30% Compensation Increases Contracting Resource
Districts have requested guidance regarding teacher contracts and how to handle the lack of certainty regarding the final amount of the spending requirement under House Bill 3 of the 86th Regular Legislative Session (86th Session). This letter provides general guidance and highlights some of the issues a district should consider. As general guidance, all districts should consult with an attorney regarding the specific issues each district faces with its teacher contracts.
The key issue to resolve is that public compensation may not be increased retroactively; otherwise, such compensation may run afoul of the prohibition found in Article 3, Section 53 of the Texas Constitution against a gift of public funds. A school district may not increase a teacher’s annual compensation under the contract once part performance has been rendered. Tex. Att’y Gen. Op. No. MW-68. However, the Attorney General has also determined that compensation may be increased after services have been rendered, provided the employee’s contract or applicable state law at the time of the contract provided for the possibility of additional payments. Tex. Att’y Gen. Op. No. GA-0204.
Districts should ensure that their contracts include a provision that incorporates current law, which would include House Bill 3 passed during the 86th Session. This ensures the contracts incorporate the compensation requirements imposed by the Texas Legislature.
Many districts do not incorporate the exact amount of salary in their educator contracts but instead state that an employee will be paid according to a compensation plan adopted later. The Texas Association of School Boards (TASB) has provided guidance for districts to adopt language in their compensation plans to provide for the possibility of additional payments. For example, that language might read:
The Board of Trustees may adjust the compensation reflected in this plan retroactively as necessary to maintain compliance with the requirements of House Bill 3 as passed by the 86th Texas Legislature and the associated funding levels which were not known at the time this plan was initially adopted.
A district that provides exact salary amounts in contracts may explore modifying their contracts to adopt similar language, recognizing the need to observe other contracting protocols when seeking to modify the contracts. These actions should occur prior to part performance being rendered under the contract.
If a district is unable to take these steps, the Attorney General opinions recognize that a district may renegotiate a contract already performed in part where new consideration passes to the district in exchange for new benefits provided. Tex. Att’y Gen. Op. No. MW-68; Tex. Att’y Gen. Op. No. GA-0204. Districts will need to consult with their attorneys regarding the parameters of what constitutes additional consideration. The districts would then need to consider how to address the subsequent year’s contracts.
However, not all employees may be subject to Texas Education Code Chapter 21 contracts. Schools should seek appropriate legal guidance when handling these situations.
The key issue to resolve is that public compensation may not be increased retroactively; otherwise, such compensation may run afoul of the prohibition found in Article 3, Section 53 of the Texas Constitution against a gift of public funds. A school district may not increase a teacher’s annual compensation under the contract once part performance has been rendered. Tex. Att’y Gen. Op. No. MW-68. However, the Attorney General has also determined that compensation may be increased after services have been rendered, provided the employee’s contract or applicable state law at the time of the contract provided for the possibility of additional payments. Tex. Att’y Gen. Op. No. GA-0204.
Districts should ensure that their contracts include a provision that incorporates current law, which would include House Bill 3 passed during the 86th Session. This ensures the contracts incorporate the compensation requirements imposed by the Texas Legislature.
Many districts do not incorporate the exact amount of salary in their educator contracts but instead state that an employee will be paid according to a compensation plan adopted later. The Texas Association of School Boards (TASB) has provided guidance for districts to adopt language in their compensation plans to provide for the possibility of additional payments. For example, that language might read:
The Board of Trustees may adjust the compensation reflected in this plan retroactively as necessary to maintain compliance with the requirements of House Bill 3 as passed by the 86th Texas Legislature and the associated funding levels which were not known at the time this plan was initially adopted.
A district that provides exact salary amounts in contracts may explore modifying their contracts to adopt similar language, recognizing the need to observe other contracting protocols when seeking to modify the contracts. These actions should occur prior to part performance being rendered under the contract.
If a district is unable to take these steps, the Attorney General opinions recognize that a district may renegotiate a contract already performed in part where new consideration passes to the district in exchange for new benefits provided. Tex. Att’y Gen. Op. No. MW-68; Tex. Att’y Gen. Op. No. GA-0204. Districts will need to consult with their attorneys regarding the parameters of what constitutes additional consideration. The districts would then need to consider how to address the subsequent year’s contracts.
However, not all employees may be subject to Texas Education Code Chapter 21 contracts. Schools should seek appropriate legal guidance when handling these situations.