According to the Legislative Budget Board (LBB), HB 3700 is not expected to result in any significant fiscal impact to the State of Texas. The analysis assumes that the Texas Workforce Commission (TWC) can develop and implement the required procedures, systems, and reporting mechanisms for fraud, waste, and abuse prevention using existing budgeted resources. This indicates that the bill's operational directives fall within the commission’s current administrative capacity and funding allocations.

Similarly, there is no significant fiscal implication anticipated for local governments. Since the bill does not impose new mandates or compliance requirements on municipalities, counties, or other local jurisdictions, it avoids placing an unfunded burden at the local level. The scope of responsibility remains with the state agency and its directly affiliated contractors or grantees.

Overall, the fiscal evaluation reflects a low-risk financial profile for the legislation, reinforcing its practicality. By leveraging existing infrastructure within TWC, the bill aims to improve program integrity and accountability without requiring new appropriations or staffing expansions, which supports its alignment with fiscally conservative governance principles.

HB 3700 represents a positive and prudent step toward improving the accountability and integrity of programs administered by the Texas Workforce Commission (TWC). The bill requires TWC to implement systems and procedures to prevent, detect, and investigate fraud, waste, and abuse across its full range of programs and delivery partners. It also mandates the creation of accessible public reporting channels, including a web-based reporting option, and authorizes the commission to obtain the necessary tools and data to perform these functions.

The bill upholds key liberty principles, particularly those of limited government, personal responsibility, and individual liberty, by fostering efficient and transparent public program management. Furthermore, the fiscal note indicates no significant cost to the state or local governments, with implementation achievable under existing resources.

However, the bill would benefit from amendments that strengthen its clarity, accountability mechanisms, and public protections. Adopting these improvements would ensure long-term efficacy and legislative oversight while preserving the bill’s limited scope and operational flexibility.

Suggested Amendments:

• Implementation Benchmarks and Reporting Requirements: Require TWC to adopt and implement procedures within six months of the effective date. Mandate annual reporting to the Legislature on the volume of reports, outcomes of investigations, and recovered funds.
• Definition Clarity: Define key terms such as “fraud,” “waste,” and “abuse.” Clarify what constitutes "program administration" to help delineate the scope of responsibility.
• Referral and Enforcement Protocols: Require TWC to refer substantiated cases to law enforcement or prosecutorial authorities. Establish internal penalties or suspension provisions for contractors or grantees who commit fraud.
• Whistleblower Protections: Prohibit retaliation against individuals who report suspected fraud in good faith. Reference applicable state whistleblower protections to strengthen enforcement.
• Independent Oversight: Require periodic independent audits or third-party evaluations of the fraud detection and prevention systems to ensure continued effectiveness and impartiality.

Texas Policy Research recommends that lawmakers vote YES on HB 3700, while also suggesting lawmakers improve the bill by considering the amendments described above. The bill addresses a clear statutory gap and improves the integrity of workforce-related programs with minimal fiscal burden. The proposed amendments would provide greater clarity, transparency, and accountability—ensuring this legislation fulfills its purpose and strengthens public trust.

• Individual Liberty: By creating systems to prevent and investigate fraud, waste, and abuse, the bill safeguards public trust and ensures that programs intended to support workforce development are used for their legitimate purpose. This protects individuals who rely on these services from being undermined by bad actors. Additionally, the inclusion of anonymous public reporting via TWC’s website empowers individuals to participate in civic oversight without fear of retaliation—a meaningful enhancement to democratic participation and free expression.
• Personal Responsibility: The bill encourages a culture of accountability by requiring TWC contractors, grantees, and participants to adhere to program guidelines and ethical standards. Those who misuse public resources risk detection and possible legal or administrative consequences. This aligns with the principle that individuals and institutions should be responsible for their actions and subject to consequences when they breach public trust.
• Free Enterprise: The bill does not introduce new regulations on businesses, but it does help ensure a fair and ethical competitive environment for contractors and grantees of TWC. By preventing fraud and abuse, the bill helps eliminate unfair advantages gained through dishonest practices, thereby supporting market fairness. Honest vendors and service providers benefit from a more level playing field.
• Private Property Rights: The bill does not alter or infringe on private property rights. It remains neutral on issues involving the use, ownership, or transfer of private property.
• Limited Government: Rather than growing bureaucracy or expanding government services, the bill enhances internal oversight and leverages existing resources to improve program integrity. It authorizes the use of information and technology for efficiency but does not create new agencies or broad regulatory frameworks. This is a clear example of limited government exercising its duty to protect taxpayer resources without expanding its footprint.