House Bill No. 39 aims to modify the public school finance system in Texas by adjusting the calculation of funding based on property values, specifically incorporating optional homestead exemptions. The bill amends Section 7.062(c) of the Education Code to prioritize the use of excess funds, not exceeding $20 million in any state fiscal year, for grants to school districts when the appropriated amount exceeds the entitlement under Subchapters A and B of Chapter 46. Additionally, it repeals Section 48.259 of the Education Code, which may have previously governed certain aspects of funding distribution.

Furthermore, the bill revises Section 403.302(d) of the Government Code to redefine "taxable value" by removing the provision that allowed for the deduction of one-half of the total dollar amount of certain residence homestead exemptions. This change is intended to ensure that the taxable value of properties more accurately reflects the market value after accounting for all applicable exemptions. The amendments will take effect on September 1, 2025, and will apply to property value studies conducted for tax years beginning on or after January 1, 2026.

Statutes affected:
Introduced: Education Code 7.062, Education Code 11.35 (Education Code 7, Education Code 11)