6/13/25 Update: This post has been updated to reflect administrator guidance released Thursday by the Texas Education Agency.  

House Bill (HB) 2, the 89th Legislature’s primary school funding bill, creates new and expanded allotments to support raises for educators and other non-administrative school employees beginning in the 2025–26 school year. The bill establishes three mechanisms for funding compensation increases: the Teacher Retention Allotment (TRA), the Support Staff Retention Allotment (SSRA), and an expanded Teacher Incentive Allotment (TIA). 

Even though many districts have already adopted budgets and approved salaries for 2025-26, they must still comply with HB 2. These raises are legally considered independent of existing contracts and may be added mid-year without violating the Texas Constitution. However, implementation will be complicated. Many districts are facing budget shortfalls and trying to cut costs through attrition. HB 2 provides targeted compensation funding, but it doesn’t address broader budget gaps. 

Let’s take a closer look at the three types of compensation increases in HB 2. 

Teacher Retention Allotment (TRA) 

The TRA provides per-teacher funding based on years of experience and district size:  

Under HB 2, a “classroom teacher” is an individual who meets the definition found in Section 5.001 of the Education Code, which says:  

[A] "Classroom teacher" means an educator who is employed by a school district and who, not less than an average of four hours each day, teaches in an academic instructional setting or a career and technology instructional setting. The term does not include a teacher's aide or a full-time administrator.  

This definition is broader than just teachers of record in that it should include those who teach the requisite number of hours but do not have their own classroom. However, the term generally does not include other educators subject to the minimum salary schedule such as counselors, librarians, and nurses, even if they hold teaching certificates. Eligibility may depend on individual duties, and guidance from the Texas Education Agency (TEA), and/or district coding. (See more on this below.)

HB 2 specifies districts must use TRA funds to increase salaries above what the teacher received or would have received in 2024–25 by the amounts listed above. The bill requires the raises to be TRS-creditable compensation and that increases be maintained in future years, which generally indicates they are not to be viewed as stipends. It does not, however, specify that districts must give these raises at the beginning of the year. In fact, the bill contains a provision that authorizes districts to provide these raises even after a teacher contract not contemplating the raise has been finalized. 

A new provision adding uncertainty was included in the final bill in the waning days of the session. The provision allows districts applying to be designated as an “Enhanced Teacher Incentive Allotment (TIA) System” to use TRA funding for performance-based raises tied to teacher appraisal results, with flexibility built into their compensation plans, in lieu of following the distribution chart above. The Enhanced TIA System designation is new and will require TEA rule making prior to implementation. It is unknown at this time whether it will be available to districts during the 2025-26 school year.  

Support Staff Retention Allotment (SSRA) 

The SSRA provides districts $45 per student (based on adjusted average daily attendance and excluding virtual school students) to fund raises for full- or part-time nonadministrative staff not covered under the TRA. This includes school counselors, librarians, nurses, custodians, food service workers, bus drivers, administrative assistants, and part-time employees. Raises must begin in 2025-26 and be maintained in future years. Administrators, including assistant principals, principals, and central office administrators, such as superintendents, are not eligible. Although districts are required to use these funds only to increase the salaries of applicable staff, they are not required to increase the salary of all applicable staff or to increase salaries equally across the board. 

Expanded Teacher Incentive Allotment (TIA) 

HB 2 also expands the TIA. Designated teachers are now eligible for larger allotments. The new ranges are: 

• $12,000 to $36,000 for the Master Teacher designation; 
• $9,000 to $25,000 for Exemplary Teacher; 
• $5,000 to $15,000 for Recognized Teacher; and 
• $3,000 up to $9,000 for the new Acknowledged Teacher designation or National Board Certified teachers, assuming the State Board for Educator Certification (SBEC) maintains a designation for National Board Certification.  

Early versions of the language removed National Board Certification, but due to push back from ATPE members and their colleagues, the Legislature delegated the final decision to SBEC.  

Accurate PEIMS coding will directly impact compensation

Now that TEA has released guidance on how districts will receive HB 2 funds, one thing is clear: Accurate PEIMS coding is critical. TEA will use the PEIMS data that districts are already required to report each year, which includes the number of eligible teachers along with their years of experience, to determine how much TRA funding a district will receive, along with which employees will receive raises and in what amounts in those districts not participating in the new Enhanced TIA System.  

TEA will use PEIMS staff classification data, specifically the 087 teacher classification, to determine how many employees meet the statutory definition of “classroom teacher,” meaning those who teach in an instructional setting at least four hours per day. Additionally, TEA will look at the “Total Years Professional Experience” as submitted in the PEIMS Fall Submission to determine years of experience for eligible employees.   

Districts are expected to begin receiving funding in September 2025, even if raises are added after contracts are signed. For the upcoming school year, TEA will use 2024-25 data until the 2025-26 PEIMS Fall Submission window closes. At that point, they will use the fall 2025-26 data until TEA certifies the fall data in spring of 2026. In short, teachers and support staff should be aware that the accuracy of PEIMS reporting this fall will directly impact their compensation under HB 2. 

Be vigilant when it comes to your own compensation 

Educators should expect districts to follow the law, but you should also be vigilant when it comes to monitoring your own compensation. Stay informed as your district develops its HB 2 compensation plan, and don’t make assumptions based on any board conversations or votes before HB 2 was finalized and signed into law. Eligible ATPE members who have specific questions about their individual compensation may contact the ATPE Member Legal Services Department to request assistance.