Legislative Review

Marty DeLeon
Escamilla & Poneck

Texas Legislature Enters the Home Stretch
The Texas Legislative session concludes on Memorial Day, May 27, 2019. Many of the major issues – property tax relief, school finance, teacher pay – remain in doubt. Let’s not forget the state budget, too. The appropriations bill, the only bill lawmakers have to pass, has not been adopted yet. The legislature convened a conference committee between the Senate and the House to negotiate the differences for final approval.

Teacher Retirement System (TRS)

The TRS pension entered this legislative session with insolvency on the horizon. However, lawmakers have rallied around SB 12, legislation sponsored by State Rep. Greg Bonnen, R-Friendswood, which would increase the amount the state contributes to the pension fund by 2% over the next five years, ultimately making the fund financially healthy for the foreseeable future. Plus, every retiree, as the bill is written right now, would receive a one-time check of up to $2,400. According to a 2018 TRS study, the average retiree receives about $2,078 each month. Currently, teachers pay 7.7% of their salaries into the pension fund, and school districts pay 1.5% of the entire teacher payroll — a combined number that puts Texas last in the country among teacher plans. SB 12 finally passed the House on Thursday 145-1, with State Rep. Jonathan Stickland, R-Bedford, casting the lone no vote. "Retired teachers deserve a permanent fix to their retirement, not another Band Aid” he said.

Property Tax Relief
In an attempt to constrain school district property taxes, lawmakers have filed Senate Bill 2. The bill provides no state funding or solve school finance, but rather seeks to limit property value growth. The Senate had tried to limit schools’ tax rate increases to 2.5%, without an election, while the House settled on 2%, a more draconian figure. In the latest version of the bill, cities, counties and emergency service districts must hold an election if they wish to raise 3.5% more property tax revenue than the previous year. Mayors believe this bill would drastically limit their ability to provide public services while making just a small dent in most property owners’ bills. As filed, HB 3, would lower school district tax rates by 4 cents per $100 valuation, leading to roughly $100 in savings on a $250,000 house. SB 2 is contingent on the passage of HB 3, the major school finance bill.

Sales Tax
To pay for property tax relief, the big three – Gov. Abbott, Lt. Gov. Patrick and Speaker Dennis Bonnen, all Republicans, have also backed a measure that would reduce school district property taxes using a one-cent increase in the sales tax, which would generate about $5 billion in revenue per year. Republicans seldom support a tax increase while Democrats typically believe a sales tax increase would be regressive.

School Finance/ Teacher Pay
Both the House and Senate have put forth school finance bills, but take different approaches. Many items in the senate version of HB 3 come from the esteemed school finance commission that met last year to determine recommendations for a public education overhaul this session.
Like the House's plan, the new Senate version would raise the basic allotment funding per student by more than $700 and would provide money for free full-day pre-K for low-income students. The Senate version of HB 3 also includes a $5,000 teacher pay raise for classroom teachers and librarians, originally passed unanimously on the Senate floor in Senate Bill 3 in early March. This would cost about $4 billion and is accounted for in the Senate's proposed budget.

Teacher pay will be a wedge issue between the House and the Senate, because the House is giving all school employees across-the-board raises of about $1,388 on average statewide and designate additional money for raises to be given at districts' discretion. The chambers have also differed on merit pay for teachers. The House removed a portion that would provide money for districts that wanted to rate their teachers and provide the top-rated ones with more money. Teachers associations oppose rating teachers based on state standardized test scores, raising the stakes for STAAR.

Outcomes-Based Funding

While the House version did not include outcomes-based funding, the senate school finance bill sought to incentivize schools for results on STAAR. School districts could get between $1,000 and $4,000 per student based on the number of third graders who do well either on the state's standardized test or an alternative test chosen by the state. They also could get between $3,000 and $5,000 per student based on the number of students who graduated ready for college, a career or the military. In both cases, districts with more high-achieving low-income students would get more money.

With the remaining days left in the session, lawmakers will try to reach consensus and avoid a special session at all cost. With an additional $9 billion in our state budget, public education stands to see additional dollars, teachers will likely get a much-needed pay raise and a lifeline will be extended to the TRS pension.

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