By: Hinojosa H.B. No. 5419

A BILL TO BE ENTITLED

AN ACT

relating to eliminating inefficiencies in the organization, operation, powers, regulations, and management of the Texas Education Agency to prioritize the provision of funding directly to public schools.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 7.004, Education Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows:

(a) The Texas Education Agency is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the agency is abolished September 1, 2027 [2029].

(c) In this subsection, "contract" includes an amendment, modification, renewal, extension, a purchase order, or an interagency contract and includes a contract that was paid with federal funds or funds not appropriated by the General Appropriations Act. The Sunset Advisory Commission, with the assistance of the State Auditor's Office, shall evaluate the efficiency and effectiveness of the organization, operation, powers, regulations, and management of the agency, including growth in full-time equivalent staff at the agency and growth in grant programs and grant conditions that result in hiring of additional staff at public schools. The evaluation shall include a review of each contract that was entered into by the agency since 2016 and that equals or exceeds $100,000, with a review of contracting procedures used by the agency and total cost of all contracts for each program area or activity. The review also shall include, if the contract is for a good or service used in public schools, an annualized cost of each contract, annual number of students, educators, or other users directly using a good or service under each contract, the annualized cost per user under each contract, and the amount of any implementation costs to public schools. In addition to its report required under Chapter 325, Government Code, the commission shall present to the 90th Legislature a report on its evaluation and recommendations under this subsection. This subsection expires September 1, 2027.

SECTION 2. Subchapter B, Chapter 7, Education Code, is amended by adding Sections 7.041 and 7.042 to read as follows:

Sec. 7.041. STATE POLICY: PRIORITIZE PUBLIC SCHOOLS. (a) It is the policy of this state that the agency shall be efficient in its operations and that state funds be prioritized for the direct support and maintenance of the public schools.

(b) Notwithstanding any other law, the agency may not:

(1) set aside or encumber funds, including a federal block grant, that otherwise could go directly to public schools for purposes of Subsection (c);

(2) enlarge, or request legislation to enlarge, the agency's scope; or

(3) increase the number of full-time equivalent employees beyond the level authorized by the 88th Legislature.

(c) It is the policy of this state that funds for education that are not obligated by constitution or statute be prioritized as follows:

(1) attaining and maintaining pay for classroom teachers of at least the national average, with an adjustment upwards for pay that is competitive with professionals in the region who have similar levels of education and skill;

(2) providing an increase to the school safety allotment sufficient to meet the needs of public schools and to cover the costs and requirements of statutes and rules regarding school safety; and

(3) providing funding for public schools sufficient to meet the needs of students with disabilities and to cover the costs and requirements of statutes and rules regarding special education.

(d) It is the policy of the state that when, due to school districts' property value growth, increase in attendance credits under Chapter 49, or change in student enrollment or attendance, state appropriations of general revenue to the Foundation School Program maintenance and operations funds for a year are supplanted as surplus, the agency identify the amount of that general revenue surplus and submit a request to the office of the governor and the Legislative Budget Board for an appropriation or budget execution authority under Chapter 317, Government Code, to provide the general revenue surplus back to the Foundation School Program for the priorities under Subsection (c). If in any year an appropriation or budget execution authority does not provide the surplus to the Foundation School Program or to school district property tax relief, the next tax bill under Section 31.01, Tax Code, shall inform each taxpayer of the diversion of the Foundation School Program surplus.

Sec. 7.042. ZERO-BASED BUDGET REQUIRED FOR TEXAS EDUCATION AGENCY OPERATIONS; CONTENTS. (a) In this section, "agency operations budget" means the budget for agency administration and operations. The term does not include any state aid or allotment under this code that is received by school districts or open-enrollment charter schools or, under Section 48.308, by the higher education coordinating board.

(b) In addition to the required annual budget under Section 7.055, the commissioner shall prepare, in plain language and an easily readable and understandable format, a zero-based agency operations budget every tenth fiscal year that contains:

(1) a description of the discrete activities the agency conducts or performs with:

(A) a justification for each activity by reference to the state constitution, statute, or rule; and

(B) an external evaluation of the effectiveness and efficiency of the agency's policies, management, fiscal affairs, and operations in relation to each activity;

(2) for each activity identified under Subdivision (1):

(A) a quantitative estimate of any adverse effects that may reasonably be expected to result if the activity were discontinued, with a description of the methods by which the adverse effects were estimated;

(B) an itemized account of expenditures required to maintain the activity at any minimum level of service required by law, with a concise statement of the quantity and quality of service required at that minimum level; and

(C) an itemized account of expenditures required to maintain the activity at the current level of service, with a concise statement of the quantity and quality of service provided at that level;

(3) a ranking of activities identified under Subdivision (1) that illustrates the relative importance of each activity to the overall goals and purposes of the agency at current service levels; and

(4) recommendations to the legislative budget board and office of the governor regarding whether the agency should continue funding each activity identified under Subdivision (1) and, if so, at what level.

(c) The commissioner shall file a copy of the zero-based budget with the legislative budget board and the office of the governor on or before the date the proposed annual budget is filed, and the zero-based budget shall be posted on the agency's Internet website.

SECTION 3. Section 7.055(c), Education Code, is amended to read as follows:

(c) The budget the commissioner adopts under Subsection (b) for operating the Foundation School Program must be in accordance with legislative appropriations and provide minimal funds for the administration and operation of the agency and any other necessary expense required by statute. The budget must designate any expense of operating the agency or operating a program for which the board has responsibility that is paid from the Foundation School Program. The budget must designate program expenses that may be paid out of the foundation school fund, other state funds, fees, federal funds, or funds earned under interagency contract. Before adopting the budget, the commissioner must submit the budget to the board for review and, after receiving any comments of the board, present the operating budget to the governor and the Legislative Budget Board. The commissioner shall provide appropriate information on proposed budget expenditures to the comptroller to assure that all payments are paid from the appropriate funds in a timely and efficient manner.

SECTION 4. Section 322.017, Government Code, is amended to add Subsection (b-1) to read as follows:

(b-1) The board shall review and analyze the effectiveness and efficiency of the policies, management, fiscal affairs, and operations of the Texas Education Agency and report its findings by September 1, 2026, for consideration in connection with the legislative appropriations process. This subsection expires September 1, 2027.

SECTION 5. (a) The commissioner of education shall prepare an initial zero-based budget as described by Section 7.042, Education Code, as added by this Act, for the fiscal year beginning September 1, 2026.

SECTION 6. This Act takes effect September 1, 2025.