SB2237

The covered executive categories are a political subdivision’s chief executive officer other than a school district’s, an agency or department head, a school district superintendent, and an open-enrollment charter school chief executive. The bill does not apply its executive contract limits to every public employee or to private-sector employees. “Severance pay” means dismissal or separation income in addition to the employee’s usual earnings at termination. Final law, new Local Government Code 180.011(a)–(b).

When a political subdivision enters, renews or renegotiates an executive employment agreement containing severance, it must include a cap on severance paid from tax revenue: compensation at the termination-date rate for 20 weeks, excluding paid time off or accrued vacation leave. It must also prohibit severance for termination due to misconduct; that prohibition is not limited in the text to tax-funded payments. “Misconduct” is an act or omission in performing duties that the governing body determines is misconduct and includes a finding of criminal conduct. A criminal conviction is not the only possible basis. Final law, 180.011(a), (c).

The political subdivision must post each severance agreement prominently on its website. In an executive’s lawsuit against the subdivision arising from termination, a court cannot issue a writ of execution or mandamus—specified court enforcement orders—in connection with a judgment that does not comply with this section. The act applies only to an employment agreement entered into or an action filed on or after September 1, 2025. Because the law separately addresses actions and expressly includes renewals and renegotiations, its transition is not simply a rule about the employee’s original hire date. Final law, 180.011(d)–(e) and sections 2–3.

This act does not repeal other existing requirements. For example, Local Government Code 180.007 requires a public hearing before certain payments above a contractual amount, and Education Code 11.201(c) requires superintendent-severance reporting and reduces school funding for the specified excess over one year’s salary and benefits. Those older provisions are not permission to disregard the new 20-week tax-funded cap. Existing excess-payment hearing rule; Existing superintendent rule; Final law.

Changes during passage: The five posted versions have the same operative provisions. Both committees reported without amendments; the official amendment index lists none. Introduced; Senate committee; Senate-passed; House committee; Final law; Version index; Amendment index.

Compare the published text versions in the official text index. A change is not attributed to a specific amendment here without a verified record.

The limits can reduce exposure to large tax-funded executive exit payments and make agreements easier for the public to inspect. Executives and local governments have less flexibility to negotiate covered severance, and misconduct determinations matter. The act does not guarantee savings or require an employer to pay 20 weeks; that figure is a ceiling, not an entitlement. Final law.

The March 28 fiscal note anticipates no significant state or local fiscal implication and assumes costs can be absorbed within existing resources. It does not estimate actual severance savings; the act makes no appropriation. Fiscal note.