Overall Vote Recommendation

Vote Yes; Amend

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

SB 1950 seeks to revise and tighten the eligibility criteria for individuals applying for unemployment benefits through the Texas Workforce Commission (TWC). The bill proposes amendments to Section 207.021 of the Texas Labor Code, among others, to strengthen work search requirements, increase wage and work history thresholds, and implement enhanced fraud prevention protocols.

A core component of the bill is the expansion of the "actively seeking work" requirement. Claimants must now complete a combination of at least five verified work search activities per week, including job applications, interviews, attending job fairs, or completing approved training programs. Additionally, applicants must undergo identity verification under a fraud risk assessment methodology established by TWC rules, with mandatory annual audits to ensure integrity.

The bill also raises the bar for financial eligibility. Applicants must now have earned wages in at least three calendar quarters during their base period (increased from two) and must have earned at least 37 times their weekly benefit amount in wages after their most recent benefit year (up from six times). Finally, SB 1950 introduces new disqualification criteria, allowing benefits to be denied if an applicant fails, without good cause, to attend a scheduled job interview or respond to a potential employer’s request.

Overall, the legislation is designed to reduce fraud, promote workforce reentry, and safeguard the unemployment insurance trust fund, while shifting more responsibility to the claimant to prove active job seeking and legitimate eligibility.

The Committee Substitute for SB 1950 refines and reorganizes the originally filed version to place greater emphasis on front-end identity verification and procedural integrity within the unemployment insurance system. While both versions seek to enhance eligibility criteria and reduce fraud, the substitute version introduces new regulatory mechanisms requiring the Texas Workforce Commission (TWC) to adopt an unbiased, statistically valid fraud risk methodology, conduct annual audits of that system, and establish identity verification rules based on government-issued identification. This contrasts with the filed version’s more technical and data-driven approach, which focused on cross-checking claims against a list of federal and state databases such as the National Directory of New Hires, prison records, and death registries.

Structurally, the substitute version embeds these verification procedures directly into the eligibility criteria under Section 207.021 of the Labor Code, making identity validation a prerequisite to receiving benefits. The originally filed bill, by contrast, created a new standalone section under Chapter 208 to handle claim validity checks as a back-end process. This reorganization reflects a shift in legislative strategy—from reactive detection of fraud to proactive prevention by requiring claimants to meet specific verification benchmarks before qualifying for aid.

Additionally, the originally filed version includes detailed enforcement provisions, such as immediate benefit suspension upon confirmation of invalid claims and an explicit requirement to cross-reference multiple national datasets. These specifics are not retained in the Committee Substitute, which favors a more generalized mandate with rulemaking authority left to the commission. Similarly, while both versions enhance penalties for willful misrepresentation, the substitute simplifies and moves these provisions without highlighting them as prominently.

Overall, the Committee Substitute aims to streamline and enforce tighter eligibility standards upfront, rather than build out more extensive infrastructure for backend fraud detection, while delegating much of the implementation detail to TWC rulemaking.

Author

Brandon Creighton

Contact the Author

Sen. Brandon Creighton

Capitol Phone:

(512) 463-0104

Capitol Office:

EXT E1.606

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

According to the Legislative Budget Board (LBB), the fiscal implications of SB 1950 reflect a trade-off between upfront administrative costs and long-term savings to the state's Unemployment Trust Fund. According to the Legislative Budget Board's fiscal note, implementing the bill would result in a one-time General Revenue Fund cost of approximately $2.74 million in Fiscal Year 2026. This cost stems largely from the need for system upgrades and staffing, specifically, the Texas Workforce Commission (TWC) would require 17 new information technology support staff to modify the unemployment insurance mainframe and online benefits system to comply with new eligibility and verification requirements.

These changes include enforcing more stringent work search criteria, raising the number of qualifying calendar quarters from two to three, and increasing the earnings threshold between benefit years from six times to 37 times the weekly benefit amount. Additionally, the bill mandates that TWC implement a statistically valid and unbiased identity verification methodology, subject to annual audits, further increasing the complexity and resource demands on the agency.

Despite the up-front administrative costs, the bill is projected to generate substantial savings over time. TWC estimates that the new eligibility restrictions and verification procedures would reduce benefit payouts by approximately $222.3 million annually from the Unemployment Trust Fund. Because the bill takes effect mid-fiscal year on January 1, 2026, the first year’s savings are prorated to about $148.2 million. These savings are expected to continue in full in subsequent years, delivering consistent reductions in trust fund expenditures through at least FY 2030.

Importantly, the bill does not directly impact local governments and does not authorize any new appropriations, though it may serve as the legal foundation for future ones. From a budgetary perspective, SB 1950 is designed to reduce long-term liabilities on the unemployment system while requiring moderate, short-term investments to modernize administrative processes.

Vote Recommendation Notes

SB 1950 introduces significant reforms to Texas's unemployment insurance system, aiming to enhance program integrity, reduce fraudulent claims, and ensure that benefits are directed toward individuals actively seeking employment. The bill mandates that claimants engage in a minimum of five specific job search activities weekly, such as submitting job applications, attending job fairs, or participating in job training programs. Additionally, it requires the Texas Workforce Commission (TWC) to implement rigorous identity verification processes, including cross-referencing claims against various state and federal databases, and mandates the use of government-issued identification for certain claimants.

From a fiscal perspective, the bill is projected to yield substantial long-term savings to the Unemployment Trust Fund by curbing improper payments. However, it necessitates a one-time expenditure of approximately $2.74 million from the General Revenue Fund to cover implementation costs, including system upgrades and additional staffing for the TWC.

While the bill strengthens the accountability and sustainability of the unemployment insurance system, it also expands the operational scope of the TWC and imposes more stringent requirements on claimants. These changes could potentially increase the administrative burden on both the agency and individuals seeking benefits.

Given these considerations, Texas Policy Research recommends that lawmakers vote YES on SB 1950 but advocate for amendments that ensure the new requirements are implemented efficiently and without unnecessary complexity. Such amendments could include provisions for periodic review of the verification processes to assess their effectiveness and impact, as well as measures to streamline administrative procedures. These adjustments would help balance the goals of fraud prevention and program integrity with the principles of limited government and efficient administration.

Individual Liberty: The bill introduces more stringent eligibility criteria and identity verification rules, which some may view as infringing on individual freedom to access public benefits. However, since unemployment insurance is not a right but a conditional, government-administered benefit, these conditions do not directly violate individual liberty in a constitutional sense. The bill focuses on ensuring that only qualified individuals receive benefits, which protects the collective liberty of taxpayers and honest claimants.
Personal Responsibility: The bill reinforces personal accountability by requiring claimants to engage in verifiable job search activities and disqualifying those who do not respond to interview requests. It also requires individuals to meet higher wage and work history thresholds before qualifying or requalifying for benefits. These provisions promote a return-to-work mindset and discourage misuse of the system.
Free Enterprise: By tightening access to unemployment benefits, the bill discourages long-term dependency and incentivizes individuals to re-enter the workforce. This promotes a more dynamic labor market and reduces artificial distortions caused by improperly awarded benefits. Employers also benefit from a healthier Unemployment Trust Fund, which could stabilize or reduce unemployment insurance tax rates over time.
Private Property Rights: The bill does not create or limit any new claims on private property. However, by curbing fraudulent claims, it protects the financial interests of businesses that fund the unemployment system through payroll taxes.
Limited Government: While the bill seeks to make government more efficient, it also expands the scope and administrative complexity of the Texas Workforce Commission. It authorizes the creation of new verification systems, fraud risk assessments, audits, and staffing increases. These additions represent a growth in government oversight, even if aimed at enforcing program integrity. Without clear limits or sunset provisions, this expansion could challenge the principle of a restrained and narrowly focused government.

View Bill Text and Status