Senate Bill 26 (SB 26) is expected to have a substantial fiscal impact on Texas’ General Revenue and the Foundation School Program (FSP), with an estimated negative impact of $4.35 billion over the biennium ending August 2027. The annual cost burden escalates over time, starting at $2.08 billion in FY 2026 and $2.26 billion in FY 2027, rising to $3.64 billion by FY 2030. The primary cost drivers include increased teacher compensation under the Teacher Incentive Allotment (TIA), the establishment of Enhanced Teacher Incentive Allotment (ETIA) schools, and additional funding for teacher retention and recruitment in high-need campuses. Additionally, expanding pre-kindergarten eligibility to include children of public school teachers adds further costs to the state’s education budget.

The Texas Education Agency (TEA) will require additional resources to implement the bill, including $15 million annually for technical assistance related to TIA, $30 million annually for the Local Optional Teacher Designation Grant Program, and state-subsidized liability insurance for teachers, which is expected to cost $1.7 million in FY 2027, increasing to $6.8 million by FY 2030. The Teacher Retirement System (TRS) will also require additional state contributions, starting at $26.6 million in FY 2026 and increasing to $38.3 million in FY 2030. To support these initiatives, TEA will need 11 additional full-time employees (FTEs), adding an estimated $1.4 million in administrative costs.

Given the record-high spending on public education, much of which already goes toward non-instructional costs, SB 26 represents a significant expansion of state education expenditures without requiring reallocation of existing resources to prioritize teacher pay.

SB 26 increases teacher pay based on merit, which is a positive step toward rewarding performance over tenure. However, the bill relies on additional state funding rather than reallocating existing resources, contradicting principles of fiscal responsibility. Texas is already spending record-breaking amounts on public education, yet a significant portion of these funds is directed toward administrative costs rather than classroom instruction. Instead of expanding spending, the legislature should focus on redirecting existing resources from bureaucracy to teacher salaries to ensure education dollars are prioritized where they have the most impact.

Additionally, the bill introduces new funding classifications and teacher designations, adding bureaucracy instead of simplifying how education funds are allocated. A more responsible approach would be to require school districts to allocate a greater share of their existing budgets to teacher salaries while reducing administrative overhead. Rather than injecting new funds into the system, the legislature should enact spending reforms that ensure existing resources are used efficiently.

For these reasons, Texas Policy Research recommends a NO vote on SB 26 unless the following amendments are adopted:

• Reallocate Existing Education Funds – Require school districts to reprioritize their budgets so that a higher percentage of funding goes directly to teacher salaries, rather than expanding administrative expenses.
• Cap Administrative Spending – Limit the percentage of state education funding that can be allocated to non-teaching personnel, ensuring more resources go directly to classrooms and instructional staff.
• Eliminate the Additional Teacher Incentive Allotment (ETIA) Category – The bill creates ETIA schools that receive extra funding for adopting state-mandated pay structures. Instead of creating a new funding class, require all districts to implement performance-based pay within their existing budgets.

Without these amendments, SB 26 represents an expansion of government spending rather than a fiscally responsible approach to improving teacher pay. The state should focus on efficiency and accountability before committing additional taxpayer dollars to a system already struggling with administrative excess.

Political Landscape

SB 26 is a legislative priority of Lt. Gov. Dan Patrick and an emergency item for Gov. Greg Abbott, reflecting state leadership’s focus on teacher pay raises. However, the Republican Party of Texas appears divided on this issue—while seemingly supportive of merit-based teacher pay, it also seems to oppose centralized education mandates, which this bill expands.