SB2237

Regular Session

Relating to severance pay for certain political subdivision employees.

CriticalImmediate action required

Low Cost

Effective:2025-09-01

Enforcing Agencies

Texas Civil Courts • Governing Bodies of Political Subdivisions (School Boards, City Councils, etc.)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025.
Compliance Deadline: September 1, 2025. (Applies immediately to any contract entered into, renewed, extended, or renegotiated on or after this date).
Agency Rulemaking: No state-level rulemaking is mandated. However, local governing bodies (School Boards, City Councils) must establish internal protocols for determining "misconduct" prior to the effective date to avoid litigation.

Immediate Action Plan

Audit Contracts: Immediately identify all executive contracts expiring or renewing after September 1, 2025.
Finalize Pending Deals: Execute any long-term contracts currently under negotiation *before* September 1, 2025, to lock in pre-statute terms if necessary.
Update Web Ops: Direct IT/Communications to create the compliance landing page for posting severance agreements.
Revise Bylaws: Ensure the governing body has a procedural mechanism to vote on and record "misconduct" findings.

Operational Changes Required

Contracts

Template Overhaul: All standard executive employment agreements must be redrafted to explicitly cap severance at 20 weeks of compensation.
Misconduct Clause: Contracts must include a mandatory provision stating that no severance will be paid if the employment is terminated for misconduct.
Renewal Review: Audit all existing "evergreen" or automatic renewal clauses. If a contract automatically renews after September 1, 2025, it must be amended to comply with the new cap.

Hiring/Training

Negotiation Hard Stop: Legal and HR negotiation teams must be instructed that the 20-week cap is a statutory bar and cannot be waived or negotiated away.
Board Protocol: Governing bodies must be trained on the requirement to formally document findings of "misconduct" in the official record before denying severance.

Reporting & Record-Keeping

Public Transparency: Entities must post the full text of every executive severance agreement on their public-facing website. This must be a prominent posting, not buried in meeting minutes.
Calculation Audit: Payroll must maintain records distinguishing "severance" from accrued PTO or vacation pay, as the latter are generally excluded from the 20-week cap calculation.

Fees & Costs

No New State Fees.
Litigation Risk: While severance payouts will decrease, anticipate increased legal costs associated with defending "misconduct" determinations, as terminated executives will litigate this classification to unlock severance eligibility.

Strategic Ambiguities & Considerations

Definition of "Misconduct": The statute allows the governing body to determine what constitutes misconduct but does not define the standard.
*Risk:* If a Board defines misconduct subjectively at the time of firing, it invites a wrongful termination suit.
*Strategy:* Define "misconduct" explicitly within the four corners of the employment contract to align with the statute, reducing ambiguity.
Scope of "Department Head": The law applies to "agency or department heads" without defining the organizational hierarchy.
*Risk:* Inconsistent application to Assistant Directors or sub-department chiefs.
*Strategy:* Adopt a formal policy defining exactly which titles constitute a "Department Head" for Chapter 180 compliance purposes.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsCity Government City Government--employees/officers County Government County Government--employees/officers Political Subdivisions

Official Analysis

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BILL ANALYSIS

Senate Research Center	S.B. 2237
89R8420 DNC-D	By: Bettencourt
	Local Government
	3/28/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Many public executive employee contracts include "golden parachutes"�payout clauses that can result in substantial taxpayer-funded payments, even in cases of misconduct or poor performance. So public executive employees are receiving taxpayer-funded severance payouts worth hundreds of thousands of dollars.

S.B. 2237 restricts political subdivisions from providing severance pay to executive employees beyond 20 weeks of compensation, prohibits severance pay entirely if the employee is terminated for misconduct, and requires severance agreements to be publicly posted for transparency.

As proposed, S.B. 2237 amends current law relating to severance pay for certain political subdivision employees.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 180, Local Government Code, by adding Section 180.011, as follows:

Sec. 180.011. LIMITATION ON SEVERANCE PAY FOR EXECUTIVE EMPLOYEES. (a) Defines "misconduct" and "severance pay."

(b) Provides that a person is an executive employee of a political subdivision for purposes of this section if the person is a chief executive officer of a political subdivision other than a school district, an agency or department head, or the superintendent of a school district or the chief executive officer of an open-enrollment charter school.

(c) Requires a political subdivision that enters into an employment agreement, or renewal or renegotiation of an existing employment agreement, that contains a provision for severance pay with an executive employee to include a requirement that severance pay that is paid from tax revenue is prohibited from exceeding the amount of compensation, at the rate at the termination of employment, the executive employee would have been paid for 20 weeks, excluding paid time off or accrued vacation leave and a prohibition of the provision of severance pay when the executive employee is terminated for misconduct.

(d) Requires a political subdivision to post each severance agreement in a prominent place on the political subdivision's Internet website.

(e) Provides that this subsection applies to an action brought against a political subdivision by an executive employee of the political subdivision arising from the termination of the person's employment. Prohibits a court from issuing a writ of execution or mandamus in connection with a judgment in the action if the judgment does not comply with this section.

SECTION 2. Makes application of this Act prospective.

SECTION 3. Effective date: September 1, 2025.

Senate Authors

Sen. Paul BettencourtRepublican · Primary Author

House Sponsor

Rep. Cecil BellRepublican · Primary Sponsor

Bill Text(with markup)

S.B. No. 2237

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to severance pay for certain political subdivision
	employees.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Chapter 180, Local Government Code, is amended
	by adding Section 180.011 to read as follows:
	Sec. 180.011. LIMITATION ON SEVERANCE PAY FOR EXECUTIVE
	EMPLOYEES. (a) In this section:
	(1) "Misconduct" means an act or omission by an
	employee of a political subdivision in the performance of the
	employee's duties that the governing body of the political
	subdivision determines to be misconduct. The term includes any
	finding of criminal conduct.
	(2) "Severance pay" means dismissal or separation
	income paid on termination of the employment of an employee that is
	in addition to the employee's usual earnings from the employer at
	the time of termination.
	(b) A person is an executive employee of a political
	subdivision for purposes of this section if the person is:
	(1) a chief executive officer of a political
	subdivision other than a school district;
	(2) an agency or department head; or
	(3) the superintendent of a school district or the
	chief executive officer of an open-enrollment charter school.
	(c) A political subdivision that enters into an employment
	agreement, or renewal or renegotiation of an existing employment
	agreement, that contains a provision for severance pay with an
	executive employee must include:
	(1) a requirement that severance pay that is paid from
	tax revenue may not exceed the amount of compensation, at the rate
	at the termination of employment, the executive employee would have
	been paid for 20 weeks, excluding paid time off or accrued vacation
	leave; and
	(2) a prohibition of the provision of severance pay
	when the executive employee is terminated for misconduct.
	(d) A political subdivision shall post each severance
	agreement in a prominent place on the political subdivision's
	Internet website.
	(e) This subsection applies to an action brought against a
	political subdivision by an executive employee of the political
	subdivision arising from the termination of the person's
	employment. A court may not issue a writ of execution or mandamus
	in connection with a judgment in the action if the judgment does not
	comply with this section.
	SECTION 2. Section 180.011, Local Government Code, as added
	by this Act, applies only to an employment agreement entered into or
	an action filed on or after the effective date of this Act.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


March 28, 2025

TO:	Honorable Paul Bettencourt, Chair, Senate Committee on Local Government

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB2237 by Bettencourt (Relating to severance pay for certain political subdivision employees.), As Introduced

No significant fiscal implication to the State is anticipated.

It is assumed that any costs associated with the bill could be absorbed using existing resources.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:

212 Office of Court Administration, Texas Judicial Council

LBB Staff:

JMc, SZ, BC, CWi

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Frequently Asked Questions

Common questions about SB2237

What does Texas SB2237 do?

SB2237 imposes a strict statutory cap of 20 weeks on severance pay for executive employees of Texas political subdivisions (cities, counties, school districts) and strictly prohibits severance payments in cases of misconduct. Effective September 1, 2025, Texas courts are stripped of the authority to enforce severance judgments exceeding these limits, rendering non-compliant contract provisions legally void and unenforceable. Implementation Timeline Effective Date: September 1, 2025.

Who authored SB2237?

SB2237 was authored by Texas Senator Paul Bettencourt during the Regular Session.

When was SB2237 signed into law?

SB2237 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce SB2237?

SB2237 is enforced by Texas Civil Courts and Governing Bodies of Political Subdivisions (School Boards, City Councils, etc.).

How urgent is compliance with SB2237?

The compliance urgency for SB2237 is rated as "critical". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB2237?

The cost impact of SB2237 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB2237 address?

SB2237 addresses topics including city government, city government--employees/officers, county government, county government--employees/officers and political subdivisions.

Legislative data provided by LegiScanLast updated: November 25, 2025

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