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Senate Finance Committee Considers Public and Higher Education Budget

By: Danielle Zaragoza, M.Ed. and Joanna Warren   |   February 10, 2023


Communities Foundation of Texas' educational initiative, Educate Texas, recognizes that this session's advancements in education policy have the potential to help improve lives and sustain our state's economic success. This week, the Texas Senate Finance Committee continued its scheduled hearings for the biennial budget. The Committee’s focus turned to public and higher education (Article III) this week with discussions on Monday, February 6 focusing on the Texas Education Agency (TEA) and public education, and discussions Tuesday and Wednesday focusing on the Texas Higher Education Coordinating Board (THECB) and higher education.   

SB 1, the General Appropriations bill filed by Senate Finance Committee Chair Joan Huffman, is the foundation of the state budget and sets the framework for all other budget-related bills the Legislature will consider. The hearings on the base budget bill are an opportunity for members of the Texas Senate Finance Committee to hear testimony from state agencies and interested parties about the proposed budget.  

Highlights from the Senate’s introduced General Appropriations bill include:

Public Education

  • Foundation School Program - $57.6 billion over the biennium 
  • Property Tax Relief - $15 billion, including $3 billion to increase the homestead exemption to $70,000 
  • ​College and Career Readiness School Models - $16.15 million over the biennium with $9 million targeted toward Pathways in Technology Early College High School (P-TECH) models 
  • School Safety - $600 million
  • Increasing Teacher Compensation - TBD
    • ​Though the funding amount has yet to be determined, a rider in the proposed Senate budget signals intent “to provide increased compensation and benefits for classroom teachers”  

Higher Education 

Funding for Community College Finance Reform – total of $650 million over the biennium 

  • $214 million – additional formula funding 
  • $16.5 million – grants for innovation and partnerships to meet regional workforce needs
  • $62.5 million – Texas Educational Opportunity Grant Program (TEOG) for community colleges and junior colleges 
  • $7 million – TEOG for state and technical colleges
  • $25 million – dual credit for economically disadvantaged students
  • Funding for Higher Education Institutions – total of $2.5 billion over the biennium 
  • $2.5 billion – endowment intended to support higher education institutions that are not eligible to receive funding from the Permanent University Fund (PUF)

Hearing Recaps

The Senate Finance Committee considered the public and higher education budget (Article III) on Monday, February 6 and Tuesday, February 7, with invited testimony from the Legislative Budget Board (LBB), Texas Education Agency (TEA), and Texas Higher Education Coordinating Board (THECB).

Senate Committee on Finance- February 6, 2023 (Article III, Public Education) 

Both the LBB and Commissioner of Education, Mike Morath, provided the committee detailed summaries of the introduced version of the budget and fielded questions related to the state of Texas education. Topics discussed at length included student enrollment declines, widespread learning loss in math due to the COVID-19 pandemic, recapture and the school finance system, and teacher compensation. 
  • Enrollment (See clip of Commissioner Morath’s remarks on enrollment trends here)
    • ​Historically, Texas has seen significant annual student enrollment growth. Because of this history, many Senators expressed surprise about the possibility of student enrollment declines
    • Commissioner Morath fielded questions from multiple committee members on current and projected enrollment declines. He explained that lower birthrates following the Great Recession are now resulting in enrollment trending downward. While there is variation across the state for how districts are experiencing these shifts, this is a statewide phenomenon that is affecting student enrollment across all ethnic groups
    • As Senator Paul Bettencourt noted, this is an important macro change in the public education funding policy
  • Math Learning Loss (See clip of Commissioner Morath’s exchange with Senator Bettencourt here)
    • Commissioner Morath stated in no uncertain terms that Texas has a math problem, noting that the disruption in education caused by the COVID-19 Pandemic has left many students without foundational knowledge in mathematics
    • If left unsolved, the consequences for both students and the Texas workforce will be severe and generational because “mathematics proficiency in K-12 is lifetime income
    • To address the Texas math problem, the Commissioner suggested devoting resources to high quality instructional materials that include an embedded diagnostic capacity to help combat learning loss
  • Recapture and School Finance
    • Average daily attendance (ADA) vs. enrollment-based funding, recapture and property tax compression, and how federal COVID relief dollars have been spent were popular topics addressed by both the LBB and Commissioner Morath
    • Notably, Commissioner Morath stated that bringing property taxes down inherently reduces recapture, but targeted tax relief towards recapture is very difficult
    • The Commissioner fielded multiple questions related to Elementary and Secondary School Emergency Relief (ESSER) funds and district spending rates. At this point, approximately $8.8 billion in ESSER funds remains unspent 
  • Teacher Compensation
    • Senators representing rural districts surfaced concerns that the Teacher Incentive Allotment (TIA) presents major barriers to entry for the schools in their districts. Commissioner Morath noted that approximately 47% of districts designated under TIA are rural. However, he also noted that additional funding for technical assistance could be helpful in setting up a valid and reliable TIA system
    • ​Upcoming recommendations coming out of the Governor’s Teacher Vacancy Task Force are likely to include recommendations related to teacher compensation and the TIA

Senate Committee on Finance – February 7, 2023 (Article III, Higher Education)

Representatives from the Legislative Budget Board and Higher Education Commissioner Harrison Keller reviewed the summary of budget recommendations for the Texas Higher Education Coordinating Board. This was followed by summaries of budget requests for various formula funding distributions including the Available University Fund (AUF), Higher Education Fund (HEF), and the Permanent University Fund (PUF) as well as individual institutions and higher education systems. Some key points of discussion were improving college affordability, funding for research, credentials of value, programs to train healthcare professionals, and a possible update to transfer legislation. Watch some of Commissioner Keller’s comments on THECB’s budget here.
  • Affordability (listen to Commissioner Keller’s remarks on affordability here)
    • The Commissioner stated throughout his testimony that financial aid should be a tool to improve college affordability, and that providing financial aid is a responsibility shared by the legislature, THECB, and institutions. THECB has a $153 million exceptional item request for need-based financial aid. See his comments on financial aid here
    • College advising was also raised as a mechanism to improve affordability. The commissioner argued that students who have access to effective advising are more likely to graduate on time. THECB has a $20 million exceptional item request for college and career advising
    • Senators questioned the commissioner on the cost of the Hazlewood Legacy Program. The legislature does not fully reimburse institutions for the cost of waiving tuition through the program, which leads institutions to make up that revenue through raising the cost of tuition to other students
  • Research Funding (Listen to Commissioner Keller’s remarks on research funding here)
    • Senators discussed the Texas Research Inventive Program (TRIP) backlog. TRIP provides matching funds to assist emerging research universities to leverage private gifts to improve research productivity and recruit faculty. There is a $325 million backlog of unfunded matches as the state appropriations have not kept up with donations
    • Because many of these emerging research institutions are not eligible to receive funds from the Permanent University Fund (PUF), and are not receiving additional appropriations through TRIP, Senators raised questions about alternative formula funding sources for non-PUF institutions such as Texas Tech University and the University of Houston
  • Healthcare Training Programs
    • Senators raised the need for examine the eligibility requirements of the Nursing Shortage Reduction Program (NSRP), citing the critical shortage of nurses in the state. $28 million dollars is allocated for NSRP, but if nursing programs don’t see and increase in enrollment, they are not eligible for funds. Senator Kolkhorst is drafting a bill to address this issue
  • Transfer Legislation
    • Senator West raised the implementation of SB 25 (2019, 86R) and noted that currently, receiving institutions must submit a report to sending institutions on which credits were not accepted for transfer. Commissioner Keller and Senator West alluded to a possible update for SB 25 that would require institutions to report this data to THECB. Watch the exchange between Senator West and Commissioner Keller here
CFT's Educate Texas looks forward to continuing to work with policy makers to advance our vision that all Texas students, especially African American, Latino, and economically disadvantaged students, earn a college degree or credential that leads to a living wage and thriving communities.

This feature was co-authored by Deputy Director of Higher Education Policy, Danielle Zaragoza, M.Ed., and Deputy Director of Public Education, Joanna Warren.