According to the Legislative Budget Board (LBB), HB 741 would have a negative two-year net impact of $3,012,732 on General Revenue Related Funds through the biennium ending August 31, 2027. The estimated General Revenue cost is $1,262,821 in fiscal year 2026 and $1,749,911 in fiscal year 2027, with projected annual costs increasing each year through fiscal year 2030.

The main cost driver is the bill’s requirement that DFPS provide monetary assistance or additional day-care services to qualifying relative or designated caregivers for children under age 13, or under age 18 if the child has a developmental disability. DFPS expects the expanded eligibility to increase relative day-care use by 17 percent, primarily because the bill includes certain youth ages 7 to 17. LBB assumes a three-month start-up period and estimates 137 additional recipients in fiscal year 2026 and 181 additional recipients each fiscal year beginning in fiscal year 2027.

LBB also notes that some fiscal implications cannot be determined. Specifically, the cost of reimbursing all day-care expenses while DFPS is the child’s managing conservator cannot be estimated because DFPS cannot accurately determine the number of children with developmental disabilities. LBB also cannot determine the fiscal effect of providing monetary assistance retroactively to caregivers because it is uncertain how many individuals would qualify for payments or services.

The fiscal note assumes any costs to the Health and Human Services Commission could be absorbed within existing resources. No fiscal implication to local governments is anticipated.

Texas Policy Research recommends that lawmakers vote YES on HB 741 while also considering amendments to strengthen the bill. HB 741 has a legitimate limited-government purpose because it restrains the Department of Family and Protective Services from removing a child from certain close-relative caregiver placements before less disruptive steps have been used, when applicable. In simple terms, the bill tells DFPS that if a child is already placed with a close relative, the department should generally investigate the concern, provide services or resources, or issue warnings before removing the child, unless an emergency, court order, reunification with a parent, placement with another relative, or interference with the parent-child relationship justifies action. This is a meaningful check on administrative discretion and supports family-based care over unnecessary state-directed placement disruption.

However, the bill does grow the scope of government in a targeted way. It expands DFPS’s role in providing information about financial benefits to relative and designated caregivers, including information about verification as an agency foster home and permanency care assistance. It also creates broader eligibility for day-care monetary assistance or additional support services for certain caregivers, including those who work at least 20 hours per week, have a diagnosed disability limiting full-time child care, or are over age 65. DFPS must also verify eligibility and confirm that the caregiver attempted to locate appropriate community-based day-care services.

The bill also increases the burden on taxpayers. The LBB estimates a negative General Revenue impact of $3,012,732 for the 2026–27 biennium, with annual General Revenue costs rising from $1,262,821 in fiscal year 2026 to $2,025,738 by fiscal year 2030. The principal cost driver is expanded caregiver eligibility for day-care assistance, which DFPS expects will increase relative day-care use by 17 percent due to the inclusion of certain youth ages 7 to 17.

There is also unresolved fiscal exposure. LBB states that the cost of reimbursing all day-care expenses while DFPS is the child’s managing conservator cannot be determined because DFPS cannot accurately estimate the number of children with developmental disabilities. LBB also states that the cost of providing monetary assistance retroactively to caregivers cannot be determined because it is uncertain how many individuals would qualify for payments or services. That uncertainty is a significant concern because the bill applies to caregiver assistance agreements entered into before, on, or after the effective date.

The bill does not appear to increase the regulatory burden on private businesses in any broad or direct way. It does not impose new licensing, permitting, wage, employment, land-use, or operational mandates on private firms. The primary compliance burden falls on DFPS and on caregivers seeking state assistance, who would have to satisfy eligibility and verification requirements. For individuals, the bill is mixed: it reduces coercive state action by limiting certain removals from relative caregivers, but it also conditions day-care assistance on documentation and verification.

The bill analysis explains that the substitute removed the introduced version’s broader expansion of caregiver assistance, including provisions that would have removed need-based eligibility criteria, increased the amount of monetary assistance, and removed time limits on assistance. Instead, the substitute focuses on financial-benefit information, targeted day-care eligibility, and verification.

The bill should be amended to limit taxpayer exposure and administrative discretion. Recommended amendments should include narrowing or removing retroactive application, capping expanded assistance within appropriated amounts, requiring annual reporting on recipients and costs, placing core verification standards in statute rather than leaving them primarily to agency implementation, and adding a sunset or review trigger if costs exceed projections. These changes would preserve the bill’s strongest liberty benefit, protecting relative placements from unnecessary state disruption, while better controlling government growth, taxpayer risk, and long-term program expansion.