The “Texas Two-Step” is a Misstep for Improving Texas

Improve HB 3, Kill HB 2. Read why...

The Texas House sells HB 2 and HB 3 as a package deal for education reform, calling them the "Texas Two-Step." But this so-called two-step is a misstep.

The package prioritizes billions more taxpayer money for a broken public education monopoly while substantially limiting school choice and property tax relief efforts. In fact, there would be twice as much with at least $8 billion for public education than the school choice amount of $1 billion and new property tax relief (not already required by existing law)of $3 billion…combined.

Ultimately, this would make improving education or eliminating school district maintenance and operations (M&O) property taxes much harder, if not impossible. Therefore, HB 2 should die, and HB 3 needs improvements to ensure Texas delivers true education freedom.

But let’s consider these two bills' merits and how they fit in the broader policy picture.

HB 3 could be a big win for school choice. It would create the first education savings account (ESA) program in Texas history and one of the biggest in the country. It provides universal eligibility, meaning every student qualifies.

However, the first year's $1 billion funding would cover ESAs for fewer than 100,000 students, or just 1.5% of the state’s 6.3 million students statewide. In other words, 98.5% of students in Texas wouldn’t initially have access to an ESA. This is a conservative estimate, as the number of students covered could be substantially less due to an unknown number of students with special needs receiving up to $30,000 annually.

Families that apply but don’t receive initial funding would be placed on a tiered waitlist with an ordering based on students with special needs first, low-income families next, and then higher-income families as funding allows.

The bill includes an “escalator” for covering the students on the ESA waitlist over time but does not have an automatic appropriation. Therefore, future legislatures would need to allocate new funding to cover those on the waitlist, which could be a problem in reaching universal school choice soon, if at all, with this package deal.

With HB 2 dumping more than $8 billion into public education, it will be far more challenging, if not impossible, to garner enough support for additional ESA funding later. Instead of building on HB 3, the primarily taxpayer-funded education lobby will argue that Texas needs more taxpayer money for public education, making expansion politically challenging.

HB 2 worsens nearly all of Texas’ long-term education and tax priorities. It could provide across-the-board pay increases, whether some teachers or administrators deserve it or not, and some merit-based pay increases. Also, it could increase the basic allotment, which is the minimum funding for each student, with the actual spending per student nearly three times as high. These would be large ongoing expenditures paid by taxpayers.

Since 2011, Texas has already increased per-student funding by 48%, far outpacing inflation’s 35% rise. Yet student outcomes have declined sharply, with 8th-grade math proficiency dropping 40% over the same period.

The state has spent record amounts on public education, only to see the taxpayer-funded monopoly continue to fail students, frustrate parents, and burden taxpayers. Given this, one could argue that Texans are overfunding public education, as spending is record-high and outcomes are near-record lows. The state can’t keep repeating the same mistakes and expect a different result.

Some lawmakers believe they can buy-off the anti-school choice crowd by increasing public school funding alongside an ESA program. This is a fantasy. The teacher unions and public education lobby will never be satisfied, no matter how much money they receive. They perceive education freedom and choice as a threat to their taxpayer-funded monopoly.

Just look at what happened to Chairman Brad Buckley when he attended a recent Texas PTA event. Despite his efforts to substantially increase school funding with HB 2, he was heckled, yelled at, and berated simply for supporting school choice in HB 3. He stayed to listen to them, but when he understood they were unwilling to talk, he did the right thing and left.

This incident should send a clear message: no amount of funding will ever satisfy the anti-school choice crowd. They will always fight competition and demand more taxpayer money. This is what a monopoly mindset does.

HB 2 also directly undermines two of Texas’ biggest priorities.

First, it makes expanding universal school choice much harder. By tying HB 3 to massive increases in government school funding, school choice will always be fighting for budget scraps. Instead of establishing ESAs as the future of education funding, HB 2 traps Texas into the same broken system: government schools get billions of more taxpayer money while school choice programs have to beg for budget scraps each session.

Second, it severely hampers momentum toward eliminating school district M&O property taxes. These taxes are the largest burden on Texas families and small businesses, and the way to phase them out is through rate compression and spending restraint. But every new dollar spent on government schools makes reducing those property tax rates more difficult.

If Texas continues to spend billions on a bloated education bureaucracy, it will be nearly impossible to justify giving taxpayers relief through compression. That means higher property taxes for Texans and no path to eliminating school district M&O property taxes.

Instead of doubling down on a failing school finance model, Texas should modernize education funding entirely by transitioning to a universal ESA approach. This could save taxpayers $20 billion annually by moving to a $12,000 ESA per child, allowing parents to take control of their children’s education, and cutting school district M&O property taxes by two-thirds.

If Texas lawmakers truly want to deliver real education freedom and property tax relief, they must fund our children, not systems, and stop throwing more money at a failing public school monopoly. Texans deserve better than this broken "Texas Two-Step"—it’s time for a better step in the right direction.