After weeks of conversations between the Texas House and Senate, lawmakers reached a compromise on an $11.6 billion plan that will change the way public school districts, including Cy-Fair ISD, are funded statewide.

House Bill 3, one of the largest attempts to reform the state’s school finance system in decades, was signed by Gov. Greg Abbott June 11 after a unanimous vote from the House and Senate.

The plan includes a $6.5 billion investment in classroom programming and salary increases for most full-time employees.

The other $5.1 billion will help lower school district property tax rates by an average of $0.08 in 2020 and $0.13 in 2021. To make up for the decrease in local revenue, legislators plan to increase the state’s share of funding from 38% to 45% for the biennium.

“We think that we did some real major reforms in education—things that haven’t been done in over 30 years,” said the bill’s co-author, state Rep. Dan Huberty, R-Houston. “And identifying children at high-need populations and making sure the money gets to the classroom rather than just going to the district, I think those are pretty remarkable things.”

CFISD officials are still determining how HB 3 could affect students and staff in 2019-20—when student enrollment is expected to exceed 117,000.

Karen Smith, the assistant superintendent of business and financial services, said preliminary estimates indicate the district will see a net gain of

$50 million in total revenue for fiscal year 2019-20 based on the final version of HB 3 compared to current law. In 2018-19, the state contributed about $372 million to CFISD’s operating budget.

However, despite the funding boost, the district is still in line to see a budget deficit next year, she said.

“HB 3 is a complex bill, and while we are working to fully understand the impact to CFISD for 2019-20, we anticipate adopting a deficit budget in order to provide a salary increase to all employees and provide funding for increases in operating costs,” she said.

According to the National Education Association, Texas districts had the 39th highest per-pupil spending in the nation in 2017-18 and the 27th highest teacher salaries.

While education advocates have expressed appreciation for the progress toward finance reform, some expressed concern over the plan’s sustainability. State Rep. Jon Rosenthal, D-Houston, whose district covers parts of Cy-Fair, said he believes there is still work to be done.

“It’s historic, but it’s only part of the picture,” he said. “It’s not as far as we need to get, and I realize there’s no way you’re going to do all that in one fell swoop. These types of things happen over time and in increments. You have to take small bites, but this is actually a pretty big bite.”

Investing in student success

Through HB 3, the Legislature plans to invest $4.5 billion to increase the basic allotment—or state revenue a district receives based on the average number of students who attend daily—from $5,140 to $6,160.

While this number varies by district, school districts will receive more money for low-income, special education, dyslexic and bilingual students. According to CFISD, 2018-19’s enrollment consisted of 53% economically disadvantaged students, 8.5% special education students and 11.9% English language learners, but officials said it was not immediately clear exactly how those figures would translate into new funding.

One of the other most notable investments made by HB 3 was in full-day pre-K programming for economically disadvantaged 4-year-olds, Rosenthal said. He said he believes reaching students as early as possible is integral to their success later in life, and increasing access to pre-K helps bridge the gap between low-income students and more affluent students.

“The single biggest factor in how well a child does going through school is how well they start—the foundation that they build,” Rosenthal said.

While CFISD currently offers half-day pre-K to eligible students, officials have said there is not enough capacity to fully expand the program right away. Karen Smith said they can apply for a waiver from the state to get around the requirement for up to six years to phase in the expansion slowly.

In addition to doubling classroom space, certified teachers and materials would need to multiply as well to meet the needs of pre-K students in the district, Superintendent Mark Henry said.

“We run two different groups of students through the same classroom each day—one in the morning and one in the afternoon—so we do not have additional space at this time,” Henry said at a May 16 board work session. “If we went to fully—for every student that’s qualified—full-day pre-K, I don’t know how many facilities we would add, but it would be more than one.”

Huberty said school districts have had the option to partner with private preschool providers in their communities since 2015. CFISD started a partnership with a Kids R Kids preschool in October 2017 with the help of a state grant.

“It’s a requirement in the bill that, if they want to expand their facilities, they need to make sure they go out and see if there’s another option to work with some of these facilities that are already existing on the ground,” he said. “If not … if they want to offer the pre-K services [and] they need to expand their facilities, then they’ll have to expand them through a bond referendum or something like that.”

Prioritizing teacher pay

Throughout the legislative session, which started in January and ended May 27, the Senate pushed to give all full-time Texas teachers a $5,000 pay raise. These salary increases alone would have cost CFISD $45 million, Karen Smith said.

At the May 16 work session, Karen Smith presented a preliminary budget of $990 million, including a $4 million deficit. District officials called this plan a “worst-case scenario” based on the Senate’s version of HB 3.

The Legislature ultimately decided to forego the $5,000 mandate and instead set aside $2 billion of the HB 3 funding to help districts provide salary increases.

At least 30% of a district’s funding increase is required to go to pay raises for full-time employees. Of this amount, 70% must go toward full-time classroom teachers, school counselors, nurses and librarians, while prioritizing teachers with more than five years of experience.

Rosenthal said he would have liked to have seen employee raises distributed more evenly and hopes to revisit the issue in the 2021 legislative session.

“I think there may be unintended negative effects from singling out [certain] employees and not raising everyone together,” he said. “If we set up an adversarial relationship between the different groups of education workers, there’s no way that is going to contribute to a positive environment.”

In the meantime, Karen Smith said it is difficult to plan the budget—which is set to be adopted June 27—without knowing exactly how the new legislation will affect CFISD.

Some portions of HB 3—including the actual revenue increase from the state and to what extent economically disadvantaged students could be factored in—are still to be determined by the Texas Education Agency, she said.

While final salary plans for CFISD employees have not yet been announced, all full-time teachers can expect to receive raises based on HB 3.

Room for improvement

While some public school advocates said HB 3 includes significant wins for public schools across the state, they believe there is still work to be done.

Michelle Smith, the director of government relations for the education nonprofit Raise Your Hand Texas, said HB 3’s property tax relief plan could make it challenging for legislators to meet budget demands in the future.

“Reaching consensus on the issues in any school finance debate is difficult,” she said in a May 25 statement. “In the end, the Legislature found a middle ground that moves Texas forward. And yet, the progress made represents only the first of many steps Texas must take to help our public schools achieve the high expectations we have for our students and schools.”

The final legislation also did not include specific changes CFISD requested. District officials signed a letter May 8 asking lawmakers to continue the existing practice of calculating school funding based on property values from the prior year, but HB 3 changed this to use current year values.

Karen Smith said the Harris County Appraisal District anticipates a 6.6% increase in taxable value next year in CFISD.

“Although the basic allotment was increased to offset the impact of current-year values, the use of current-year values creates budget challenges due to receiving certified property values months after the budget is adopted,” she said.

A portion of the revenue for HB 3 would come from a new fund called the Tax Reduction and Excellence in Education Fund, which uses $300 million in sales tax revenue and some revenue from the Available School Fund for tax relief and allotment costs, according to the Legislative Budget Board.

Rosenthal said HB 3 was based on a year of economic strength for the state with a surplus budget, but conversations about how to sustain the plan were largely avoided.

“I feel like the revenue stream needs to be broadened, strengthened and stabilized,” he said.

Additional reporting by Kelly Schafler