Senate finance staff: SB1 would boost school funding but leaves hard questions on distribution

The Texas Senate Finance Committee heard detailed budget briefings and testimony Wednesday on the Foundation School Program and other parts of the Texas Education Agency budget, with Legislative Budget Board staff and TEA officials saying the introduced Senate bill would increase state support for public education by billions but leaves important distribution choices for the full Legislature to resolve. LBB officials said SB1 recommendations include about $71.3 billion in all funds for the FSP in 2026–27, an increase of roughly $11.7 billion from the 2024–25 base; general‑revenue increases of about $7.9 billion drive much of the change.

The presentation emphasized that most of the increase flows through the FSP and related statutory mechanisms. Maggie Yipson of the Legislative Budget Board told the committee the introduced bill contains contingency appropriations for policy items that require separate legislation: a $1 billion contingency for an education savings account program and another $750 million contingent increase for the Teacher Incentive Allotment intended to expand the number of designated teachers who get bonuses.

The nut graf: LBB and TEA officials said the headline numbers are large but that local effects will depend on technical assumptions — projected student growth, property values and yields — and on whether the contingent items are enacted. Committee members pressed TEA Commissioner Mike Morath and LBB staff on how increases should be directed between a higher basic allotment (broad, flexible funding) and targeted programs such as teacher compensation, school safety and special education.

Among specific budget drivers the LBB attributed to SB1 and the introduced pattern: $1.7 billion for weighted student growth, estimated additional costs for tax‑compression and recapture changes tied to property values, roughly $804.7 million for changes to yields and $754.3 million tied to the teacher incentive allotment. LBB testimony also highlighted an estimated $51 billion in state spending on property tax relief over the 2026–27 biennium under the introduced plan, including a $3 billion conditional transfer to the Property Tax Relief Fund to support increased homestead exemptions (contingent on legislation).

TEA Commissioner Morath told the committee the package ‘‘fully funds the FSP’’ and preserves support for non‑FSP programs, and he described the introduced bill as a mix of flexible funding for districts and targeted investments aimed at higher return interventions (for example, curriculum and teacher preparation). Morath and LBB witnesses also noted the fading of sizeable one‑time federal ESSER (COVID) funds and the resulting ‘‘fiscal cliff’’ districts face.

Committee members pressed for details: how the $1.7 billion for ‘‘student growth’’ breaks down by special‑education and bilingual weights, how the proposed $750 million TIA contingency would be implemented and how districts should use tier‑2/’golden penny’ money. LBB and TEA said detailed distributional and settle‑up numbers will change as TEA updates enrollment and property‑value projections in March and as potential legislation that activates contingency riders is decided.

Ending — what to watch next: the committee will consider how to convert contingency appropriations into statute (for example TIA expansions or an education savings account), and how much of the new funding to put in the basic allotment (broad, flexible dollars) versus targeted allotments for teacher pay, special education, or school safety. LBB and TEA said updated enrollment, property‑value and compensation proposals due this spring could materially change final cost and distribution estimates.