Midway ISD hears House Bill 2 impacts; board adopts FY26 budget after finance and compensation briefing

Midway ISD financial staff updated the board June 17 on the district’s budget outlook for fiscal year 2026, explaining key provisions of the recently enacted House Bill 2 and how those changes affect Midway’s revenue and compensation planning. After discussion the board adopted the proposed budgets and related compensation framework by voice vote.

Lede facts: The district’s initial FY26 proposed general‑fund budget shows a possible deficit of about $3.4 million in a conservative (worst‑case) scenario. Finance presenters said House Bill 2 creates new allotments—teacher retention, support‑staff retention and an allotment for basic costs—that increase state funding but require interpretation and local implementation choices.

Why it matters: The new funding formulas change how some state dollars are delivered (more funding through dedicated allotments rather than the basic allotment or local revenue). For Midway, staff said these changes increase uncertainty for near‑term budgets even as they provide dedicated funding for pay increases. Board adoption of the FY26 budgets authorizes the district to move forward with staffing and compensation plans tied to those allotments.

Key provisions and local impacts explained to the board - House Bill 2 and allotments: Presenters summarized the bill’s structure and said about $8.5 billion in additional school funding statewide was directed to salary‑related allotments. For Midway specifically, staff estimated the teacher retention allotment at roughly $2,100,000, the support staff retention allotment at about $315,000, and a new allotment for basic costs (calculated at $106 per student) worth about $935,000 based on last fall’s PEIMS snapshot. - Teacher retention allotment distribution: Under the law’s eligibility rules (staff cited Texas Education Code definitions), Midway staff proposed passing through allotment dollars to qualifying classroom teachers. Presenters said teachers with three to four years of experience would receive $2,500 and those with five or more years would receive $5,000 from the state allotment; final eligibility depends on October staffing codes. - Support staff and other impacts: The support‑staff allotment is modest relative to district needs; presenters said the district would receive about $315,000 in the support staff allotment and would likely need to supplement that to provide meaningful raises for non‑teacher staff. The special education funding model is changing toward an intensity‑of‑service framework; staff said initial amounts include $1,000 per sped evaluation in year one (roughly $300,000) and a range of additional funds in year two as tiers and weights are finalized. - Health insurance and employer costs: Administration proposed targeted adjustments to employee benefits to help staff absorb premium increases. Presenters estimated an additional $400,000 would be required to maintain an enhanced employer contribution for an employee‑only health plan option. - Local budget picture: With the HB2 effects and other assumptions, the administration presented a proposed FY26 general fund that, in a conservative scenario, shows a $3.4 million deficit; staff described that as a worst‑case projection that could improve as state interpretations and district enrollment data are finalized.

Compensation proposal described to the board - Teacher pass‑throughs: The $2.1 million teacher retention allotment would be passed through to eligible teachers (three years or more of Texas experience) according to the $2,500/$5,000 schedule described by staff; teachers in years one and two of state teaching would not qualify for the allotment. - District compensation for other staff: Administration recommended a 2% general pay increase for other staff not eligible for the teacher allotment (estimated cost about $1,300,000). Staff said those adjustments, plus benefit contributions, are included in the FY26 budget proposal and communications to employees will follow adoption.

Board action and public process Trustees voted by voice to adopt the proposed budgets after the required public hearing. The motion to approve the budgets was made by Board Member Alford and seconded by Board Member Green; administration recorded the motion as carried unanimously by voice vote. Presenters and trustees agreed additional detail on state interpretations and the exact dispersal of allotments will follow (the state will determine final eligibility and rules in coming weeks), and staff said they will share individualized impacts with employees once the state and fall PEIMS counts are confirmed.

Quotes from presenters and trustees (selected) Mr. Brooks (district finance staff, presented budget update): “So here overall is the impact to Midway ISD...the total increased revenue because of this House Bill 2 is $4,200,000.”

Dr. Chris Allen, Superintendent: “We know that the people we have are willing to know what it is. So we clearly want to do what we can to keep them around.”

What the public and staff should expect next - Staff will host webinars and follow‑up communication to finalize eligibility and to explain the individualized effects of the teacher retention allotment, support‑staff allotment and changes to special‑education funding. - The board will receive updated revenue estimates once the state finalizes rules and the district’s October staffing snapshot is available; any changes that materially affect the budget may return to the board for modification.

Ending note Trustees approved the FY26 budgets at the June 17 meeting, authorizing the administration to proceed with the compensation framework described while staff continue to refine state interpretations and the district’s enrollment and eligibility data.