Texas is preparing to fund special education based on how much service a student needs rather than where that student sits, one of the largest structural changes in the state’s school-finance system in years, as the Texas Education Agency rolls out implementation guidance for House Bill 2 ahead of the 2026-27 school year.
In a series of administrator letters, the agency said HB 2 and Senate Bill 568, both passed in the 2025 regular session, replace the long-standing instructional-arrangement model, which paid districts according to the classroom setting where a student received services, with a service-intensity model that ties dollars to each student’s identified needs.
The shift is designed to send money where it does the most good rather than reward placement. Under the new framework, the Texas Education Agency said funding follows the intensity of services a student requires across a tiered structure, and the state’s special-education transition is projected to add roughly $250 million statewide.
HB 2 also provides $1,000 for each full individual and initial evaluation a school system completes, covering children enrolled in public schools as well as private-school and homeschool students, according to the agency’s guidance.
The changes arrive as districts absorb the rest of the HB 2 package. The Texas Education Agency set the Basic Allotment, the per-student figure that anchors the Foundation School Program, at $6,215 for the current biennium and tied future increases to statewide property-value growth.
The agency is also reshaping the Teacher Incentive Allotment, adding a new designation that it said will expand the number of designated teachers and route more money to high-need and rural campuses. Districts can propose teachers for the Acknowledged designation in October 2026 using performance and student-growth data from the 2025-26 year, and top incentive payouts can reach $36,000, according to the agency and the Teacher Incentive Allotment program.
Supporters frame HB 2 as an efficient use of existing state dollars. Raise Your Hand Texas said the package directs about $8.5 billion into teacher pay and programs, and analysts at Texas Policy Research have described the service-intensity model as targeting funds to students who need them most rather than to fixed placements. Backers of the teacher-pay redesign argue that paying more to demonstrably effective teachers, and steering those teachers toward the hardest-to-staff schools, stretches each dollar further than across-the-board raises.
Not everyone is convinced the money will be enough. Many superintendents told The Texas Tribune earlier this year that even the larger allotments have not closed budget gaps opened by years of inflation since the Basic Allotment was last raised, and that earmarked funds limit local flexibility.
Special-education directors face the added work of recoding students under the new intensity tiers before the funding follows. And the structural drag of recapture continues in the background: 192 districts paid more than $2.3 billion under the “Robin Hood” system in 2025-26, according to the Texas School Coalition, dollars that offset the state’s own obligation rather than adding to total school funding.
The immediate tests come this fall. The Texas Education Agency is finalizing the special-education service-intensity weights, districts will submit Acknowledged designation proposals in October, and near-final school-finance settle-up figures are due in September 2026, when districts will learn how much the redesigned formulas actually delivered.