TEA Updates Charter School Facilities Funding Rules Effective October 25, 2026
FINANCIAL MANAGEMENT
10/26/2026
Facilities funding is an important component of financial planning for Texas open-enrollment charter schools. Recent changes adopted by the Texas Education Agency (TEA) update how these funds are calculated, establish additional eligibility requirements, and introduce a new annual certification.
While these changes primarily affect charter schools, they reinforce the importance of monitoring accountability ratings, maintaining strong financial practices, and incorporating regulatory changes into long-term financial planning.
What's Changing?
The $60 Million Funding Cap Has Been Removed
House Bill 2 eliminated the previous $60 million statewide cap on charter school facilities funding. The updated rule establishes a revised calculation using the lesser of two statutory formulas, one of which is based on 6% of the maximum Basic Allotment
What this means: Schools should review their facilities revenue projections to ensure budgets reflect the updated formula rather than relying solely on historical funding amounts.
Accountability Ratings Matter More Than Ever
Eligibility for facilities funding is now tied to both academic and financial accountability results from the preceding two school years.
Ratings that may affect eligibility include:
Academic Accountability: Overall scores below 60, an F rating, or a D rating considered unacceptable under applicable law.
Charter FIRST: Financial accountability scores below 70 or a designation of Substandard Achievement.
Not Rated: A designation of "Not Rated" is not considered an unacceptable rating.
A single unacceptable rating does not necessarily result in a loss of eligibility. The two-year statutory requirements must be considered.
What this means: Academic and financial performance can have consequences beyond the accountability rating itself. Schools should actively monitor their results and evaluate the potential impact on future facilities funding.
New Charter Schools Receive Additional Consideration
Charter schools in their first two years of operation will automatically receive estimated facilities funding under the applicable statutory provisions.
What this means: Newly established charters can incorporate this estimated funding into their initial financial planning, while remaining mindful that funding estimates may be adjusted.
New Annual Real Estate Certification Required
Charter holders must complete an annual certification confirming that certain individuals associated with the school, including specified administrators, governing board members, and relatives, do not financially benefit from prohibited real estate transactions involving the charter school.
TEA will prescribe the certification process.
What this means: Schools should proactively review lease agreements, related-party transactions, and potential conflicts of interest to ensure they can accurately complete the required certification.
Don't Overlook the Funding Adjustments
Initial funding estimates may be based on prior-year eligibility. TEA will update those estimates as final accountability results and required certifications become available.
For schools budgeting facilities allotment revenue, this creates an important forecasting consideration. An initial funding estimate should not automatically be treated as guaranteed final revenue.
The inSchools Takeaway
Facilities funding is no longer simply a calculation based on student attendance. Academic performance, financial accountability, and governance compliance all play a role in maintaining eligibility.
As schools prepare and monitor their FY2027 budgets, now is an appropriate time to:
Review academic and Charter FIRST ratings for the preceding two years.
Validate facilities funding projections against current TEA estimates.
Evaluate lease agreements and related-party real estate transactions.
Plan for the new annual certification.
Consider the potential cash flow implications of changes in eligibility.
A proactive review today can help prevent unexpected funding adjustments tomorrow.
Need support?
The inSchools Finance Team can assist charter schools with reviewing facilities funding projections, evaluating potential accountability-related risks, and incorporating regulatory changes into financial forecasts.
For additional information, review TEA's adopted rule for 19 TAC §105.1011.