SB2778

Regular Session

Relating to the amount of an expenditure that may be paid by an emergency services district employee without board approval.

ModeratePlan for compliance

Low Cost

Effective:2025-09-01

Enforcing Agencies

Board of Emergency Services Commissioners (Local District Level)

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

Effective Date: September 1, 2025
Compliance Deadline: August 31, 2025 (Board resolutions and bond adjustments must be executed *prior* to utilizing the new authority on September 1).
Agency Rulemaking: No state-level rulemaking is required. However, Local Boards must adopt internal resolutions to activate this authority; it is not automatic.

Immediate Action Plan

1. Immediate: Audit current fidelity bonds for District Administrators and Chiefs; compare against the District Treasurer’s bond amount.
2. July 2025: Secure quotes and bind increased coverage for authorized signatories.
3. August 2025: Place the "Resolution to Increase Expenditure Authority" on the Board Agenda for a vote.
4. August 2025: Update financial software approval workflows to go live September 1.
5. September 2025: Issue the first "Ratification Report" format to the Board for review.

Operational Changes Required

Contracts

Vendor MSAs: Review Master Service Agreements. Remove "Subject to Board Approval" clauses for purchases under $50,000 to facilitate faster payment terms (e.g., moving from Net-45 to Net-30).
Employment Agreements: Update contracts for District Administrators and Fire Chiefs. Explicitly define the $50,000 signing authority and the specific consequences for exceeding this limit without board consent.

Hiring/Training

Fidelity Bonding (CRITICAL): The statute conditions this authority on the employee executing a bond "in an amount equal to the amount required for the district treasurer." You must increase the bond coverage for any employee granted this authority to match the treasurer's bond or the new expenditure limit, whichever is higher.
Internal Controls: Train Accounts Payable staff to reset approval triggers in financial software from $2,000 to $50,000.

Reporting & Record-Keeping

Board Resolutions: Draft and execute a specific resolution adopting the $50,000 limit. Relying solely on the statute is insufficient for governance purposes.
Ratification Logs: Implement a monthly "Ratification Report" for the Board to retroactively review all staff-approved expenditures between $2,001 and $50,000.
Audit Trails: Configure financial software to detect "structuring" (splitting invoices to bypass the $50,000 cap).

Fees & Costs

Insurance Premiums: Anticipate a minor increase in premiums associated with raising the fidelity bond coverage limits for authorized signatories.

Strategic Ambiguities & Considerations

Definition of "Purchase Made": The statute applies to purchases "made on or after" September 1, 2025. It does not define if "made" refers to the Requisition, Purchase Order, or Payment date.
*Guidance:* Adopt the Purchase Order/Contract Date as the controlling factor. A PO issued August 30 for $5,000 requires Board approval, even if paid in September.
Invoice Structuring: The law does not explicitly penalize splitting a $60,000 project into two $30,000 invoices to avoid board oversight.
*Guidance:* Local policies must explicitly define this practice as a termination-level offense to close the loophole.

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Legislative Timeline

This bill's path through the Texas Legislature

TopicsHealth Health--emergency Services & Personnel Special Districts & Authorities Special Districts & Authorities--miscellaneous

Official Analysis

View HRO Analysis View All Bill Documents

BILL ANALYSIS

Senate Research Center	S.B. 2778
89R4154 MCF-D	By: Hinojosa, Adam
	Local Government
	4/22/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

S.B. 2778 aims to modernize the outdated $2,000 spending cap for emergency services districts (ESDs) in Texas, which has not been updated since 1989. Due to inflation and rising costs, routine expenses like fuel, repairs, and equipment now often exceed that amount, slowing emergency response times by requiring board approval for basic purchases. The bill would raise the cap to $50,000, allowing each ESD board to set their own limit up to that amount through public meetings.

As proposed, S.B. 2778 amends current law relating to the amount of an expenditure that may be paid by an emergency services district employee without board approval.

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 Section 775.073(b), Health and Safety Code, to prohibit an expenditure of more than $50,000, rather than $2,000, from being paid unless the expenditure is presented to the board of emergency services commissioners (board) and the board approves the expenditure.

SECTION 2.� Makes application of this Act prospective.

SECTION 3. �Effective date: September 1, 2025.

Senate Authors

Sen. Adam HinojosaRepublican · Primary Author

House Sponsors

Rep. John LujanRepublican · Primary Sponsor

Joint Sponsors

William Metcalf (R)

Bill Text(with markup)

S.B. No. 2778

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

	AN ACT
	relating to the amount of an expenditure that may be paid by an
	emergency services district employee without board approval.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1. Section 775.073(b), Health and Safety Code, is
	amended to read as follows:
	(b) The board by resolution may allow a district employee
	who has executed a bond in an amount equal to the amount required
	for the district treasurer to sign an instrument to disburse
	district funds. An expenditure of more than $50,000 [~~$2,000~~] may
	not be paid unless the expenditure is presented to the board and the
	board approves the expenditure.
	SECTION 2. The change in law made by this Act applies only
	to a purchase made on or after the effective date of this Act. A
	purchase made before the effective date of this Act is governed by
	the law as it existed immediately before the effective date of this
	Act, and that law is continued in effect for that purpose.
	SECTION 3. This Act takes effect September 1, 2025.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION


April 22, 2025

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

FROM:	Jerry McGinty, Director, Legislative Budget Board

IN RE:	SB2778 by Hinojosa, Adam (Relating to the amount of an expenditure that may be paid by an emergency services district employee without board approval.), As Introduced

No fiscal implication to the State is anticipated.

Local Government Impact

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

Source Agencies:

LBB Staff:

JMc, SZ, BC, CWi

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Frequently Asked Questions

Common questions about SB2778

What does Texas SB2778 do?

Senate Bill 2778 fundamentally alters procurement governance for Emergency Services Districts (ESDs) by raising the ceiling for employee-authorized expenditures from $2,000 to $50,000 without prior board approval. This change streamlines operations but significantly increases liability exposure, requiring immediate updates to fidelity bonds and internal financial controls before the new fiscal year. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: August 31, 2025 (Board resolutions and bond adjustments must be executed prior to utilizing the new authority on September 1).

Who authored SB2778?

SB2778 was authored by Texas Senator Adam Hinojosa during the Regular Session.

When was SB2778 signed into law?

SB2778 was signed into law by Governor Greg Abbott on June 20, 2025.

Which agencies enforce SB2778?

SB2778 is enforced by Board of Emergency Services Commissioners (Local District Level).

How urgent is compliance with SB2778?

The compliance urgency for SB2778 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

What is the cost impact of SB2778?

The cost impact of SB2778 is estimated as "low". This may vary based on industry and implementation requirements.

What topics does SB2778 address?

SB2778 addresses topics including health, health--emergency services & personnel, special districts & authorities and special districts & authorities--miscellaneous.

Legislative data provided by LegiScanLast updated: November 25, 2025

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