The legislation includes new pots of money for teacher raises and other school costs like insurance and transportation. It now heads to the House, where leaders say it will pass.

The Texas Senate could vote on a new public school funding bill as early as Thursday that would inject a record $8.5 billion in new money for the state's school districts. That is a $500 million increase from the most recent version of the legislation and comes after lawmakers in the House and Senate struck a new deal Wednesday afternoon.

Under state law, school districts are required to pay certain percentages of total staff compensation toward pensions, health insurance and other benefits. Applying those percentages to the $4.2 billion for school employee raises in the agreement, works out to between $543.9 million to $606.9 million in new costs for school districts.