According to the Legislative Budget Board (LBB), HB 2196 is estimated to have a negative net impact on General Revenue–Related funds of approximately $62.6 million over the 2026–2027 biennium, with continuing annual costs in the $28–$32 million range through 2030.

A substantial portion of the cost stems from increased enrollment eligibility in the Foundation School Program (FSP), as the bill allows school districts to count students enrolled in remote or hybrid programs toward ADA. The Texas Education Agency (TEA) projects that 3,000 additional students will be funded annually under this new model, leading to direct FSP costs of over $22 million each year. Additionally, there is an expected decrease in recapture (i.e., "Robin Hood") revenue of around $600,000 to $1 million annually due to adjustments in attendance-based funding metrics.

TEA also anticipates administrative and technology-related expenditures to implement the bill. This includes the hiring of nine full-time staff members and the development of IT systems, with projected tech costs totaling $1.3 million in FY 2026 and $3.5 million in FY 2027. A further $5 million per year is allocated to grants and technical assistance for school districts and charter schools to establish high-quality virtual campuses. These grants aim to support equity in implementation and capacity-building across districts of varying sizes and resources.

While the bill authorizes school districts to charge tuition for out-of-district students, providing potential local revenue offsets, this is unlikely to mitigate the broader state-level cost impact. The bill's overall fiscal approach prioritizes expanding access and continuity of learning—especially in emergencies—while accepting increased public investment in virtual education infrastructure. Local districts may experience additional costs in adapting or launching programs to comply with the new Chapter 30B requirements.

HB 2196 represents a thoughtful and forward-looking reform to Texas’s virtual education framework. It responds to the growing demand for flexible learning environments by empowering school districts and open-enrollment charter schools to develop their own hybrid and virtual programs. The bill also preserves student and parent choice, safeguards teacher autonomy, and replaces the centralized Texas Virtual School Network with a more decentralized and locally driven model. These reforms align well with the principles of Individual Liberty and Personal Responsibility, offering families and educators the tools to customize education in ways that better reflect their needs and values.

The bill also includes important accountability mechanisms for quality assurance, student eligibility, and educator preparation. However, the scope of authority delegated to the Commissioner of Education—particularly around provider eligibility and rulemaking—could result in administrative overreach if not checked by clearer legislative parameters. Additionally, the fiscal note projects a negative impact exceeding $62 million through FY 2027, primarily from expanded eligibility for average daily attendance (ADA) funding and new grant programs. While these costs are tied to long-term investments in infrastructure and access, they highlight the need for cost containment strategies and phased implementation to ensure financial sustainability.

Because the bill effectively expands educational opportunity and modernizes policy in a direction consistent with liberty principles, Texas Policy Research recommends that lawmakers vote YES on HB 2196. However, the implementation details—especially those that touch on Limited Government and Free Enterprise—require refinement. For these reasons, we recommend that lawmakers also support targeted amendments that limit regulatory risk, protect competition, and ensure responsible fiscal stewardship.

• Individual Liberty: The bill advances individual liberty by expanding educational choices for students and families. By authorizing school districts and charter schools to create their own virtual or hybrid campuses and courses, the legislation provides families greater autonomy in selecting the learning environment that best meets their child’s needs. It explicitly prohibits districts from compelling students to enroll in virtual instruction and preserves parents’ right to choose in-person learning. These provisions protect the individual rights of both students and parents to determine their educational paths.

• Personal Responsibility: The bill fosters personal responsibility by enabling students to take greater ownership of their learning. Virtual and hybrid education requires self-direction, time management, and independent study—skills that strengthen personal accountability. The bill also allows for tailored instructional design, which can empower students to learn at their own pace and according to their needs, particularly those with disabilities or non-traditional learning styles. Teachers and schools are likewise held responsible for maintaining course quality and tracking student progress.

• Free Enterprise: The bill creates opportunities for private providers to participate in delivering virtual instruction through contracts with districts and charter schools. However, it grants the Commissioner of Education broad authority to evaluate and disqualify these providers based on performance without clear statutory criteria or an appeal process. While oversight is necessary, this provision risks limiting market competition and innovation. Amendments to clarify standards and protect due process would better align this section with free enterprise principles.

• Private Property Rights: While the bill does not directly address private property rights, it may have tangential impacts where it intersects with intellectual property. Districts may license or procure course content from private vendors, and clear protections for provider rights over their educational materials should be ensured in practice. However, no explicit threats or expansions to private property regulation are included in the bill itself.

• Limited Government: While the bill decentralizes virtual education delivery by allowing local entities to build their own programs, it simultaneously concentrates regulatory power in the hands of the Texas Education Agency (TEA) Commissioner. The Commissioner is given broad discretion to set rules, authorize or revoke campuses, and determine provider eligibility. Without statutory guardrails or legislative oversight this undermines the principle of limited government. Targeted amendments are needed to narrow this authority, improve transparency, and protect local innovation from regulatory overreach.

• SB 569 (Same As)