According to the Legislative Budget Board (LBB), the fiscal implications of SB 37 are projected to have a negative net impact of approximately $2.93 million to General Revenue-related funds over the 2026–2027 biennium. This cost is primarily associated with the establishment of new administrative functions at the Texas Higher Education Coordinating Board (THECB), specifically the creation of the Office of the Ombudsman and the expanded duties of the agency in conducting return-on-investment (ROI) reviews of academic degree programs.

To implement these functions, THECB anticipates the need for 11 full-time employees in fthe iscal year 2026, scaling down to 10 in subsequent years. These roles include a director, compliance analysts, legal support staff, data analysts, and IT personnel to manage program evaluations and ensure compliance tracking. The associated personnel and operational costs total approximately $1.5 million in FY2026 and $1.4 million annually thereafter.

In addition to staffing, ongoing technology-related costs are estimated at $100,000 per year, which will support the data collection, analysis, and reporting infrastructure necessary to execute the bill's mandates. Notably, the fiscal note assumes that public universities and systems can absorb costs related to curriculum reviews, program evaluations, and reporting through existing resources, with no anticipated need for new appropriations at the institutional level.

Finally, the bill includes provisions that could indirectly generate revenue through authorized civil penalties for noncompliance, although the fiscal note does not estimate any positive revenue impact from those penalties at this stage. There are also no significant fiscal impacts projected for local government entities. Overall, while the bill does not make an appropriation, it establishes legal authority for future funding to support its implementation.

SB 37 proposes a sweeping overhaul of public higher education governance in Texas, prioritizing workforce alignment, accountability, and ideological neutrality in curricula. Its framework would empower governing boards to oversee comprehensive curriculum reviews, enforce limitations on faculty governance, and approve or deny academic programs based on return-on-investment (ROI) metrics. The bill also creates an Office of the Ombudsman under the Texas Higher Education Coordinating Board (THECB) to investigate noncompliance and enforce civil penalties, reinforcing state-level oversight. While these objectives promote personal responsibility and transparency, the bill raises significant liberty concerns related to individual liberty, free enterprise, and limited government.

Most notably, the bill's content restrictions on general education—prohibiting instruction in identity politics and theories of systemic oppression—risk infringing upon academic freedom. While well-intentioned in curbing political bias, these provisions are overly broad and vague, potentially suppressing legitimate intellectual exploration and classroom discourse. Similarly, the extensive limits placed on faculty councils or senates, including their advisory-only role and prohibition from publishing statements outside that role, restrict traditional shared governance models and faculty expression.

From a fiscal standpoint, the bill will have a negative impact of approximately $2.9 million through the 2026–27 biennium, largely due to staffing needs and technology investments required for the ROI review process and the new ombudsman office. While institutions are expected to absorb some responsibilities within existing resources, the overall growth in state oversight mechanisms—especially investigatory and enforcement functions—raises concerns about bureaucratic expansion and government overreach.

To better align SB 37 with liberty principles while preserving its core goals, the following amendments are recommended:

• Clarify or remove ideological content restrictions (e.g., bans on identity politics and systemic theories) to prevent academic censorship and protect First Amendment rights within public institutions.
• Restore institutional autonomy by limiting the scope and authority of the Office of the Ombudsman. Its investigatory powers and civil penalty mechanisms should include checks, such as legislative review or independent advisory input.
• Reform faculty governance restrictions to permit meaningful input from faculty senates/councils, provided that transparency and accountability standards are met. Allowing greater participatory governance preserves academic tradition and supports institutional innovation.
• Include clearer standards for ROI evaluations to ensure diverse fields of study, particularly those in humanities and public service, are not arbitrarily penalized due to lower initial wage outcomes, and integrate qualitative educational value alongside financial metrics.
• Implement a phased compliance timeline for institutions and provide support to meet new reporting, review, and training mandates without immediate risk of penalties or funding constraints.

With these amendments, SB 37 could achieve its goals of enhancing efficiency and accountability in higher education without sacrificing fundamental liberties or academic integrity. Therefore, Texas Policy Research recommends that lawmakers vote NO on SB 37, unless amended as described above.

• Individual Liberty: The bill's most direct impact on individual liberty arises from its restrictions on curriculum content. By mandating that general education courses “not distort significant historical events” and forbidding instruction in “identity politics” or “theories of systemic oppression,” the legislation risks suppressing academic freedom and open inquiry. These provisions could have a chilling effect on faculty and students, limiting their ability to explore and debate complex social, political, and historical issues. Individual liberty includes freedom of thought and expression—rights especially vital in educational contexts—and this bill could encroach upon those freedoms in public institutions.
• Personal Responsibility: The bill promotes personal responsibility by requiring institutions to evaluate and reform programs based on their return on investment (ROI) and student debt levels. This approach encourages transparency about the value of degrees, helping students make informed choices about their education and financial futures. It also holds institutions accountable for offering programs that provide meaningful career pathways, reinforcing responsible stewardship of public resources and student time.
• Free Enterprise: The bill supports free enterprise by aligning academic offerings with workforce needs and economic outcomes. Encouraging programs with strong job market demand fosters a more dynamic and responsive education system. However, the bill's ideological content bans and the potential for penalizing programs based on narrowly defined ROI metrics may suppress intellectual diversity and innovation—both of which are crucial elements in a free market of ideas. Overregulating academic content could undermine the competitive, exploratory spirit that higher education contributes to broader enterprise and innovation ecosystems.
• Private Property Rights: The bill does not directly affect private property rights. It pertains to governance and operations of public institutions of higher education, and no provisions in the bill deal with property ownership, eminent domain, or property-related regulation.
• Limited Government: While the bill intends to improve accountability, it expands the power of the state in several significant ways. The establishment of an Office of the Ombudsman with investigatory powers, the imposition of civil penalties for noncompliance, and the centralization of curriculum authority in the hands of governing boards and THECB reflect a substantial increase in state oversight. These expansions, particularly when applied to academic content and governance, risk crossing from oversight into micromanagement. The principles of limited government caution against centralized control, especially when it may suppress institutional independence and voluntary self-governance.