Priority bills of the 89th Legislature: Funding, compensation, and the teacher pipeline

The 89th Legislature adjourned sine die June 2 after passing many bills related to public education. In this multi-part series, ATPE is recapping these bills by first taking a look at major legislation relating to our four legislative priorities for the 2025 regular session.

PART I: Public Education Funding, Educator Compensation, and the Teacher Pipeline

SB 1 (Relates to ATPE’s Priority to Increase Public Education Funding and Educator Compensation)
HB 2 (Relates to ATPE’s Priorities to Increase Public Education Funding and Educator Compensation and Strengthen the Teacher Pipeline)
SB 260 (Relates to ATPE’s Priority to Increase Public Education Funding and Educator Compensation)
SB 568 (Relates to ATPE’s Priorities to Increase Public Education Funding and Educator Compensation and Strengthen the Teacher Pipeline)

Coming soon:

PART II: School Working Conditions
PART III: Vouchers & Virtual Schools
PART IV: Parental Rights
PART V: Legal & Liability Bills
PART VI: Testing & Accountability

We’ll share information about other public education legislation not considered high-priority bills in a subsequent post.

Each bill includes ATPE’s position on the legislation, along with links to related ATPE Legislative Program categories and positions.

PART I: Public Education Funding, Educator Compensation, and the Teacher Pipeline

Related ATPE Legislative Priorities for 2025:

Increase Public Education Funding and Educator Compensation
ATPE urges the Texas Legislature to meet its constitutional duty and fund public schools at levels that meet student needs and allow our public schools to comply with state and federal mandates. The Legislature should increase school funding and index it to inflation to ensure students are adequately supported both now and into the future. Funding must provide meaningful increases in all aspects of teacher compensation, including salaries, healthcare, and retirement benefits.

Strengthen the Teacher Pipeline
Ensuring students have access to educators who are well prepared and well supported is key to student success. As such, ATPE recommends limiting exemptions from teacher certification laws. ATPE further recommends the Legislature provide grant funding for school districts to assist noncertified teachers obtain certification in a timely fashion.

Senate Bill (SB) 1 by Sen. Joan Huffman (R–Houston) — State Budget Bill

Status: Signed into law 

The state budget is the one bill the Legislature is constitutionally required to pass every two years. It is over 1,000 pages long and contains appropriations for all state-funded spending over a two-year period. The total state budget is $321.3 billion in All Funds for the 2026–2027 biennium. “All Funds” includes General Revenue as well as federal funds (Title I, IDEA, Medicaid); dedicated state funds (e.g., State Highway Fund, Available School Fund); and other revenue streams, such as fees, bond proceeds, and local match contributions. This represents the total budget, including restricted-use money—in other words, “All Funds” is every dollar that flows through the state budget, including money earmarked for specific purposes.

ATPE supported the bill.

Here is a closer look at specific appropriations within SB 1:

1. General Revenue ($144.1 billion)

General Revenue (GR) is the state’s most flexible pot of money and comes primarily from sales taxes as well as oil and gas revenue. GR is what the Legislature uses to make core funding decisions on such matters as school funding formulas, teacher pay, and basic operations.

2. K–12 Public Education ($93.7 billion)

The $93.7 billion going to public education in SB 1 is allocated as follows:

$83.3 billion to the Texas Education Agency (TEA)
The funding for TEA is broken down as follows:
- $34.5 billion from GR (including $5.8 billion from the Permanent School Fund)
- $13.7 billion from federal funds
- $6.5 billion from property tax revenue recapture
- $28.7 billion from funds dedicated to tax relief

$8.1 billion to the Teacher Retirement System (TRS)
$1 billion to fund private school vouchers
$84.9 million to the School for the Deaf
$74.1 million to the School for the Blind
$1.1 billion to other agencies for prekindergarten- through 12th grade-related programs

K–12 General Revenue dropped by $1.9 billion, despite All Funds being flat. This suggests a shift to other funding sources (such as one-time dollars) and less direct investment in school formula funding. This is concerning in light of inflation, enrollment changes, and teacher retention needs.

3. Tax relief

Money appropriated for tax relief does not increase the funding available for classroom spending. This money is used to lower local property taxes for homeowners as the state "buys down" the tax rate on behalf of school districts.

According to rider 76 on page 281 of SB 1, the amounts appropriated to TEA ($83.3 billion) include an estimated $51 billion for the 2026-27 biennium to provide new tax relief and to maintain tax relief provided by the Legislature following the 2019 enactment of House Bill 3. The $51 billion includes $28.7 billion from the funds dedicated to tax relief listed above and $22.3 billion in spending on tax relief from the other funding sources.

Related positions in the ATPE Legislative Program:

School Funding:

Texas public education system

House Bill (HB) 2 by Rep. Brad Buckley (R–Salado) — Omnibus School Finance Bill

Status: Signed into law

The 231-page HB 2 is a major public education, special education, school safety, and school finance bill that directs the appropriation of approximately $8.5 billion passed during the 89th Texas Legislature. It primarily addresses educator compensation, retention, preparation, and certification. The bill makes significant investments in both teacher and non-administrative staff salaries while also reforming educator preparation and strengthening oversight and standards for certification pathways. While HB 2 does not directly appropriate funds, it establishes new allotments and funding formulas that will drive future appropriations.

ATPE supported the bill in its final form but had significant concerns about the way the funding was allocated. HB 2’s funding structure will likely leave many school districts in continued deficits and in the position of closing schools and laying off teachers while at the same time giving mandated pay raises to remaining teachers.

Here is a summary of the components of HB 2:

Compensation provisions ($4.2 billion)

Enrollment of 5,000 or less		Enrollment of 5,001 or more
3–4 years of experience	$4,000	3–4 years of experience	$2,500
5+ years of experience	$8,000	5+ years of experience	$5,000

1. Teacher Retention Allotment (TRA):

The TRA provides per-teacher funding based on years of experience and district size:  

Under HB 2, a “classroom teacher” is an individual who meets the definition found in Section 5.001 of the Texas Education Code, which says:  

[A] "Classroom teacher" means an educator who is employed by a school district and who, not less than an average of four hours each day, teaches in an academic instructional setting or a career and technology instructional setting. The term does not include a teacher's aide or a full-time administrator.  

This definition is broader than just teachers of record in that it should include those who teach the requisite number of hours but do not have their own classroom. However, the term generally does not include other educators subject to the minimum salary schedule such as counselors, librarians, and nurses, even if they hold teaching certificates. Eligibility may depend on individual duties, guidance from TEA, and/or district coding under the PEIMS system. 

TEA correspondence released June 12, 2025, provides initial details on how the TRA will be implemented. ATPE sent a follow-up letter to the agency June 18 requesting clarification on several provisions. The TEA guidance shows that the PEIMS code of 087 would be an indicator of eligibility for the TRA, but in our follow-up letter, ATPE Member Legal Services Director Judd Gibson points out that some employees are not categorized with this code but otherwise meet the bill’s definition of “classroom teacher.” ATPE has asked TEA to clarify the following: 

A contradiction within HB 2’s language regarding the eligibility of uncertified teachers for the TRA; 
Which central office employees are considered to work in supervisory roles under HB 2 and therefore are not eligible for the TRA; and 
The eligibility of school district employees with dual or multiple positions for the TRA (e.g., a librarian or instructional coordinator who teaches in an academic or career and technical education instructional setting for at least an average of four hours per day).

HB 2 specifies districts must use TRA funds to increase salaries above what the teacher received or would have received in 2024–25 by the amounts listed above. The bill requires the raises to be TRS-creditable compensation and that the increases be maintained in future years, which generally indicates they are not to be viewed as stipends. However, the bill does not specify that districts must give these raises at the beginning of the school year. In fact, HB 2 contains a provision that authorizes districts to provide these raises even after a teacher contract that did not contemplate the raise has been finalized.

A new provision adding uncertainty was included in the final bill in the waning days of the session. The provision allows districts applying to be designated as an “Enhanced Teacher Incentive Allotment (TIA) System” to use TRA funding for performance-based raises tied to teacher appraisal results, with flexibility built into their compensation plans, in lieu of following the distribution chart above. The Enhanced TIA System designation is new and will require TEA rule making prior to implementation. It is unknown at this time whether the new designation will be available to districts during the 2025-26 school year.  

2. Support Staff Retention Allotment (SSRA):

The SSRA provides districts $45 per student (based on adjusted average daily attendance and excluding virtual school students) to fund raises for full- or part-time non-administrative staff not covered under the TRA. This includes school counselors, librarians, nurses, custodians, food service workers, bus drivers, administrative assistants, and part-time employees. Raises must begin in 2025-26 and be maintained in future years. Administrators, including assistant principals, principals, and central office administrators, such as superintendents, are not eligible. Although districts are required to use these funds only to increase the salaries of applicable staff, they are not required to increase the salary of all applicable staff or to increase salaries equally across the board. 

3. Expanded Teacher Incentive Allotment (TIA):

HB 2 also expands the TIA. Designated teachers are now eligible for larger allotments. The new ranges are: 

$12,000 to $36,000 for the Master Teacher designation; 
$9,000 to $25,000 for Exemplary Teacher; 
$5,000 to $15,000 for Recognized Teacher; and 
$3,000 up to $9,000 for the new Acknowledged Teacher designation or National Board Certified teachers, assuming the State Board for Educator Certification (SBEC) maintains a designation for National Board Certification.

State-Funded Teacher Liability Insurance

Under HB 2, TEA must contract with a third-party provider to offer professional liability insurance and legal support resources for all classroom teachers.
The contracted entity is barred from using state funds for political advocacy.

Educator Preparation and Certification Reform

Phasing Out Non-Certified Teachers: Requires all “teachers of record” in foundation curriculum to be certified by 2029-30. Limits District of Innovation (DOI) exemptions.
Incentives for Certification: Provides $1,000 bonuses to teachers hired between 2022 and 2024 who were uncertified but earn standard certification by 2026-27.
New Certificate Types: Standard certificate; enhanced standard certificate (from teacher residency programs); intern certificate for preservice candidates.
Residency and Partnership Programs: Requires educator preparation programs to partner with school districts for preservice practice, literacy/math academies, and mentoring models.

Changes to Districts of Innovation (DOI) and Accountability

Limits Innovation Plan Waivers: Prohibits exemptions from teacher certification laws under most DOI plans.
Redesignation of NBCTs: Teachers previously designated as "recognized" due to National Board Certification must be redesignated by Sept. 1, 2026.

Retirement System and Salary Deductions

Changes the law pertaining to the surcharge for retired employees rehired by a school district. Previously, districts were prohibited from passing along the cost of the surcharge to their retire/rehire employees. HB 2 repeals that provision.
Makes retention allotment and incentive pay count toward TRS-creditable compensation.
Updates salary deduction rules to permit dues for approved entities, including those offering liability insurance (through HB 2).

Special Education Funding and Reform ($850 million)

HB 2 incorporates language from SB 568 (which also passed) to overhaul how special education funding is calculated. It transitions from the current instructional arrangement model to a service intensity-based funding model, aimed at more accurately reflecting the level of services each student requires. This model includes grouping students into service intensity levels (low, moderate, and high) with corresponding funding weights. The bill also covers an evaluation offset allotment for districts to help cover the cost of Full and Individual Initial Evaluations (FIIEs), which is capped at $1,000 per evaluation per student, as well as increases the transportation allotment for special education students from $1.08 to $1.13 per mile.

HB 2 establishes grant programs to address staffing shortages in special education by supporting recruitment, preparation, and retention of special education teachers and related service providers and encourages partnerships between school districts and higher education institutions to increase the pipeline of trained special education professionals. The bill includes funding for education service centers (ESCs) to provide training and technical assistance to districts around special education, especially in areas such as compliance, instructional strategies, and evaluations.

HB 2 requires TEA to publicly report on special education student outcomes disaggregated by disability type and intensity of services. It also mandates annual reviews of funding adequacy and the impact of the new model. These provisions are designed to align with recommendations from the Texas Commission on Special Education Funding and address long-standing equity and adequacy concerns in special education service delivery.

Student Safety and Mental Health Allotment ($430 million)

HB 2 raised the Student Safety and Mental Health Allotment under the Foundation School Program and provides funding to school districts and open-enrollment charter schools to hire or retain mental health professionals and school safety personnel, improve school facilities for security purposes, expand access to telehealth and trauma-informed care, or develop or implement positive behavior programs and threat assessments. Funds may be used for security personnel, facility upgrades, training, and equipment to implement school safety plans; behavioral threat assessment teams; and mental health support for students and staff. Districts receiving funding must submit a School Safety and Mental Health Plan to the commissioner, align the use of funds with specific strategies outlined in their plan, and report on the effectiveness and impact of these programs annually. Districts retain flexibility to prioritize funds based on local safety needs and student wellness concerns and are encouraged to coordinate with local law enforcement and mental health authorities.

Basic Allotment Increase of $55 per student ($800 million in reallocated funds)

HB 2 maintains the current Basic Allotment (BA) amount of $6,160 but adds to it an amount determined by the commissioner based on a formula set in statute. For the current biennium, that amount is set in statute as $6,160 plus $55. The $800 million associated with the provision is being characterized as new funding for a mechanism that automatically increases the BA over time. However, it is really a reallocation of currently mandated funding that increased a different part of the school finance system and will therefore not produce substantial new funding for most districts over time. In fact, it will likely produce less funding for property-poor districts. Additionally, the mechanism to increase the BA is based on property value increase, not general inflation—which means that if property values do not increase, the allotment will not rise.

New Allotment for Basic Costs (ABC) of $106 per enrolled student ($1.3 billion)

The new ABC Allotment (referred to in the bill as the “basic allotment for basic costs”) provides $106 per enrolled student in addition to the Basic Allotment (BA), not as a replacement. It is designed to provide base-level funding to every school district to help cover minimum operational and fixed costs that every district incurs regardless of its size or student demographics. Examples of such costs are utilities, custodial services, administrative support, transportation, and facilities maintenance. The funding is automatically applied through the Foundation School Program. The commissioner of education is tasked with adopting rules for the use and oversight of these funds, ensuring they support essential operational functions. This new allotment recognizes that all schools face unavoidable baseline operating costs, and it attempts to stabilize district budgets by directly funding those expenses. This may be especially helpful for small and mid-size districts that may struggle to spread fixed costs across a limited enrollment base.

Small and Mid-Size District Allotment ($300 million)

HB 2 updates the formula used to calculate the Small and Mid-Size District Allotment, adjusting the multiplier used in the tiered formula to better reflect the costs associated with operating smaller districts. It allows a district to choose between using the district’s average daily attendance (ADA) or enrollment for the preceding school year, whichever results in a greater allotment. This is helpful if districts had a drop in current-year enrollment, and it is a significant departure from the standard ADA-based approach. This will provide enrollment-based stability for smaller districts that may experience fluctuating attendance but have consistent enrollment.

Career and Technical Education (CTE) Allotment ($153 million)

The bill raises the maximum CTE allotment from 1.35 to 1.47 times the Basic Allotment, in lieu of the Basic Allotment, for eligible full-time equivalent students in approved programs in grades 7–12. It also ensures this allotment is calculated using the updated BA, thereby increasing overall CTE funding.

Early Education Funding

Kindergarten Readiness Allotment: The bill introduces a new early education allotment, adding a weight of 0.1 to the Basic Allotment for certain students in prekindergarten through grade 3, particularly for those not meeting early literacy and developmental benchmarks. The bill allows for funding adjustments based on student need and performance for full-day pre-K programs (for the children of educators) under existing law.

Related positions in the ATPE Legislative Program:

Educator Compensation

Compensation and benefits package;

Educator Preparation, Certification, And Professional Development:

School Accountability, Governance and Regulation:

School Funding:

Workplace Issues:

Educator speech and political involvement

SB 260 by Sen. Joan Huffman (R–Houston) – School Safety Allotment

Status: Signed into law 

SB 260 increases the school safety allotment from $10 to $20 per student and $15,000 to $33,540 per campus.

ATPE supported this bill.

Related positions in the ATPE Legislative Program:

School Accountability, Governance and Regulation:

School safety

School Funding:

Texas public education system

SB 568 by Sen. Paul Bettencourt (R-Houston) | et al. – Special Education Funding

Status: Signed into law 

SB 568 overhauls how special education funding is calculated. It transitions from the current instructional arrangement model to a service intensity-based funding model, aimed at more accurately reflecting the level of services each student requires. This model includes grouping students into service intensity levels (low, moderate, and high) with corresponding funding weights.

The bill also covers an evaluation offset allotment for districts to help cover the cost of Full and Individual Initial Evaluations (FIIEs), which is capped at $1,000 per evaluation per student.

The bill establishes grant programs to address staffing shortages in special education by supporting recruitment, preparation, and retention of special education teachers and related service providers and encouraging partnerships between school districts and higher education institutions to increase the pipeline of trained special education professionals.

The bill includes funding for Education Service Centers (ESCs) to provide training and technical assistance to districts around special education, especially in areas such as compliance, instructional strategies, and evaluations.

It requires TEA to publicly report on special education student outcomes disaggregated by disability type and intensity of services. It also mandates annual reviews of funding adequacy and the impact of the new model.

These provisions are designed to align with recommendations from the Texas Commission on Special Education Funding and address long-standing equity and adequacy concerns in special education service delivery.

ATPE provided oral and written testimony on the bill. The language in SB 568 is mirrored in HB 2.

Related positions in the ATPE Legislative Program:

School Funding:

Texas public education system