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Senate committee hears case for 4% early-payment credit for school recapture
Summary
Lawmakers and school leaders told the Senate Committee on Education the bill would let districts that prepay recapture by Feb. 15 keep 4% of their payment, providing local relief and earlier state access to funds; bill left pending for further analysis.
A bill that would allow Texas school districts to receive a 4% discount for prepaying recapture obligations drew support from district leaders and advocates at a Senate Committee on Education hearing Friday, but the measure was left pending while lawmakers sought more fiscal detail.
House Bill 19 39, sponsored in the Senate by Sen. Parker, would let districts that elect the lump-sum option and fully prepay recapture by Feb. 15 of the school year take a 4% reduction in the total payment. Proponents said the optional incentive would help local budgeting while giving the state earlier access to funds that could be invested in the Texas Treasury.
"This bill would allow school districts to receive a 4% credit on the recapture obligation if they elect to pay it by February 15," Missy Bender, executive director of the Texas School Coalition, told the committee. She said the Treasury Pool's most recent yield was 4.372% and that earlier access to funds benefits state cash management.
Frank Alfaro, assistant superintendent of Alamo Heights ISD, described the local impact: "For Alamo Heights ISD, this means that nearly $1,000,000 in local taxpayer money could stay in our community," he said, adding the district has faced budget deficits and staff reductions.
Sen. West questioned how many districts historically prepay recapture; the sponsor said none do now because there is no incentive, but when a similar incentive existed previously, districts broadly participated. Parker said the Legislative Budget Board has prepared a fiscal calculation and that he would provide a specific historical percentage to the committee.
Discussion points included whether the credit would harm other districts and how the state would benefit from earlier lump-sum receipts. Bender and Alfaro both said the bill preserves recapture and equity while providing an optional mechanism for participating districts.
Public testimony closed and the bill was left pending for additional analysis and information from the Texas Education Agency and the Legislative Budget Board. No roll-call vote on the bill occurred during the hearing.
Details recorded at the hearing: the bill would apply the 4% credit after any other reductions under chapter 49 of the Education Code; the prepayment deadline created by the bill is Feb. 15 instead of the current August 15 payment schedule.
The committee indicated it will request historical prepayment data from TEA and fiscal estimates tied to different participation rates before taking further action.
