House Committee Discusses Special Ed Funding
But district leaders told lawmakers that many schools remain under financial pressure because of rising costs, declining enrollment and funding streams that are tied to specific purposes rather than broad operating needs.
One concern of lawmakers was that the 2025 funding package did not fully hold districts harmless. HB 2 included targeted money for teacher pay, educator preparation, school safety, early learning and special education, but only a modest increase to the basic allotment, the flexible per-student funding districts use for general operations. The deal included a $55 increase to the basic allotment while steering larger amounts into specific programs.
Lawmakers were surprised to learn that the districts were not held harmless, and that the bill unexpectedly resulted in an estimated $28 million decrease in funding across seven school districts.
That concern was also reflected in the special education testimony as TEA officials and district leaders explained to lawmakers how the rollout of the new funding system has and could affect districts.
Kristin McGuire, TEA’s deputy commissioner for special populations and monitoring, said more than 903,000 Texas students were receiving special education services as of October 2025, about 16.6% of the state’s student population. She said the number has continued to rise, with dyslexia identification contributing to growth in students identified with specific learning disabilities.
Under HB 2, the new special education model must generate at least $250 million more statewide in 2026-27 than the old formula would have generated. McGuire reminded the committee that districts will be held harmless in the first year of the new model. But she also acknowledged that, after the transition year, some districts could receive less depending on student needs, service intensity scores and how the new formula redistributes money if lawmakers don’t step in.
That possibility drew concern from lawmakers who questioned how districts could absorb any reduction when TEA’s own data show a large gap between special education costs and dedicated revenue. McGuire told the committee that districts and charter schools report spending about $1.69 billion more on special education than they receive in special education revenue.
Steven Aleman of Disability Rights Texas said his organization estimates the state special education shortfall to be more like $2.5 billion. He said Texas is spending more on special education than ever before, about $7.2 billion in state dollars, but student growth and service costs continue to outpace funding. Aleman urged lawmakers to consider a second-year hold harmless or supplemental grant program so the new funding model does not create instability as districts transition.
TCASE President Kami Finger, assistant superintendent for school support and special services in Lubbock ISD, told lawmakers the rollout of the new model has been positive and that TEA has provided clear guidance. But she said districts face a heavy administrative lift as they review IEPs, assign service tiers and prepare data submissions.
Finger said Lubbock ISD currently covers an approximately $3.5 million special education funding shortfall with general fund money and also questioned whether districts should be held harmless from any threat of funding reductions through the 2027-28 school year.
The hearing also highlighted pressure from evaluations. Brandon Enos, superintendent of Gunter ISD and legislative chair for the Texas Rural Education Association, said the $1000 evaluation reimbursement in HB 2 does not match actual costs in rural areas. He said some districts have seen sharp increases in evaluation requests from families whose children are not enrolled in public schools, while rural co-ops are paying up to $180 an hour for school psychologists.
The state’s new education savings account program added another layer to that concern. Finger asked lawmakers to consider removing public school educators from the process of evaluating private school students for voucher-related purposes, saying the work adds to already high caseloads. Enos said districts have become, in effect, gatekeepers for access to special education-related voucher funding because families need public school evaluations and IEPs.
It was clear in the hearing that the new funding model is broadly supported, but its success will depend on implementation. The committee was sent the message that they should not only consider more flexibility and a second year of hold harmless for special education funding, but also that districts need more flexible operating money. If the state does not close the gap for districts between state revenue and the actual cost of educating students with disabilities, districts will likely need to use their general funds to cover evaluations, related services, specialized staffing and their more intensive placements.