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Signed Into Law
Signed June 20, 2025Effective 2025-06-20
HB3788

Regular Session

Relating to the operations of municipal hospital authorities.

Government Affairs & Regulatory Compliance Analysis

HB3788: Government Affairs Overview

HB 3788 immediately transforms Municipal Hospital Authorities (MHAs) from strictly hospital operators into broad public health financing entities capable of funding wellness, research, and administrative facilities even without owning a hospital. It simultaneously alters governance by strictly disqualifying authority employees from board service and granting boards autonomy over director selection.

Rep. David Spiller·House Bill·Regular Session

Moderate
Low Cost
Effective:2025-06-20
Enforcing Agencies

Municipal Hospital Authority Boards

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HB3788
Relating to the operations of municipal hospital authorities.
Moderate Urgency
Heavily Contested
House Vote118 - 23
YEA
NAY
84% in favor141 voting
Senate Vote28 - 3
YEA
90% in favor31 voting
26
Total Opposition Votes
Cost Impact
Low
Effective
2025-06-20
Enforcing Agencies
Municipal Hospital Authority Boards
Primary Author: Rep. David Spiller
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: June 20, 2025 (Immediate).
  • Compliance Deadline: Immediate. Authorities must currently be operating under these rules. Any sitting board member who is also an employee of the Authority is now ineligible and must vacate the voting seat immediately.
  • Agency Rulemaking: No state agency rulemaking is required. However, MHA Boards must adopt internal resolutions to define "wellness" initiatives and formalize director selection methods to operationalize the statute.

Immediate Action Plan

  • 1. Purge Ineligible Directors: Confirm no Authority employees currently hold voting board seats; vacate non-compliant seats immediately.
  • 2. Codify Selection Method: Pass a Board resolution establishing the specific method for selecting directors to lock in governance autonomy from the municipality.
  • 3. Update Bond Resolutions: Instruct bond counsel to draft templates citing Section 262.0331 for future revenue bonds backed by non-hospital assets.
  • 4. Inventory Assets: Evaluate real estate and capital for conversion to "wellness" or "research" facilities now eligible for financing.

Operational Changes Required

Contracts

  • Trust Indentures: Legal counsel must review existing indentures to ensure they do not prohibit changes to the number of directors or the new selection methodologies.
  • Grant Agreements: New standardized agreements must be drafted for funding non-profits. These contracts must explicitly tie funding to "public health benefits" to satisfy the expanded statutory scope.
  • Bond Resolutions: New resolutions authorizing debt must cite Section 262.0331 as the enabling authority for non-hospital facility bonds.

Hiring/Governance

  • Board Audit: You must immediately audit the Board of Directors roster. Employees of the Authority are statutorily ineligible to serve as directors. If the CEO or Executive Director holds a voting seat, they must resign from the Board immediately.
  • Director Selection: The Board must pass a resolution or enter a trust indenture agreement to prescribe the method for selecting directors and their terms.

Reporting & Record-Keeping

  • Justification Resolutions: For every non-hospital project (e.g., fitness centers, research facilities), the Board must adopt a formal resolution detailing how the project "promotes wellness" or "prevents disease." This creates the necessary administrative record to defend the tax-exempt status and statutory validity of the expenditure.

Fees & Costs

  • Legal & Administrative: Budget for immediate legal counsel fees to amend bylaws and review bond indentures.
  • Revenue Streams: Revenue bonds may now be secured by non-hospital revenue streams (e.g., gym memberships, office leases), requiring new financial modeling by underwriters.

Strategic Ambiguities & Considerations

"Promote Wellness" & "General Welfare"

The statute allows funding for activities that "improve public health, promote wellness, prevent disease, or enhance general welfare." These terms are not defined in the text.

  • The Risk: Without strict definitions, funding projects with tenuous healthcare connections (e.g., public parks, housing) invites legal challenges regarding scope creep or misuse of funds.
  • The Fix: Boards must define these terms strictly within their authorizing resolutions to withstand scrutiny before releasing funds.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Mar 5, 2025
Passed House
May 14, 2025
Passed Senate
May 21, 2025
Signed
Jun 20, 2025
Effective
Jun 20, 2025
TopicsSpecial Districts & AuthoritiesSpecial Districts & Authorities--hospitalBonds
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House Authors

Rep. David SpillerRepublican · Primary Author
Joint Authors

Senate Sponsor

Sen. Tan ParkerRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

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Quick Reference

Frequently Asked Questions

Common questions about HB3788

Q

What does Texas HB3788 do?

HB 3788 immediately transforms Municipal Hospital Authorities (MHAs) from strictly hospital operators into broad public health financing entities capable of funding wellness, research, and administrative facilities even without owning a hospital. It simultaneously alters governance by strictly disqualifying authority employees from board service and granting boards autonomy over director selection.

Q

Who authored HB3788?

HB3788 was authored by Texas Representative David Spiller during the Regular Session.

Q

When was HB3788 signed into law?

HB3788 was signed into law by Governor Greg Abbott on June 20, 2025.

Q

Which agencies enforce HB3788?

HB3788 is enforced by Municipal Hospital Authority Boards.

Q

How significant are the changes in HB3788?

The regulatory priority for HB3788 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of HB3788?

The cost impact of HB3788 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does HB3788 address?

HB3788 addresses topics including special districts & authorities, special districts & authorities--hospital and bonds.

Q

What are the key dates for HB3788?

Key dates for HB3788: Effective date is 2025-06-20. Consult with legal counsel regarding applicability.

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JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026