This story has been updated.
During a state legislative session where education issues took center stage and Gov. Greg Abbott promised to fund public schools, one San Antonio area school district could potentially lose money under the new bill.
“When this session ends we will provide more funding than ever in the history of our state for our public schools,” Abbott said during a February visit to San Antonio Christian School where he urged private school parents to support the passage of school vouchers.
While state lawmakers patted themselves on the back for investing $8.5 billion in a largely prescriptive public school funding bill — House Bill 2 — that prioritizes teacher raises, San Antonio area school districts are unsure of how to proceed while facing multimillion-dollar budget deficits and a June 30 deadline to adopt a budget for the 2025-26 school year.
One school district located on the far Northeast Side of Bexar County, Comal Independent School District, made it out of this year’s legislative flurry as perhaps the least winningest of all.
Why isn’t a ‘record’ $8.5 billion enough?
Comal ISD, serving around 28,000 students and part of the lobbying group Bexar County Education Coalition, went into a panic after legislative board budget predictions for the 2025-26 fiscal year showed that rather than getting more dollars from the state, the district could actually lose money.
For comparison, Judson ISD, a neighboring district to the east of Comal ISD with an enrollment of roughly 20,000, is set to receive about $5.7 million after all the relevant education bills are implemented.
So why could Comal ISD lose money?
This is because of a structural friction between HB 2 and Senate Bill 2, a bill passed in 2023 that decreased “hold harmless” funding for recapture school districts, or districts with very high property values.
“Hold harmless” funding was meant to give school districts who have to return local tax dollars to the state extra breathing room, but SB 2 effectively weaned Comal ISD off that money in 2023, and this year’s public school funding bill creates significant additional costs via state-mandated teacher raises.
HB 2 passed only after Abbott signed off on school vouchers, or education savings accounts, one of his legislative priorities championed by school choice advocates. After withholding public school funding during a 2023 regular session and two special sessions when the House refused to pass universal vouchers, public school advocates were hopeful the state would send some much needed funds their way.
But district leaders aren’t sure what to make of the $8.5 billion bill yet, which raises the base funding public schools receive per student by $55, a far cry from the $1,300 increase advocates say is necessary to keep up with inflation.
For the most part, HB 2 directly governs school districts on how to use state funds. The bill also includes a staff retention allotment of $45 per student meant for non-administrative and hourly staff.
While most GOP state lawmakers have focused on HB 2’s teacher retention allotment, calling the bill “historic” and a “record” amount of money for public schools, there are several other pieces of legislation that will affect school district budgets.
Most notably, Senate Bill 4 and Senate Bill 23 are predicted to eat through money available to public schools. SB 4, which Abbott is expected to sign off on, would increase the homestead exemption in Texas, limiting how many tax dollars school districts can collect. SB 23 is also headed to the governor’s desk, and would increase the homestead exemption for elderly and disabled homeowners.
While both bills are contingent upon voter approval in November, school districts are already bracing for the financial impact.
Comal ISD officials expect to lose access to anywhere between $10 million to $20 million in tax collections under the new homestead exemption measures.
Comal ISD considers non-teacher raises
A couple of weeks removed from the buzz of the session and the passage of HB 2, Comal ISD’s budget analysis showed the district may actually receive about $1.7 million, an amount that would hardly put a dent in a projected $20.7 million budget deficit for the 2025-26 school year.
School finance experts expect that even if Comal ISD does see financial gains from the state as a result of HB 2, they’d be very small compared to other school districts.
At the June 10 meeting, Comal ISD chief financial officer Glenn Graham presented school board trustees with the “worst case scenario” numbers along with different compensation packages for staff who weren’t included in HB 2’s teacher raises.
HB 2 prescribes $2,500 raises for teachers with three to four years of experience and $5,000 raises for teachers with five or more years of experience in school districts with enrollments greater than 5,000. Smaller school districts are set to receive larger teacher raises.
The bill also specifies that only “classroom teachers” are eligible for raises under the teacher retention allotments. The Texas Education Agency defines classroom teachers as someone who teaches at least four hours a day “in an academic instructional setting or a career and technology instructional setting.”
In the past, state funded teacher raises included nurses, librarians, counselors and other positions that support students. Under HB 2, there’s more flexibility. School districts can use the smaller staff retention allotment to raise non-administrative personnel wages if they want, which would include nurses, librarians, counselors, custodians and other positions that support students.
Uncertified and certified teachers fall under the TEA’s definition.
The raises are not one-time bonuses, and Comal ISD will have to pay $960,000 to implement them in the upcoming fiscal year.
Trustees were presented with three potential wage raise plans, including a 1%, 2% or 3% increase for non-teacher staff in the district. The compensation packages, including the cost of implementing state-funded teacher raises, could cost the district between $2.5 million and nearly $5 million.
School board trustee David Krawczynski said he had no qualms supporting the biggest compensation package, calling the cost “peanuts” compared to the district’s projected budget deficit.
Trustee Jason York, asked why not just give staff 5% raises while the district plays “chicken with the state,” as another trustee put it.
District superintendent John Chapman warned the board of a growing budget deficit’s implications.
“I know we want to support our people, I know that,” Chapman told the board. “All that said … we’re going to have some very, very, very difficult conversations this fall. You’re going to have to start making decisions that affect us long term — that other districts have already done.”
Last year, San Antonio ISD closed 15 schools to address a declining student enrollment and a budget shortfall, and this year North East ISD approved the closure of three schools for the same reasons. Last month, Judson ISD came close to closing schools too, but ultimately decided not to, instead considering other measures like increasing its property tax rate to address budget woes.
“If we’re gonna have to be cutting these people in the years to come, we might as well pay them now,” Comal ISD trustee Courtney Biasatti said.
School districts ask TEA to step in
Krawczynski also said he was concerned about how to communicate the district’s financial woes and potential budget cuts to constituents, especially when the “marketing out of Austin” framed HB 2 as a historic public school funding bill that rewards teacher experience.
As Abbott signed HB 2 into law June 4, he said it was time to make Texas the “No. 1 in educating our children.” The bill ensures that schools are funded better than ever — teacher pay and student funding are at all time highs, Abbott added.
Most likely, Chapman told the board, school districts would be called “ungrateful” by state leaders for their lukewarm reactions to HB 2.
“We can talk to our constituents about the effects of legislation, but the problem is I can’t explain the ‘why’,” Chapman said.
Chapman said that when new laws cause school districts to lose money compared to current laws, Texas Education Commissioner Mike Morath has the authority to override the new legislation. He hopes Morath will be able to step in and fix the district’s funding mechanisms.
Currently, there are as many as 20 other school districts in Texas that would be similarly affected by the structural problem created by SB 2 from 2023 and HB 2, all which have looked to the TEA for guidance.
“There’s a lot that’s going to change. This is the 100% worst case scenario,” Chapman said about Graham’s budget projection report to the board. “I do feel it’s going to get much better, and we’re going to be able to push our need to the commissioner.”
School districts figuring HB 2 out
Even without facing stiff headwinds, Comal ISD could get shortchanged about $4 million from the TEA in special education funding for the current 2024-25 fiscal year, despite having a growing special education population.
“It seems like the data we submitted is not interpreting the money that we’re supposed to be getting,” Graham told the Report.
Graham said TEA recently changed to a new data reporting system, and the district is working with the agency to fix the special education allotment issue.
All of it, including issues for the current fiscal year and the upcoming 2025-26 cycle, is steeped in uncertainty.
The language of HB 2 and other bills are still being discerned, and the TEA has yet to make a set of rules and guidelines for school districts to follow. School districts across Texas, not just Comal ISD, will soon have to adopt a budget for the upcoming year.
Adding more confusion, HB 2 also overhauled the way special education is funded in Texas to address gaps between special ed needs and what school districts actually receive in revenue, but TEA has yet to release any guidelines on that either.
Graham fully expects Comal ISD’s board to pass budget amendments far into the fall semester as they learn more about the measures passed in Austin.
If the laws are interpreted differently later, Comal ISD’s revenue could change by tens or even twenties of millions of dollars, Graham said, but the district is bracing for the worst.
Board president Russ Garner, who has served on the board for several years, said that with the current projections, the district’s fund balance could decrease by about two thirds by 2027 if nothing changed.
In 2024, the district reported having roughly $92 million in its general fund balance.
At one point during the budget workshop, trustee Krawczynski leaned back from the board table in his leather office chair, nearly falling off.
Someone from the viewing gallery yelled out “Don’t break the chair. We don’t have any money.”
Clarification: This story has been updated to clarify that nurses, librarians, counselors and other staff that support students could potentially receive raises under HB 2.
