HOUSE NEWS

The House adjourned Sine Die at 12:50 p.m. The House caucuses announced their "Freshman of the Year" awards:

            Republican Caucus - Representative Brad Buckley (R-Killeen)

            Democratic Caucus - Representative John Bucy (D-Austin)

            Legislative Black Caucus - Representative Sheryl Cole (D-Austin)

Mexican-American Legislative Caucus - Representative Jessica Gonzalez

(D-Dallas)

            LGBTQ Caucus - Representative Julie Johnson (D-Carrollton)

            Legislative Study Group - Jon Rosenthal (D-Houston)

Speaker Dennis Bonnen introduced Governor Greg Abbott, who was in the chamber as the House adjourned. The speaker also thanked House members for a productive session.

• $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.

• 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.

• 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.

• 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.

• 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.

• 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.

• $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, $7.0 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.

• 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.

• 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.

• 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.

• 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

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

• 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.

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

• 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.

• 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).

• 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.

• 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.

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