Honorable Phil King, Chair, Senate Committee on Economic Development
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB1950 by Creighton (relating to the eligibility of certain individuals for unemployment
benefits and the validity of certain claims for unemployment
benefits submitted to the Texas Workforce Commission.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for SB1950, Committee Report 1st House, Substituted: a negative impact of ($2,739,523) through the biennium ending August 31, 2027.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five- Year Impact:
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2026
($2,739,523)
2027
$0
2028
$0
2029
$0
2030
$0
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Probable Savings from UNEMPLOYMENT TRST FND ACCT 938
Change in Number of State Employees from FY 2025
2026
($2,739,523)
$148,183,521
17.0
2027
$0
$222,275,282
0.0
2028
$0
$222,275,282
0.0
2029
$0
$222,275,282
0.0
2030
$0
$222,275,282
0.0
Fiscal Analysis
The bill would amend the Labor Code to modify the eligibility requirements for unemployment benefits and increase the validity checks on unemployment benefit claims submitted to the Texas Workforce Commission (TWC).
The bill would add a requirement for a minimum of five work search activities per week, specify the types of activities that can be counted as a work search activity, increase the required number of calendar quarters with benefit wage credits from two to three, adds criteria that can be used as a reason for disqualification from benefits, and increase the amount of required earned wages between benefit years from six times the weekly benefit to 37 times.
The bill would require TWC to establish by rule, a process to verify an individual's identity using a statistically valid and unbiased methodology which must be audited annually to assess the methodology's effectiveness.
The bill would take effect January 1, 2026.
Methodology
Under current law, individuals who file for Unemployment Insurance (UI) benefits must be actively seeking work, have two calendar quarters of benefit wage credits and have earned wages of an amount equal to not less than six times the individuals benefit's amount.
Based on the analysis of TWC, changes under the bill's provisions to require claimants to have wages in three quarters instead of two to establish a payable claim and that claimants filing claims in successive years earn 36 times their new weekly benefit payment rather than six times under current law would result in an estimated annual savings of $222.3 million to the Unemployment Compensation Fund (Unemployment Trust Fund) due to estimated reductions in benefits payments from the account. Savings for fiscal year 2026 are estimated to be a prorated $148.2 million due to the bill taking effect on January 1, 2026.
According to TWC, implementing the bill's provisions would require modifications to the UI mainframe computer system and the online Unemployment Benefits system to alter existing requirements for work search activities, increase the minimum benefits wage credits requirement, raising the minimum earnings requirement between benefits periods, and cross-checking claims against multiple state and federal databases. The agency would require an additional 17.0 information technology support staff in fiscal year 2026 totaling $2,739,523 in General Revenue funding to implement these modifications.
Technology
The bill would require modifications to the UI mainframe computer system and the online Unemployment Benefits system with costs as identified above.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
304 Comptroller of Public Accounts, 320 Texas Workforce Commission