Funding includes an estimated $58.4 million for the prevention, investigation, and prosecution of human trafficking-related activities.

  • Increase of $39.6 million from the 2018-19 biennium. Funded initiatives include law enforcement; inspection and prosecution personnel at the Department of Public Safety, Alcoholic Beverage Commission, Department of Licensing and Regulation, Office of the Governor, and the Office of the Attorney General; and prevention services at the Department of Family and Protective Services, the Department of State Health Services, and the Department of Transportation. Additionally, a Human Trafficking Coordinating Council is established to coordinate statewide anti- human-trafficking efforts.

Border Security – Funding of $800.6 million in AF is provided to fund border security purposes at nine state agencies across multiple articles of government.

  • The majority of this funding, $693.3 million, is provided to the Department of Public Safety (DPS). Border security funding maintains support for DPS personnel at fiscal year 2019 full deployment levels and eliminates funding for one time and transitional expenditures. Significant funding items include the following:
  • $671.1 million in 2018-19 biennial base border security funding provided for the border security initiative, including a 50.0-hour work week for all DPS’ commissioned law enforcement officers, full biennial costs for 22 Texas Rangers, 250 new troopers and associated support staff, and several other border security-related initiatives.
  • Funding also includes $9.3 million for human trafficking and anti-gang activities, $7 million for Operation Drawbridge camera maintenance, $0.8 million for a new Tactical Training Facility in Cameron County, and $0.5 million in GR for the Texas Transnational Intelligence Center.
  • Border security funding also includes $53.5 million to the Trusteed Programs within the Office of the Governor for grants to local entities and other support, $29.0 million to the Parks and Wildlife Department for enhanced game warden activity, and funding for investigations, prosecutions, and other border security-related activities across several state agencies.

Trusteed Programs Within the Office of the Governor – Funding for the Trusteed Programs within the Office of the Governor totals $1.4 billion in AF for the 2020-21 biennium, a decrease of $121.9 million, or 8.2 percent, from the 2018-19 biennium.

Funding of $100.0 million from the Economic Stabilization Fund in the supplemental appropriations bill is provided for disaster grants. Funding for economic development and jobs creation includes programs for economic development, tourism, film and music marketing, the Texas Enterprise Fund, military community support, and the Governor’s University Research Initiative. Funding in the strategy for various economic development programs totals $534.2 million in AF for the 2020-21 biennium, including the following amounts:

  • Defense Economic Adjustment Assistance – $30.0 million in GR to provide assistance to military defense impacted communities;
  • Texas Enterprise Fund – $74.0 million in GR and $76.0 million in estimated unexpended balances remaining at the end of fiscal year 2019 in the Texas Enterprise Fund for incentive grants, a decrease of $7.3 million in All Funds;
  • Governor’s University Research Initiative – $17.1 million in GR and $22.9 million in estimated unexpended balances remaining at the end of fiscal year 2019 in the Governor’s University Research Initiative for recruitment grants, a decrease of $13.3 million in All Funds;
  • Moving Image Industry Incentive Program – $50.0 million in GR for the Moving Image Industry Incentive Program, a decrease of $17.2 million in General Revenue Funds;
  • Tourism – $110.2 million in GRD from Hotel Occupancy Tax deposits for tourism promotion, which maintains the $34.2 million appropriated for the 2018-19 biennium, plus projected unobligated balances estimated at $76.0 million; and
  • Military Value Revolving Loan Program – $50.0 million in General Obligation Bond Proceeds for the Military Value Revolving Loan Program for loans to defense communities for economic development projects at the Texas Military Preparedness Commission.

Judicial Salary Increase – Funding of $34.0 million provides for judicial compensation based on a tiered, tenure-based structure for district judges, appellate court judges, the state prosecuting attorney, and professional prosecutors contingent on the enactment of HB 2384.

Debt Service – Funding for the 2020-21 biennium fully funds debt service and totals $4.2 billion in AF, a decrease of $56.6 million, or 1.3 percent, from the 2018-19 biennium. Funding provides for debt service for General Obligation and revenue debt issued, or expected to be issued, by the Texas Public Finance Authority, the Facilities Commission, the Water Development Board, the Department of Transportation, and the Office of the Governor. Funding also provides for reimbursement of debt service payments for tuition revenue bonds issued by various institutions.

Economic Stabilization Fund – No new appropriations of the Economic Stabilization Fund are included for the 2020-21 biennium in HB 1. SB 500 includes appropriations of $4,967.7 million from the Economic Stabilization Fund for fiscal year 2019 and $1,160.0 million for the 2020-21 biennium. The resulting cash balance of the fund plus the total asset value of investments is estimated to be $9.2 billion at the end of fiscal year 2021.

School Finance Reform and School Property Tax Relief – HB 3 by Dan Huberty (R-Humble) and Larry Taylor (R-Friendswood) is a major school finance reform and school property tax relief bill. The conference committee report passed the Senate by a vote of 30 to 0 and passed the House by a vote of 139 to 0. It is headed to the governor’s desk.

Tax Relief Provisions in HB 3:

Effective September 1, 2019 (2019-20 school year)

  • M&O tax rate cap is the maximum compressed tax rate plus $0.17.
  • Sets a statewide compression percentage of 93 percent in statute (93 percent x $1.00 = $0.93), resulting in $0.07 tax rate reduction.
  1. Districts with $1.00 tier 1 rate in the 2018-19 school year will now have a $0.93 tier 1 rate.
  2. Districts with M&O tax rates below $1.00 in the 2018-19 school year will have a tier 1 rate compressed to 93 percent of the 2018-19 tier 1 rate plus additional pennies levied in 2018-19 up to $0.93.
  • The portion of a school district’s M&O tax rate up to $0.93 must be used to generate the district’s share of its Tier 1 entitlement.
  • Requires mortgage lenders to adjust escrow accounts for tax reductions immediately.
  • Requires the Legislative Budget Board to study possible methods of providing property tax relief through the reduction of school district maintenance and operations taxes.

Effective September 1, 2020 (2020-21 school year)

  • Sets a statewide compression percentage of the lesser of 93 percent or a compression percentage set by using statewide property value growth in excess of 2.5 percent to compress tier 1 tax rates.
  • School districts with value growth in excess of the statewide average will use the district’s value growth in excess of 2.5 percent to compress their tier 1 tax rate.
  • Each school district will be subject to an M&O tax rate cap equal to the district’s maximum compressed rate plus $0.17.
  • TEA will calculate and make available all maximum compressed rates. If a school district has a maximum compressed tax rate that is less than 90 percent of another district’s rate, the Commissioner will recompute the lower rate until it is within the 90 percent range.

Tax Reduction and Excellence in Education (TREE) Fund – It creates the Tax Reduction and Excellence in Education (TREE) Fund to provide further tax rate compression and funding for schools. The fund would consist of:

  • Sales tax revenue from the Wayfair court decision ($300 million per year)
  • Available School Fund revenue to be used for increased school funding ($600 million per year)
  • Any severance tax revenue diversion provided by the Constitution to be used for tax compression
  • Any revenue appropriated to the fund

Tax Ratification Elections

  • Requires a tax ratification election for rates adopted that exceed $0.93 + prior year enrichment rate + debt rate.
  • In the 2020 tax year, rollback rate is increased by $0.01. School boards must have a unanimous vote of the board to access the $0.01 without an election.
  • Tax ratification election must be held on a uniform election date that allows sufficient time to comply with the requirements of other laws.
  • Requires a school district to conduct an efficiency audit before holding a tax ratification election. Efficiency audit is waived for two years if the school district is located in a disaster area.
  • School districts with strategic plans in place requiring a rate increase that exceeds the rollback rate may proceed with voter approval.
  • Prohibits school districts from increasing M&O tax rate to create a surplus for the purpose of paying the district’s debt service.

School Finance Provisions of HB 3:

  • Changes the calculation of recapture to the amount of revenue raised by a district’s tier 1 tax rate that exceeds a school district’s tier 1 entitlement. It will no longer be based on property wealth per weighted average daily attendance (WADA).
  • Commissioner may not deduct 50 percent of local option homestead exemption value when calculating recapture amounts unless the deduction is made for all school districts for state funding purposes.
  • School districts can send their recapture obligation in one recapture payment not later than August 15 rather than in monthly payments February 15 – August 15.

“Golden” and “Copper” Pennies

  • Adds two “golden pennies” (not recaptured) for a total of 8 golden pennies (first 8 pennies above the compressed rate). De-links guaranteed yield from Austin ISD ($126.88) and links it to the greater of:
  1. a school district at the 96th percentile of wealth or
  2. 0.016 x basic allotment ($98.56)
  • Increases yield of “copper pennies” (remaining pennies up to the M&O rate cap) to $49.28 (54 percent) and ties the guaranteed yield to 0.008 x basic allotment ($49.28). Requires compression to the number of pennies that would raise the same amount of revenue per weighted student as copper pennies raised in the previous year.

Formula Changes

  • Uses current year values (changed from prior year) in formula calculations.
  • Repeals the following formula elements and re-distributes the revenue attributable to them:
  1. Cost of Education Index (CEI)
  2. 1993 Chapter 41 Hold Harmless (phases out over 5 years)
  3. Chapter 41 Early Agreement Credit
  4. Gifted and Talented Weight (Requires school districts to maintain their gifted and talented programs, or funds will be withheld from the district. Districts must report to the Commissioner of Education regarding the use of funds on gifted and talented programs. School districts cannot limit the number of gifted and talented students identified based on any provisions in HB 3.
  5. High School Allotment ($275 per ADA)
  6. Staff Salary Allotment for non-professional staff.
  • Increases the basic allotment to $6,160 from $5,140 (+19.8 percent). Authorizes a school district to increase its M&O tax rate up to $1.17 to make up for lost revenue if the Legislature lowers the basic allotment.
  • Increases compensatory education funding based on student needs; sliding scale weight 0.225-0.275 (from 0.20). Based on “economic census blocks” using median household income, average educational attainment, percentage of single-parent households, rate of homeownership. No longer based on qualification for free and reduced price lunch.
  • Expands career & technology allotment to include courses in grades 7 -12 (current law is 9 – 12).
  • Increases special education mainstream weight to 1.15 (from 1.10) and requires the Commissioner of Education to distribute funding to school districts for special education students in the amount necessary to comply with federal requirements for maintenance of state financial support. Requires the Commissioner of Education to appoint a Special Education Allotment Committee to make recommendations on special education funding.
  • Converts the small and mid-size district adjustment to a stand-alone allotment, but maintains it as a formula multiplier for special education students.
  • Maintains current law bilingual weight of 0.10.
  • Changes transportation allotment calculation to $1.00 per mile per student instead of using linear miles.
  • Requires quality full-day prekindergarten for eligible 4-year-olds. Districts can opt out for lack of facilities. District must seek partnerships before obtaining waiver.
  • Authorizes the Commissioner of Education to include the reimbursement of interest payments when adjusting a school district’s funding due to refunds made by a school district in the 2018 or 2019 fiscal year as a result of litigation. 
  • Provides “formula transition grants” for five years so that all school districts and charter schools will receive at least the lesser of (1) 103 percent of the amount they would have received under current law or (2) 128 percent of the statewide average amount of M&O revenue that would have been provided for the 2019-20 under current law. 
  • Provides a special hold harmless for the 10 school districts that are the only school district in a county and have less than 300 ADA. 

New Allotments and Programs

  • Early education allotment for economically disadvantaged and bilingual students in grades K-3; weight 0.10.
  • Dual language allotment; weight 0.15, 0.05 if English proficient.
  • Dyslexia allotment for each student identified as having dyslexia or a related disorder; weight 0.10.
  • Dropout recovery school and residential placement facility allotment of $275 per student attending a dropout recovery school or residing in a residential placement facility.
  • Fast growth allotment of 0.04 for each student in a school district with enrollment growth in the top quartile over the past three years.
  • Mentor program allotment to provide school districts with funds to pay stipends to mentor teachers.
  • College, career, and military readiness outcomes bonus of $5,000 for economically disadvantaged students, $3,000 for non-economically disadvantaged students, and $2,000 for special education students to send to districts for students in the top 25th percentile of performance on the SAT and ACT test, and other indicators established by the Commissioner.
  • Extended year incentive program to provide 30 days (1/2 day) additional instruction days for students in Pre-K through 5th grade.
  • Directs the Commissioner to establish a blended learning grant program to assist districts in combining classroom and online instruction.

Kindergarten-Third Grade Reading Standards

  • Requires each school district and charter school to provide for the use of a phonics curriculum that uses systematic direct instruction in kindergarten through third grade to ensure all students obtain necessary early literacy skills and requires that K-3 teachers and principals attend a literacy achievement academy.

Early Childhood Literacy and Mathematics Proficiency Plans

  • Requires each school district to adopt and post on the district’s website early childhood literacy and mathematics proficiency plans that set specific annual goals for the following five school years to reach quantifiable goals for student performance in reading and mathematics at each campus.
  • An annual report of progress must be reviewed annually by the school board and posted on the district’s website.

Teacher Salaries

  • Requires school districts to use 30 percent of the revenue from the increase in the basic allotment to increase compensation for all employees other than administrators. 75 percent of that amount must be used to provide salary increases to teachers, librarians, counselors, and nurses, prioritizing differentiated compensation for classroom teachers with more than five years of experience.
  • Creates a new teacher incentive allotment to send to districts to provide pay increases to effective teachers who teach at high needs campuses, rural campuses, or in areas experiencing a critical shortage of teachers. Teachers designated as master, exemplary, or recognized by the district and who teach at campuses with the greatest needs can receive a bonus of up to $32,000.
  • Requires each school district to submit a report to the Legislature on salary and wage increases by December 1, 2020.
  • Requires the Commissioner of Education to create a “Do Not Hire” registry for education employees.

Kindergarten Reading Diagnostic Instrument

  • Requires school districts to administer a reading diagnostic instrument to all kindergarten students.

FAFSA

  • Requires students to fill out a Free Application for Federal Student Aid (FAFSA) before graduating from high school. A student can obtain a waiver from this requirement.

Property Tax Reform – SB 2 by Paul Bettencourt (R-Houston) and Dustin Burrows (R-Lubbock) is a major property tax reform bill. The conference report was adopted by the Senate by a vote of 21 to 9 and by the House by a vote of 88 to 50.

Summary of SB 2

Restrictions on Tax Increases

  • Reductions to the rate of increase in local city, county, and special district property taxes for the taxing jurisdictions in which most people live. Under current law, voters may petition for a “rollback” election if the district raises revenue on existing properties more than 8 percent. The new limit requires an automatic November election in larger jurisdictions if the tax increase is greater than 3.5 percent. The lower threshold does not apply to jurisdictions with a tax rate below 2.5 cents per $100 of value, hospital districts, and junior college districts. Further, smaller taxing units may increase taxes by up to $500,000 before voters must approve the increase, although they may still petition for an election if the increase is greater than 8 percent.
  • Jurisdictions subject to the 3.5 percent threshold may carry forward any amount from tax rates below a 3.5 percent increase during the 3 prior years. For example, if a jurisdiction has adopted a 2.5 percent tax increase over the previous 3 years, their voter-approval threshold would be 6.5 percent (3.5 percent plus the 3 percent unused from prior years).

Improved, “Real Time” Tax Notices

  • A new requirement that property owners be notified in August about their property taxes and be provided the dates, times, and locations of public meetings for the adoption of each jurisdiction’s tax rates, as well as the amount those rates would impact their individual tax bills, with links allowing property owners to register comments about the proposed tax rates with the governing bodies of the taxing entities before they are adopted.
  • Taxing unit websites are required to include more tax rate and levy information so that property owners can make informed comments.
  • Newspaper notices are still required for public hearings on tax rates in a format that is more understandable; the notices also must be posted on the home page of the taxing unit’s website.

Improvements to the Process of Disputing Values

  • Changes to appraisal review board hearing procedures, including the creation of special panels in the five largest counties to hear protests for complex properties;
  • Improvements in the binding arbitration system; and
  • Other technical changes to appraisal district operations.

Hurricane Relief and Recovery – Over 100 bills were filed after Hurricane Harvey to help with hurricane relief, recovery, and preparedness. 28 passed including:

  • HB 5 (Phelan/Kolkhorst) debris management and other disaster recovery efforts
  • HB 6 (Morrison/Kolkhorst) disaster relief and recovery
  • HB 7 (Morrison/Huffman) disaster preparations for state agencies and political subdivisions
  • HB 26 (Metcalf/Nichols) notice of releases of water from dams
  • HB 1307 (Hinojosa/Huffman) disaster case management system by the Texas Division of Emergency Management
  • HB 2310 (Vo/Alvarado) appropriate title for flood damaged vehicles
  • HB 2315 (Ed Thompson/Kolkhorst) automatic issuance of natural disaster housing titles
  • HB 2320 (Paul/Taylor) improving emergency management services during and after a disaster
  • HB 2325 (Metcalf/Hancock) standardizing emergency communications during and after a disaster
  • HB 2330 (Walle/Lucio, Jr.) intake system for state and federal disaster assistance
  • HB 2340 (Dominguez/Johnson) emergency and disaster management, response and recovery
  • HB 2794 (Morrison/Kolkhorst) transferring administration of the Division of Emergency Management from the Texas Department of Public Safety to the Texas A&M University System
  • HB 2856 (Morrison/Kolkhorst) restrictions under disaster remediation contracts
  • HB 3022 (Miller/Kolkhorst) emergency warning systems of cities and counties
  • HB 3175 (Deshotel/Creighton) confidentiality of personal information of applicants for disaster recovery funds
  • HB 3616 (Hunter/Lucio,Jr.) task force on faith-based programs providing assistance during a disaster
  • HB 3668 (Walle/Creighton) grants for disaster response by nonprofit food banks
  • HJR 34 (Shine/Bettencourt) reappraisal of property damaged by a disaster
  • SB 6 (Kolkhorst/Morrison) emergency and disaster management, response, and recovery
  • SB 285 (Miles/Ed Thompson) hurricane preparedness and mitigation
  • SB 300 (Miles/Ed Thompson) contracts for services to declared disaster areas following a natural disaster
  • SB 339 (Huffman/Morrison) seller’s disclosure notice for residential property regarding floodplains, flood pools, floodways or reservoirs
  • SB 475 (Hancock/Hernandez) advisory body on security of the electric grid
  • SB 494 (Huffman/Zaffirini) open meetings law suspension during an emergency or catastrophic event
  • SB 537 (Kolkhorst/Ed Thompson) TxDOT to purchase food and beverages for employees during emergencies or disasters
  • SB 799 (Alvarado/Murphy) emergency management and disaster recovery
  • SB 981 (Kolkhorst/Zerwas) disaster supplemental nutrition assistance program
  • SB 982 (Kolkhorst/Lucio, III) disaster and emergency health care services
  • SB 986 (Kolkhorst/Phelan) management of contracts related to emergency management