HB12

HB12 adds scheduled efficiency audits for agencies subject to the Texas Sunset Act and strengthens public input, performance measurement and follow-up in Sunset reviews. Sunset is the Legislature’s process for reviewing whether agencies should continue and how they should improve. The bill does not itself close a particular agency, cut a particular program or guarantee savings. Final law; official history.

Public participation and performance: the Sunset Advisory Commission must explain how people can participate and, where practicable, seek input from interested parties. Each agency under review must post an opening notice and participation information on its website. Regulatory agencies must, where practicable, notify their license/certificate/authorization holders of a review hearing and seek their views; river authorities are exempt from that particular holder-notification/input requirement, not from the general website notice. Here, a regulatory agency is a constitutionally or statutorily created executive-branch body with statewide authority to grant, deny, renew, revoke or suspend an authorization to engage in an activity. (Sections 1–2.)

Sunset reports on regulatory agencies must analyze performance over the preceding 10 years or since the last review, whichever is longer. Reports must evaluate agency performance measures and targets, including whether they fit the agency’s mission and meaningfully assess its goals. After consulting the Legislative Budget Board, Sunset must recommend improvements to key measures and targets. This is not limited to targets printed in the appropriations act. (Sections 3–4.)

Limited follow-up review: Sunset may recommend a limited review before a regulatory agency’s next full Sunset review, and must recommend one when its recommendations identify rulemaking deficiencies or improvements. But the review takes effect only if the Legislature includes it in the agency’s legislation. It covers public participation and rulemaking, employee-conflict rules, efforts to identify unnecessary/ineffective/inefficient rules, and the specified improvement recommendations lawmakers adopt. The agency must report progress by September 1 of the odd-numbered year lawmakers specify; Sunset’s public report is due by January 1 of the following odd-numbered year. For example, a September 2027 agency deadline points to January 2029—not January 2028. There is no automatic six-year follow-up review for every regulator in the enacted law. (Section 5.)

A separate efficiency-audit program

The State Auditor must arrange an efficiency audit for each entity expressly subject to Sunset, except the 15 river authorities listed in Government Code 325.025(b). These include the Brazos, Lower Colorado, Trinity and other named authorities; their existing limited Sunset review is not abolished. This is not a requirement to audit every local government or every entity that happens to receive state money. The statutory list.

The auditor’s schedule requires Legislative Audit Committee approval. An agency’s audit falls in the two-year window starting September 1 four years before its scheduled Sunset abolition date. The bill required adoption of the schedule by January 1, 2026, not completion of all audits by that date. An agency need not also perform a legally required internal efficiency audit in a year when it receives this audit. (Sections 6–7.)

Audits examine whether money, staff, property, technology and other resources are used efficiently and effectively for program beneficiaries; whether resources are diverted from intended purposes; and whether programs duplicate, overlap or conflict with others. They must recommend potential savings and resource reallocations and identify opportunities involving consolidation, outsourcing or elimination of duplicate work. Those are subjects for evaluation and recommendations—not automatic orders to privatize or close services.

The State Auditor, working with the Legislative Budget Board, sets the scope. Subject to committee approval, the auditor decides whether to use its own staff or a private auditor; any private contract must be made by March 1 of the scheduled audit year. The State Auditor and budget board oversee private auditors, who are not subject to direction by the agency being audited. The audited agency pays the State Auditor’s determined audit costs promptly upon billing.

The audit, recommendations and report must go to the named state officials, legislative bodies and agency by November 1 of the audit year, and the State Auditor and agency must publish them online. Within 90 days after receiving the complete audit and recommendations, the agency head must deliver an implementation plan to the specified recipients. An agency may decline a recommendation, but must give a reasoned justification in its plan. (Section 6, new Government Code Chapter 327.)

Timing: HB12 took effect September 1, 2025. This summary describes the enacted requirements; it does not certify that every required audit, schedule or implementation plan has since been completed.