Texas School Funding Changes Take Effect as Districts Adjust to New Formula
October 2026
Texas school districts are implementing changes to the state’s public education funding system following the passage of House Bill 2 in 2025. The legislation updates several parts of the Foundation School Program, which determines how state and local funding is allocated to public schools.
The changes affect funding calculations, support for smaller districts, and the way special education services are funded. As districts work through the new requirements, the financial impact will vary based on enrollment, student needs, local property values, and other funding factors.
Key Changes to the Texas School Funding Formula
One of the central changes under House Bill 2 is an increase in the basic allotment, the foundational amount used in several school funding calculations.
For the 2025–2026 and 2026–2027 school years, the basic allotment increased from $6,160 to $6,215 per student in average daily attendance. The legislation also adjusted funding provisions for small and midsize districts and introduced additional support for certain districts facing higher regional insurance costs.
These changes are intended to modify how state aid is calculated and distributed across different types of school systems.
Special Education Funding Moves Toward Service-Based Allocations
A major update took effect on September 1, 2026, as Texas began transitioning its special education funding system toward a model based more directly on students’ service needs.
The updated structure includes separate allotments based on service intensity and service groups, replacing the previous approach that relied more heavily on instructional arrangements or settings.
For the 2026–2027 school year, the state is using a transition funding process. The Texas Education Agency estimates that the updated special education allotments will provide approximately $250 million more statewide than the prior formula would have provided for the same school year.
Districts must report additional information to support the new calculations, and the state is providing technical assistance during the transition.
What the Changes Could Mean for Texas Communities
School funding can affect local communities through district budgets, staffing decisions, student services, and long-term facility planning. However, a change in the state funding formula does not automatically translate into a specific increase in teacher salaries, smaller class sizes, or new programs at every school.
District-level outcomes depend on several factors, including student enrollment, attendance, local tax revenue, staffing needs, and the funding provisions that apply to each district.
Large urban districts such as Houston, Dallas, and El Paso may experience different financial effects from smaller or rural districts. Each district must evaluate its own funding estimates and budget requirements.
What Happens Next?
The Texas Education Agency continues to publish funding guidance, reports, and implementation information as districts submit data and the state updates its calculations.
School boards and district administrators will need to review state funding estimates, assess local budget conditions, and determine how available resources can support their campuses.
Families and community members can follow updates through the Texas Education Agency and their local school districts.
Practical takeaway: Texas is implementing school funding changes enacted through House Bill 2, including a higher basic allotment and a revised special education funding structure. The impact will differ by district, making local budget updates and official funding reports important resources for understanding how the changes affect individual communities.