Texas is preparing for one of the most significant changes to special education funding in years. Beginning with the 2026-27 school year, the state will move away from a funding model based largely on instructional arrangement or placement and toward a new model based on the intensity of services students receive.
For school districts, charter schools, special education leaders, campus administrators, and families, this shift matters because it changes how special education services are documented, reported, and funded. The goal is to better align state funding with individual student needs rather than the setting where a student receives services.
The Texas Education Agency has already issued guidance to help school systems prepare, and the transition year will require careful attention to IEP documentation, PEIMS reporting, service minutes, and staff training.
Historically, Texas has funded special education in part through an instructional arrangement or setting-based model. In simple terms, funding was tied heavily to where and how a student received special education services.
Under the new approach, Texas will use a service intensity model. That means funding will be connected more directly to the type and level of services a student needs, regardless of instructional placement. TEA says the change is intended to allow students’ needs to drive the funding received through the state special education allotment.
This shift comes from House Bill 2, Article 4, and Senate Bill 568, passed during the 89th Texas Legislature. TEA’s guidance states that the new funding structure begins in the 2026-27 school year.
The practical reason for the change is straightforward: students with disabilities do not all require the same level of support, even when they are served in similar settings.
A placement-based model can create a mismatch between funding and actual student need. A service intensity model is designed to look more closely at the supports written into a student’s IEP, including specially designed instruction, related services, and the amount of time a student spends receiving services.
Education policy analysts have also noted that HB 2 moves Texas toward more program-specific funding allotments, including special education funding based on service intensity rather than placement. IDRA summarized the change as part of a broader school finance package that shifts money into teacher pay and targeted program allotments.
TEA’s April 2026 guidance explains that the new system will include two major pieces:
Tiers of intensity.
Texas law specifies eight tiers of intensity. TEA says Tier 1 applies to students who receive speech therapy as their only instructional service and no other specially designed instruction (SDI), while Tier 8 applies to students whose ARD committees determine that a residential placement program is the student’s least restrictive environment for educational purposes.
Service group allotments.
The new system will also include service groups that provide supplemental funding for certain special education instructional and related services beyond the foundational tier funding. State law requires at least four service groups to be established through rule, and TEA’s current framework identifies five service groups.
Together, these two pieces are meant to create a more detailed funding framework. Instead of relying primarily on setting, the system will consider both the intensity of the student’s special education needs and the specific services being provided.
The 2026-27 school year will be a transition year, and reporting requirements will be especially important.
TEA’s May 28, 2026 update says that by the first PEIMS Attendance Submission reporting period, due October 8, 2026, each school system is expected to review IEPs in place as of the first day of the 2026-27 school year for at least 50% of students receiving special education services and enter the student’s intensity tier, applicable service groups, and average daily minutes spent in a special education setting. TEA further states that data for students not included in the first Attendance Submission must be reported by the second PEIMS Attendance Submission, due December 3, 2026.
Districts will also continue reporting instructional arrangement or setting codes during the transition year. TEA’s April guidance, as updated by TEA’s May 28, 2026 correspondence, explains that, for 2026-27 only, school systems must report both the prior-law instructional arrangement information and the new service intensity information.
This dual reporting requirement means districts will need close coordination among special education departments, PEIMS staff, campus leaders, diagnosticians, related service providers, and ARD committee members.
The new model puts additional weight on the accuracy and clarity of a student’s IEP.
If funding is tied to service intensity, then the services listed in the IEP must clearly reflect what the student actually receives. That includes service type, frequency, duration, instructional setting, related services, and time spent in special education settings.
For districts, this creates both a compliance issue and a funding issue. Incomplete or inconsistent documentation could lead to reporting errors. It could also make it harder to estimate future funding accurately.
TEA has said that during 2026-27, final information on funding levels associated with the service intensity model may not be available until the end of the school year, which creates uncertainty for local budget planning. However, TEA also says it will ensure districts receive no less special education funding than they would have received under the prior instructional arrangement system during the 2026-27 transition year.
For superintendents and finance teams, the change affects budgeting and forecasting. Districts will need to understand how student-level service data connects to future special education allotments.
For special education directors, the change affects documentation, ARD processes, service tracking, and staff training.
For campus administrators, the change may affect scheduling, service delivery, staff assignments, and how general education and special education teams coordinate supports.
For PEIMS and data staff, the change creates a major reporting lift during the 2026-27 transition year.
The biggest risk is waiting too long. Districts that treat this as only a finance change may miss the operational impact. This is really a cross-functional change involving instruction, compliance, data, staffing, and budgeting.
Districts preparing for the new special education funding model should start with a few practical steps:
Families may not need to understand every technical detail of the funding formula, but they should understand the basic direction of the change.
Because the new model is based on services, families should pay close attention to whether the IEP clearly describes the supports their child needs. The ARD process should continue to focus on the student’s individual needs, not on funding categories.
Families may want to ask questions such as:
The funding model should not determine what a student needs. The student’s needs should determine the services written into the IEP.
Texas’ move to a service intensity model is more than a technical funding update. It is a major shift in how the state connects special education funding to student need.
The 2026-27 school year will be a transition period, and districts should expect added reporting responsibilities, training needs, and budget uncertainty. But the change also creates an opportunity to better align funding with the actual services students receive.
For Texas school systems, the most important work starts before the first PEIMS Attendance Submission deadline. Clear IEP documentation, accurate service data, and strong coordination across departments will be essential.
References
Texas Education Agency. (2026, April 16). Special Education Funding Updates. https://tea.texas.gov/about-tea/news-and-multimedia/correspondence/taa-letters/special-education-funding-updates
Texas Education Agency. (2026, May 28). Special Education Funding Update. https://tea.texas.gov/about-tea/news-and-multimedia/correspondence/taa-letters/special-education-funding-update
Texas SPED Support. (2026). Intensity of Services Special Education Funding Model Resources. https://spedsupport.tea.texas.gov/resource-library/intensity-services-special-education-funding-model-resources
Texas SPED Support. (2026). New Intensity of Services Funding Model. https://spedsupport.tea.texas.gov/sites/default/files/2026-04/new-intensity-of-services-funding-model.pdf
Texas Education Agency. (2025). HB 2 Implementation: Special Education Program and Funding Updates. https://tea.texas.gov/about-tea/news-and-multimedia/correspondence/taa-letters/hb-2-implementation-special-education-program-and-funding-updates