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Legislature Passes Comprehensive School Finance Reform

May 28, 2019

Frisco ISD is projected to receive $30-35 million in increased funding next school year under a bill passed over the weekend by the Texas Legislature. Governor Greg Abbott has pledged to sign the bill into law.

The negotiated, final version of House Bill 3 would provide Frisco ISD with an increase of approximately $495-577 per student in the 2019-20 school year compared to existing law.

The estimated overall impact of $30-35 million includes a recapture savings of about $40 million.

By slowing the growth of recapture, or Robin Hood, House Bill 3 would significantly reduce the state’s reliance on local property taxes to fund public education and shift more of the burden back to the state. It would also provide immediate property tax relief and a mechanism to limit the growth of future local property tax revenue.

In 2019, House Bill 3 would reduce Frisco ISD’s total tax rate by an estimated 10.165 cents to $1.33835 per $100 valuation, providing a savings of about $403 for a home valued at $422,364, after factoring in the homestead exemption.

In addition, a 2.5% cap on year-to-year local revenue growth would further reduce Frisco ISD’s tax rate when property values rise above the cap. 

“House Bill 3 benefits all school districts and addresses systemic problems in the school finance system,” said Frisco ISD Superintendent of Schools Dr. Mike Waldrip. “We are encouraged by the state’s commitment to providing additional long-term funding for schools and applaud lawmakers for tackling these difficult issues.”

The bill would require school districts spend at least 30% of increased funding, or $9-10.5 million for FISD, on compensation increases, which could include a combination of employee raises and increased health care contributions. Of that 30%, at least 75% must be spent on teachers, librarians, counselors and nurses, with an emphasis on those with more than five years of experience. The remaining 25% could be spent on employees other than administrators.

In addition, the bill includes an optional merit-based pay program for school districts who choose to assign teacher designations within the evaluation system. The bill requires the Texas Education Agency establish criteria for the program and prohibits student results on the State of Texas Assessments of Academic Readiness (STAAR) from being considered.

House Bill 3 also includes outcomes-based funding tied to college, career and military readiness. Funding would be determined by performance on the ACT or SAT and enrollment in a postsecondary school, performance on the ACT or SAT and receipt of an industry-based certificate and performance on the ASVAB and enrollment in the military.

The final bill does not include a more controversial outcomes-based funding proposal tied to third-grade reading scores. It does, however, increase requirements to improve early literacy and require school districts provide full-day Pre-Kindergarten to eligible 4-year-olds.

“Throughout the legislative session, Frisco ISD has worked to keep our eye on the big picture,” Dr. Waldrip said. “While no piece of legislation is perfect, we believe House Bill 3 is a meaningful step forward for school finance in our state.”

Frisco ISD will present updated 2019-20 budget recommendations, including a revised employee compensation plan, during the regular School Board meeting on June 10. A vote on the budget is scheduled during a special meeting on June 12. 

For more detailed information about House Bill 3 and provisions unrelated to school finance, please click here

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