Compensatory Education Update

Compensatory Education Update

December 15, 2025 | Employment, Grants Management

Much has changed in the world of compensatory education funding this year! The 89th Legislature threw a giant curve ball and made the changes effective this year. The communication of the practical implementation of the changes has been slowly trickling out as the State makes decisions and responds to school system’s questions. CSS has been following the changes, and we are sharing a summary as we know it today. The pitches keep coming, however, so the game is still in progress!

The CSS Federal team assists its clients with planning the compensatory program allotment including evaluating compensatory programs, setting up budgets, and coordination with other funding such as Title I!

What has changed?

  • TEA added 2 additional identification At–Risk criteria that relate to “chronic absenteeism” and “truant students.” This raised the number of possible reasons a student may be At–Risk from 15 to 17. For a complete list, please refer to Texas Education Code Section 29.081.
  • HB 2, effective 9/1/25, removed the minimum 55% spending requirement from the comp ed funding allotment. The happened after most school systems had already adopted and set up their budgets. This change gives the school systems greater flexibility in how to use the funds without having to track 55% of the funds by budget code to direct instructional services. Rather than change their budgets, the State did allow schools to keep the coding structures in place for the 2025-26 school year (PIC codes 24, 26, 28, 29, and 30). See TEA Memo from 10/16/25
  • Positions funded from the compensatory education allocation no longer require a signed job description indicating the funding source; however, you might consider continuing this as best practice since Federal job descriptions still require this.
  • The Schedule J-4 as part of annual financial reporting for audit purposes, will no longer be required for use of comp ed funds, but will remain for the Bilingual Allotment.
  • Submission of campus improvement plans in TEAL for compensatory education amounts over $750K is no longer required.

What hasn’t changed?

  • Schools are still receiving compensatory education funding, and the amounts have not been reduced.
  • Schools are still required to identify and serve their At-Risk students with intervention and accelerated instructional services to achieve on–grade-level performance, pass EOC and required State Assessments, and remain engaged in school and graduate from high school.
  • Schools must use student data from State assessments to design appropriate services and must include goals and strategies towards that end in their District and Campus Improvement Plans.
  • At the central office level, schools must annually evaluate their comp ed programs in a written format and present the outcomes in an annual public hearing. This could be during a board meeting or a community meeting, but documentation should be kept.

Budgeting Considerations

With the removal of the 55% spending requirement, the need to capture personnel and expenses using a PIC 24 budget code is more flexible. The focus shifts from making sure you spend 55% of the money to evaluating spending on programs. This allows for more local flexibility on which personnel and expenses you want to track for program evaluation purposes.

Using PIC 24 also allows you to pull data when asked what you spend on intervention and accelerated instruction. There are several benefits to continuing tracking personnel and expenses for your compensatory services, but you no longer must worry if you do not spend 55% of the allotment. The question now becomes, are your expenses working for the students to improve? If they are not improving, it could be the quality of the programs, the scope of the programs, or you are not spending enough to offer the programs you need.

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