According to the Legislative Budget Board (LBB), the fiscal implications of HB 123 are significant, with a projected negative impact to General Revenue-related funds of approximately $314.8 million over the 2026–2027 biennium. The bill does not make an appropriation itself but would provide the statutory framework for increased funding obligations, primarily through the Foundation School Program (FSP) and Texas Education Agency (TEA) operations.

Major cost drivers include new and expanded training requirements for teachers through literacy and mathematics academies, including development, implementation, and evaluation systems. TEA is required to administer reading and mathematics intervention programs and adaptive assessments in early grades, with related annual costs in the millions. For instance, TEA anticipates spending over $9 million per year on reading intervention programs alone. It also projects costs for adaptive vocabulary assessments, advisory boards, and ongoing updates to state-approved diagnostic instruments.

Another key financial feature is the Early Literacy Intervention Allotment, providing $250 per eligible student, capped at 15% of K–3 enrollment, resulting in substantial recurring obligations. There are also ADA (average daily attendance) funding incentives for districts offering extended school year or targeted reading intervention days, and modifications to existing allotments, such as the Early Education Allotment, which increases the multiplier for certain students. These elements combined are estimated to cost over $202 million annually by FY 2030.

At the local level, school districts are expected to face implementation costs for assessments, increased instructional staffing, and teacher participation in training academies. While these costs may be offset by increased FSP funding, they nonetheless represent a logistical and financial burden on districts, especially smaller or resource-limited ones. TEA will also require 21 new full-time employees and incur IT development costs exceeding $3 million in the first biennium to support implementation.

HB 123 proposes a broad expansion of state-directed early childhood education policies, centered on improving kindergarten readiness and student proficiency in literacy and numeracy. While the bill is well-intentioned and addresses legitimate challenges, such as lagging third-grade reading scores and inconsistent progress monitoring, the mechanisms it employs raise serious concerns related to fiscal responsibility, limited government, educational centralization, and long-term sustainability. For these reasons, a “No” vote is recommended.

At its core, HB 123 significantly expands the role of the Texas Education Agency (TEA) and the state in micromanaging how public schools, including charter schools, approach early learning. It mandates a uniform set of reading and math diagnostic tools, state-designed intervention models, and required teacher participation in TEA-created academies. This approach overrides local discretion, undermines the professional judgment of educators, and sidelines parents’ ability to shape their child’s early education experience. While the bill includes narrow opt-out provisions for parents, they are largely procedural and do little to balance the broader shift of authority away from families and local districts toward centralized state control.

The fiscal implications of the bill are substantial. According to the Legislative Budget Board, HB 123 is projected to cost over $314 million during the 2026–27 biennium, with recurring costs growing over time. The bill creates multiple new entitlement streams—including a $250 per-student Early Literacy Intervention Allotment and additional ADA-based funding incentives for reading interventions—without corresponding spending caps, outcome benchmarks, or performance contingencies. These funds will flow through current bureaucratic channels, often without assurances that the money will be used effectively or efficiently. Instead of building accountability into the funding structure, the bill adds layers of cost without addressing longstanding inefficiencies in education spending.

Furthermore, HB 123 does not meaningfully engage with or encourage innovation in educational service delivery. All training academies, intervention products, and tutoring providers must be TEA-approved, which restricts competitive choice and limits opportunities for private-sector or nonprofit innovation. The bill discourages the development of diverse, community-responsive solutions by defaulting to state-driven program design. It treats education as a one-size-fits-all endeavor rather than embracing a pluralistic, performance-based model.

From a limited government perspective, the bill is problematic. It creates new mandates, imposes uniform curriculum and training models, and grows the size and scope of the state education bureaucracy. It authorizes the hiring of 21 new TEA employees and requires the development of new IT systems, intervention tracking, and oversight structures. These additions will burden taxpayers and local school systems alike. Notably, the bill does not sunset any of its new provisions or link continued funding to measurable improvements in student performance. Without such safeguards, this legislation risks becoming another expensive and entrenched education initiative with limited results.

In summary, while the goals of HB 123—improving early literacy, numeracy, and school readiness—are commendable, the bill’s approach is flawed. It increases government spending and bureaucracy without sufficient guardrails, erodes local autonomy, limits educational freedom, and centralizes control in ways that may not lead to better student outcomes. A better policy framework would focus on structural reform, outcome-based funding, and flexible tools that empower families, educators, and local communities. Until such reforms are prioritized, the state should not commit to costly and inflexible programs. Texas Policy Research recommends that lawmakers vote NO on HB 123.

• Individual Liberty: The bill includes some recognition of individual liberty, particularly in allowing parents to opt their children out of certain assessments and interventions. However, these opt-outs are narrow and procedural, applying only to specific instruments or programs and requiring written requests. The broader structure of the bill undermines liberty by mandating uniform diagnostic tools, intervention timelines, and instructional models across all districts and charter schools. These mandates shift control away from parents and educators and place decision-making power in the hands of the state, limiting local innovation and customization. In practice, this reduces the ability of families to pursue education options aligned with their values or needs, thereby constraining educational freedom.
• Personal Responsibility: The bill includes provisions aimed at supporting early childhood development by encouraging parental involvement through school readiness initiatives and literacy reporting. These efforts suggest a philosophical alignment with personal responsibility. However, because participation in state-defined frameworks is mandatory for schools and largely prescribed by the Texas Education Agency (TEA), the parental role becomes more reactive than proactive. The state sets the terms of engagement, and parents are expected to comply within that structure. True personal responsibility would be more meaningfully promoted through decentralized systems that empower families to choose curriculum, service providers, or interventions—none of which this bill prioritizes.
• Free Enterprise: The bill significantly limits market flexibility and private-sector innovation in educational services. All intervention products, assessments, and even tutoring services funded under the third-grade supplementary support grant must be pre-approved by TEA. There is no meaningful opportunity for competition among providers unless they conform to state-determined standards and are selected through government-managed processes. Additionally, teacher training must occur in state-established academies, rather than allowing districts or educators to choose from a marketplace of providers. This top-down design reinforces a monopolistic education system and excludes private innovators from offering alternative or potentially more effective solutions, undermining free enterprise principles.
• Private Property Rights: The bill does not involve eminent domain, property seizure, or zoning. However, it expands regulatory oversight over private entities that partner with public schools, especially those delivering prekindergarten programs. By imposing curriculum alignment, teacher certification, and reporting requirements on these partners, the bill increases the regulatory burden on privately operated educational services. While this does not rise to the level of violating property rights, it does represent creeping state influence over privately run operations and may discourage private-sector involvement in education delivery.
• Limited Government: This is where the bill most clearly departs from liberty principles. The bill mandates sweeping new educational programs, increases TEA staffing by 21 positions, imposes new obligations on all public schools and charter schools, and creates permanent funding streams through the Foundation School Program. These obligations are not accompanied by performance triggers, sunset provisions, or meaningful accountability metrics. Instead of incentivizing innovation, efficiency, or outcomes, the bill assumes a central role for the state in defining how early childhood education should be conducted, contrary to the principle that government should be minimal, accountable, and subsidiary to local authority.

• SB 2252 (Same As)