According to the Legislative Budget Board (LBB), the fiscal implications of HB 125 are significant, with an estimated negative impact of $25 million to General Revenue-Related Funds for the biennium ending August 31, 2027. The proposed Tarleton State University College of Osteopathic Medicine (TSUCOM) is expected to begin receiving non-formula start-up funding of $12.5 million annually starting in fiscal year 2026. These appropriations are anticipated to continue annually until full enrollment is reached and the college becomes eligible for formula-based funding, projected to begin in fiscal year 2030.

Over the 10-year forecast, funding needs will increase substantially. Once the college qualifies for state formula funding—based on inputs like enrollment and infrastructure—it will draw funds through four key higher education formulas used for health-related institutions: Instruction and Operations Support, Infrastructure Support, Research Enhancement, and Graduate Medical Education. The bill estimates a gradual increase in enrollment from 75 students in 2029 to 600 by 2034, with corresponding rises in annual costs, from about $18.4 million in 2030 to $37.6 million by 2034.

Additional cost drivers include projected personnel increases, with full-time equivalent (FTE) positions expected to grow from about 54 in 2026 to 165 by 2035. Though formula inputs were based on estimates aligned with similar medical institutions, actual expenditures may exceed projections depending on final enrollment, infrastructure, and research performance. The bill also makes TSUCOM eligible for distributions from the Permanent Health Fund (PHF), which would be shared among a larger pool of institutions without increasing total fund outlays.

Importantly, the fiscal note indicates that no impact is anticipated for local governments, and that other institutional costs, such as faculty salaries and facilities construction, are expected to be covered by existing resources or constitutional funds allocated to Tarleton State University and the Texas A&M University System.

HB 125 proposes the establishment of the Tarleton State University College of Osteopathic Medicine with the aim of addressing the shortage of physicians in rural Texas. While the bill’s intentions—to increase healthcare access and expand medical education—are laudable, the means by which it pursues those goals raise serious concerns about fiscal responsibility, government expansion, and policy efficiency. The bill would significantly grow the footprint of state government in higher education, adding a new publicly funded medical institution with a long-term dependency on taxpayer dollars.

The fiscal implications are particularly troubling. The bill carries an estimated $25 million cost to the state over the next biennium, with annual expenditures increasing to nearly $38 million by 2034 as the institution scales. These costs come at a time when Texas is grappling with numerous other funding priorities and when legislators are focused on tax relief, infrastructure, and school finance. Without clear guarantees that the new institution will result in more physicians practicing in rural areas—the core justification for its creation—the fiscal commitment appears speculative at best.

Furthermore, Texas already has two existing osteopathic medical schools. Instead of duplicating programs and infrastructure, the state could more effectively allocate resources to expand capacity or incentivize rural practice through existing channels. HB 125’s creation of a third osteopathic college may dilute limited educational resources and introduce inefficiencies without substantially improving rural health outcomes.

For these reasons—significant taxpayer burden, unnecessary expansion of government, and uncertain effectiveness—HB 125 does not meet the criteria for responsible, limited, and efficient governance. As such, Texas Policy Research recommends that lawmakers vote NO on HB 125.

• Individual Liberty: The bill expands educational liberty by creating a new public option for medical education in Texas, particularly in the field of osteopathic medicine. This can be seen as increasing individual opportunity for students, especially those in underserved or rural areas who may not have access to medical training programs. However, the expansion comes at the cost of taxpayer funding, meaning individuals are compelled to finance the endeavor regardless of whether they benefit directly, which tempers the liberty gains.
• Personal Responsibility: The bill may encourage a culture of personal responsibility in healthcare by training more osteopathic physicians—doctors who often focus on holistic, preventive care. This aligns with the principle that individuals should take ownership of their health and wellness. However, without built-in incentives or requirements to serve in underserved areas, there's no guarantee that the bill’s intent to improve rural healthcare will materialize.
• Free Enterprise: While the bill allows for teaching hospitals to be operated by private entities, fostering some degree of public-private collaboration, it also creates a new publicly subsidized competitor in the higher education and healthcare training marketplace. This could distort the balance in a space where private medical institutions already operate, reducing the natural competitive pressure that often drives innovation and efficiency.
• Private Property Rights: The bill does not directly impact private property rights. Its provision for partnering with private or public entities for teaching hospitals is voluntary and does not involve eminent domain or regulatory restrictions that would interfere with property use. This neutrality keeps it aligned with the principle, but without actively advancing it.
• Limited Government: This is the area where the bill most clearly conflicts with liberty principles. The bill expands the scope and spending of state government by creating a new state-supported medical school. It increases the number of state employees, commits the legislature to long-term funding obligations, and duplicates services already offered by existing public and private institutions. These actions are counter to the principle that government should be restrained, efficient, and focused on essential functions only.

• HB 3197 (Same As)
• SB 1570 (Same As)