Skip to main content

Bill Analysis: The Texas House Omnibus School Finance Bill (HB 2)

Published Mar 05, 2025 by Jordan Overturf

Empty classroom

This week, the House Public Education Committee held two hearings on its omnibus school finance proposal, House Bill 2 (HB 2). Chairman Brad Buckley has indicated the committee plans to vote on HB 2 at its March 18 hearing.

Ahead of that vote, the Partnership is conducting a deep dive into HB 2 to understand the proposed changes to funding formulas, teacher incentives, Pre-K eligibility and more. Below is a summary analysis of the proposed changes in the bill as filed.

School Finance & District Funding

  • Raises the basic allotment per student from $6,160 to $6,380.
  • Increases required percentage (30% to 40%) of additional funds used for employee compensation.
  • Modifies small and mid-sized district allotment formulas, increasing funding weight calculations.
  • Expands provisions for school districts experiencing a declining enrollment by adjusting funding calculations.

Teacher Designation System & Compensation

  • Expands the categories of teacher designations to include "acknowledged" teachers.
  • Increases the maximum allotment amounts for designated teachers:
    • Master Teacher: Up to $36,000 (previously $32,000).
    • Exemplary Teacher: Up to $25,000 (previously $18,000).
    • Recognized Teacher: Up to $15,000 (previously $9,000).
    • New Category (Acknowledged Teacher or nationally board certified): Up to $9,000.
  • Introduces an enhanced teacher incentive allotment for schools implementing a comprehensive evaluation system.
  • Requires districts to prioritize highly effective teachers being assigned to high-needs campuses.

Pre-Kindergarten & Early Education

  • Expands prekindergarten eligibility for 3-year-olds under partnerships with community-based childcare providers.
  • Grants school districts flexibility in municipal ordinance compliance for pre-K programs.

High-Needs and Resource Campuses

  • Reduces the number of years a school must receive a "D" or "F" rating before being designated as a resource campus (from four years to three years within 10 years).
  • Adjusts staffing criteria for resource campuses, including experience requirements for teachers.

School Year & Attendance Incentives

  • Modifies funding adjustments based on attendance, increasing the threshold for funding stabilization from a 2% to a 5% decline.
  • Lowers the minimum required instructional days for funding eligibility from 180 to 175.
  • Introduces incentives for schools offering at least 200 instructional days.

High School Advising & Workforce Readiness

  • Establishes a high school advising program to support students in college or career planning.
  • Provides funding for high school advisors at $50,000 per full-time equivalent.
  • Creates new advising support mechanisms for high school graduates during the first two years post-graduation.

Charter School Funding Adjustments

  • Modifies Foundation School Program funding formula for charter schools under Chapter 48 of the Texas Education Code.
  • Adjusts additional funding per student in average daily attendance from $125 to $700.
  • Adds new requirements for charter schools to receive additional funding, including performance standards and financial certification requirements.

Miscellaneous Education Reforms

  • Adds a fine arts allotment for students enrolled in approved fine arts courses.
  • Clarifies rules on federal grant administration for nonpublic school participation.
  • Implements new school district notification requirements for property value adjustments affecting funding.

As the committee prepares for the March 18 vote, a committee substitute may be offered to adjust the bill before it is sent to the House Floor for debate. Stakeholders are also waiting for the proposed school district “runs,” which outline the direct changes in funding for each school district.

Those details are expected to be made public in April. The data will be added to the Partnership’s Budget Explorer Tool when available. This tool will make it easier to search for individual districts and see the considerable impact of HB 2’s reforms to public education funding.

For more updates and alerts on the Texas Legislature, click here to sign up for our weekly newsletter. 

Related News

Public Policy

Constitutional Ballot Could Have Big Implications for Houston Region

7/10/25
This November, millions of Texas voters will head to the polls to decide whether to approve or reject 17 proposed constitutional amendments by state lawmakers. It’s an annual process that plays out in the fall during odd-numbered years following a legislative session.  This year, however, the potential benefits for the Houston area are greater based on two key funding proposals: $1 billion annually for water projects and $300 million annually for a newly created Dementia Prevention and Research Institute of Texas (DPRIT). Secretary of State Jane Nelson drew the order for the November 4 ballot last month, following the end of the veto period. As the state’s top election official, the Secretary of State oversees organizing the constitutional election. The propositions are drawn at random to determine the order in which they appear on the ballot. The two key propositions supported by the Partnership are as follows: Prop 4: "The constitutional amendment to dedicate a portion of the revenue derived from state sales and use taxes to the Texas water fund and to provide for the allocation and use of that revenue." Prop 14: "The constitutional amendment providing for the establishment of the Dementia Prevention and Research Institute of Texas, establishing the Dementia Prevention and Research Fund to provide money for research on and prevention and treatment of dementia, Alzheimer's disease, Parkinson's disease, and related disorders in this state, and transferring to that fund $3 billion from state general revenue." The language above is precisely what will be included on the ballot. However, there is much more to these propositions and the legislation passed into law that makes these initiatives possible. Click here to read more about the potential $20 billion investment in water. Click here to learn more about the potential impact $3 billion in total funding for DPRIT could have on Houston’s medical research community. Included in the additional 15 propositions are recommendations related to the creation of a dedicated fund to support skilled trade programs at Texas State Technical College, changing the state’s tax code, and providing a tax exemption to surviving spouses of fallen veterans in specific scenarios.  A complete list of the ballot order and prop language is available on the Secretary of State’s website.  
Read More
Public Policy

Show Houston the Money: Exploring the $338 Billion Texas Budget

7/10/25
This year, Texas lawmakers passed a historic spending bill that increased the two-year funding total by more than $27 billion over the previous budget. A portion of that spending was included in the Supplemental Budget (House Bill 500), providing immediate funding for targeted projects. The direct impact on the Houston area over the next two years is significant: $1.22 billion in new programmatic funding for 47 school districts around the Houston region $1.17 billion across local medical schools Nearly $362 million in dedicated funding for flood prevention & water supply projects $135 million for regional operational centers for the Texas Department of Emergency Management and other emergency operations $12.8 million for upgrades to the Harris County Psychiatric Hospital Click here for an infographic highlighting other policy victories for the state and the city of Houston. These targeted investments are enormous for the Houston region, but there is also much more on the horizon. On November 4, Texas voters will decide on 17 constitutional propositions, two of which could bring more funding to local communities, including: Prop 4: Authorizing the legislature to dedicate $1 billion annually to the Texas Water Fund over the next 20 years Prop 14: Authorizing the creation of a Dementia Prevention and Research Institute of Texas and providing $3 billion over the next 10 years Exploring the Budget The Partnership has updated its Budget Explorer Tool with the final version passed by lawmakers. Using this tool, you can explore topline funding by agency, specific funding for water and education programs, and search new funding projections for individual school districts. There is also a table of contents that links to appropriations for each agency.  Here’s a quick reminder on how to read the state budget: Method of Financing: From where does the money come (i.e., state, federal, or other)? Strategy Funding: The highlighted funding for specific programs and targeted goals for the agency Riders: This is the last section of the agency funding in the bill, and it gives specific instructions on how the dollars are to be spent. Article IX: This is where you will find additional provisions on spending and revenue, as well as contingency funding.  For more updates and alerts on the Texas Legislature, click here to sign up for our policy newsletter. 
Read More

Related Events

Public Policy

State of the County

The Greater Houston Partnership is pleased to present the 2025 State of the County, featuring Harris County Judge Lina Hidalgo. As the chief executive of the third-largest county in the nation…

Learn More
Learn More
Executive Partners