House Bill 3 raises teacher pay, lowers property tax rates

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Following the 86th Texas Legislature’s passage of House Bill 3—which allocated $11.6 billion to reform the way public school districts are funded—Spring, Klein and Cy-Fair ISDs are shaping their budgets for the 2019-20 school year while navigating legislative mandates.

Through HB 3’s implementation, local school districts are increasing teacher salaries by 3%-6%, decreasing property tax rates by $0.07-$0.08 and expanding full-day pre-K programs for eligible students. In total, KISD is expected to receive $20 million more in state funding in 2019-20 than it did in 2018-19, while SISD will receive $6.2 million more, and CFISD will receive $47.7 million more.

HB 3, which local legislators said is one of the largest attempts to reform the state’s school finance system in decades, was signed by Gov. Greg Abbott on June 11. 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 per $100 valuation in 2020 and by $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% in the 2018-19 biennium to 45% for the 2020-21 biennium.

“It’s a 7% difference, and that’s going to make a big difference for everybody,” said the bill’s co-author, state Rep. Sam Harless, R-Spring.

While Spring and Cy-Fair ISDs have already approved budgets for the 2019-20 school year, Klein ISD will not approve its budget until Aug. 26.

While district officials said they agree HB 3 was a step in the right direction for school finance reform, they believe it is only the first of many. SISD Chief Financial Officer Ann Westbrooks said any time mandates are given to school districts, there are concerns about how they will be sustained.

“This is especially true when mandates involve employee pay, because once salary scales are increased, that increase remains constant and grows with expected cost-of-living raises,” she said. “If funding is also growing year over year, those increases are naturally absorbed and easily managed. When funding, though, remains constant or even decreases, concerns arise.”

Prioritizing teacher pay

The KISD board of trustees approved its employee compensation package July 2, giving teachers, counselors, librarians and nurses with six or more years of experience a $3,250 pay raise and those with one to five years of experience an additional $3,150. All other employees will receive a 4% pay raise, KISD Chief Financial Officer Dan Schaefer said.

Likewise, the SISD board of trustees approved its 2019-20 budget June 12, which includes a $3,250 pay raise for teachers with five or more years of experience and an additional $2,250 for teachers with zero to four years of experience.

SISD counselors will receive $2,350 more this year, while nurses and librarians will receive $2,200 more.

“[The raise is] actually much more than we anticipated and it is across the board, and I want to say ‘thank you,’” SISD teacher Terrence Boggs said to the board during the meeting.

Westbrooks said while the pay raises were necessary to comply with HB 3 and to remain competitive, as a result the district was unable to provide additional contributions to the health plan and was only able to provide a 2% cost-of-living raise for all other staff.

Likewise, while CFISD provided pay raises for all staff for the eighth consecutive year upon budget approval June 27, CFISD Chief Financial Officer Karen Smith said the board was only able to do so by adopting a $27.6 million deficit budget.

CFISD pay raises include a 3% increase for teachers, counselors, librarians and nurses with one to five years of experience and a 3.5% increase for those with six or more years of experience. All other staff will receive a 3% increase.

“It’s definitely long overdue,” said Chandra Villanueva, the economic opportunities program director for the Center for Public Policy Priorities, an independent public policy association. “It was good [the state prioritized]teachers with five or more years of experience because … one-third of our teachers have less than five years of experience, [so]it’s really hard to keep teachers past that five-year mark.”

Uncertain sustainability

HB 3 also limits school district tax revenue growth by automatically lowering tax rates for districts with property values growing 2.5% or more and mandates a study on other potential funding sources.

“The tax base within [SISD’s] boundaries has continued to grow at a rate that has outpaced both the growth rate in Harris County and Texas,” Westbrooks said. “For this reason, a cap on the amount of additional tax revenue the district can collect alongside adjusted state aid and flat enrollment causes great concern for our future budgets.”

Although tax rates will not be formally adopted until later this year, SISD is proposing a rate of $1.43 per $100 valuation—$0.08 less than the 2018-19 rate—and CFISD is proposing a rate of $1.37 per $100 valuation—$0.07 less than the 2018-19 rate. KISD has yet to propose a 2019-20 tax rate; however, the 2018-19 rate is $1.43 per $100 valuation.

While legislators said they believe HB 3’s limitation on the amount of property tax revenue school districts can collect is a win for property owners, school district officials said it is a point of concern.

“Unfortunately, [the property tax rate decrease]is one of the most shortsighted and harmful things that happened in HB 3,” Villanueva said. “The long-term goal is to wean schools off property taxes and replace it with sales tax. That’s not good … [because]sales taxes are extremely volatile. We can’t put tax cuts before educating our kids.”

Although KISD’s proposed tax rate for 2019-20 remains unknown, the district tried to pass a tax ratification election—in which voters decide on a proposed tax rate increase—in June 2018 to raise its tax rate by $0.09 per $100 valuation in the face of a $30 million budget deficit in 2018-19. The proposed tax hike failed with 55% of voters opposing the measure.

Although KISD officials have discussed the possibility of holding another TRE during board meetings earlier this year, district officials confirmed they would not hold another TRE during the 2019-20 school year.

Smith said because Cy-Fair voters passed CFISD’s $1.76 billion bond proposition in May, she does not anticipate the district holding a TRE in the next few years. The same could not be said for SISD.

“A TRE could potentially be on the horizon,” Westbrooks said. “At this point, though, it’s too early to know. A TRE would only be pursued after every other option of tightening the budget was exhausted.”

Investing in students

In addition to pay raises, HB 3  invested $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.

The bill also mandates full-day pre-K programs for students who qualify in hopes of bridging the gap between economically disadvantaged 4-year-olds and those who are more affluent. Qualified students include those who are low-income, homeless, limited in English proficiency, in foster care, or whose parents are active-duty members in the armed forces or whose parents were injured or killed while serving in the military, as a peace officer or first responder.

“I consider it an unfunded mandate because [the state]isn’t directly funding full-day pre-K,” Villanueva said. “They’re telling districts they have flexibility with this money, but at the same time telling them to do full-day pre-K and they’re not funding it … so they have no choice.”

Although Westbrooks said SISD already offers full-day pre-K at seven elementary campuses and half-day programs at the remaining 19, the district will be unable to comply with the mandate this school year.

“We plan to apply for a three-year waiver due to lack of space for a districtwide full-day program and reduced enrollment, although expanding our pre-K program has been a long-term goal,” Westbrooks said.

At the same time, CFISD officials said they are still evaluating the district’s available resources before deciding how to go about complying with the new mandate. The district already offers half-day pre-K to eligible students; however, officials said there is not enough room to fully expand the program right away.

While KISD officials have not yet laid out plans for full-day pre-K implementation, Schaefer said the loss of the cost-of-education index, which adjusted funding allocations for regional variances such as poverty levels and competition among school districts, was a big loss for KISD as it previously represented 11% more funding to the district above its basic funding allotment.

“Fortunately, there will be a CEI study performed prior to the next legislative session, which will provide guidance for future decisions,” he said.

Eva Vigh contributed to this report

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Hannah Zedaker
Born and raised in Cypress, Texas, Hannah Zedaker graduated from Sam Houston State University in 2016 with a bachelor's degree in mass communication and a minor in political science. She began as an intern with Community Impact Newspaper in 2015 and was hired upon graduation as a reporter for The Woodlands edition in May 2016. In January 2019, she was promoted to serve as the editor of the Spring/Klein edition where she covers Spring ISD and Harris County Commissioners Court, in addition to business, development and transportation news.
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