According to the Legislative Budget Board (LBB), HB 3941 would have a negative General Revenue-related impact of $11.1 million for the 2026–27 biennium. The estimated cost is $5.75 million in fiscal year 2026 and $5.39 million in fiscal year 2027, with the same $5.39 million annual cost continuing through fiscal year 2030.

The largest cost driver is the bill’s expansion of extended foster care eligibility from age 21 to age 23. DFPS estimates that 250 youth would receive extended foster care services, producing an annual General Revenue cost of about $4.15 million. The LBB notes that federal funds are not available for this portion because federal foster care maintenance payments are limited to age 21.

The second major cost driver is increased use of transitional living services. DFPS estimates that 937 additional youth would access those services, at an estimated annual General Revenue cost of about $1.24 million. Federal funds are also not expected to offset this cost because the relevant federal grant is capped and has decreased in recent fiscal years.

The bill also creates a one-time technology cost in fiscal year 2026. DFPS anticipates needing to modify the IMPACT system to reflect the expanded eligibility, re-entry into transitional services, Medicaid data processing, and reporting updates. The LBB estimates those technology costs at $353,764 in All Funds in fiscal year 2026. The fiscal note assumes any HHSC costs can be absorbed within existing resources and anticipates no fiscal impact to local governments.

Texas Policy Research recommends that lawmakers vote NO on HB 3941 because it grows the size and scope of state government, increases recurring taxpayer obligations, and expands agency-administered benefit programs without sufficient structural limits. The bill addresses a real and sympathetic policy concern: young adults aging out of foster care may face housing instability, healthcare gaps, and difficulty accessing workforce or education support. However, the bill’s chosen mechanism is a direct expansion of state services, eligibility periods, Medicaid access, contractor obligations, and agency rulemaking authority.

The bill clearly grows the scope of government. It extends foster care eligibility from age 21 to age 23, extends transitional living services through age 23, and extends Medicaid coverage for current and former foster youth to age 26. It also requires HHSC to provide Medicaid to qualifying former foster youth regardless of income, assets, or resources, and grants the HHSC executive commissioner rulemaking authority to implement that requirement. These provisions move the state beyond temporary child welfare custody and into a longer-term support role for legal adults, creating a broader state-administered safety-net framework.

The bill also increases the burden on taxpayers. The LBB estimates a negative General Revenue-related impact of $11,149,282 for the 2026–27 biennium, with recurring annual General Revenue-related costs of $5,394,928 from fiscal year 2027 through fiscal year 2030. The largest annual cost is projected extended foster care services for 250 youth, estimated at $4,153,408 in General Revenue each year. Federal funds are not available for that cost because federal foster care maintenance payments are limited to age 21. DFPS also estimates that 937 additional youth would use transitional living services, at an estimated $1,241,520 in General Revenue annually, with no federal offset expected because the relevant federal grant is capped and has declined in recent fiscal years.

The bill does not appear to impose a broad regulatory burden on individuals or private businesses generally. It does not create a criminal offense, increase criminal penalties, or restrict private conduct. However, it does increase obligations within the state-contracted service system. DFPS contractors providing transitional living services would be required to provide or assist eligible youth in obtaining additional housing and utility support, including for youth attending higher education or vocational programs and for youth employed full time while gaining life skills. That is not a general private-sector regulatory burden, but it is an expanded state-directed service requirement for entities contracting with DFPS.

The bill’s objective is understandable, but it relies on expanding public programs rather than narrower alternatives such as time-limited pilots, private charitable partnerships, employment-based supports, deregulation of housing barriers, or outcome-based grants with strict spending caps. The absence of strong means testing, firm fiscal limits, sunset review, or statutory constraints on agency discretion makes the bill difficult to justify under limited-government principles. On balance, the bill would increase government dependency, expand state administrative responsibility, and commit taxpayers to recurring costs; those concerns outweigh the bill’s targeted benefits.