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Signed Into Law
Signed May 24, 2025Effective 2025-12-01
SB5

Regular Session

Relating to the creation of the Dementia Prevention and Research Institute of Texas.

Government Affairs & Regulatory Compliance Analysis

SB5: Government Affairs Overview

SB5 establishes the Dementia Prevention and Research Institute of Texas (DPRIT), a state agency authorized to deploy $3 billion in funding for dementia research and facility construction, contingent on voter approval in November 2025. This creates a massive funding opportunity for life sciences, healthcare, and universities, but imposes a strict compliance regime involving state equity positions in intellectual property, aggressive clawback provisions, and mandatory 50% matching funds.

Sen. Joan Huffman·Senate Bill·Regular Session

Moderate
Low Cost
Effective:2025-12-01
Enforcing Agencies

DPRIT Oversight Committee • Dementia Prevention and Research Institute of Texas (DPRIT) • Texas Comptroller of Public Accounts (Audit authority)

Business Impact

Who SB5 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: moderate

Notable regulatory updates (effective 2025-12-01). Consider how these changes may affect your operations.

🏥

Healthcare

Affected business types:

  • Hospitals
  • Healthcare systems
  • Medical practices
  • Health insurance providers
View all healthcare legislation
🎓

Education

Affected business types:

  • School districts
  • Charter schools
  • Private schools
  • Education service providers
View all education legislation

Key Operational Considerations

  • 1IP & Royalties: You must execute agreements granting the State of Texas a share of royalties and income from patents/products developed with grant funds.
  • 2State Liens: Contracts for construction or capital equipment will attach a state lien to the asset; you cannot sell or encumber these assets without state approval and profit-sharing.
  • 3Vendor Flow-Down: Prime contracts require a "good faith effort" to purchase from Texas suppliers. You must flow down these requirements to subcontractors to ensure the 50% Texas-sourcing goal is met.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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SB5
Moderate
Relating to the creation of the Dementia Prevention and Research Institute of Texas.
Moderate Compliance Urgency
Requires near-term attention
Cost Impact
Low
Effective
2025-12-01
Enforcing Agencies
DPRIT Oversight CommitteeDPRITTexas Comptroller of Public Acco...
Primary Author: Sen. Joan Huffman
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: December 1, 2025 (Contingent on voter approval of SJR 3 in Nov 2025).
  • Compliance Deadline: Immediate upon application (Projected Q3/Q4 2026). However, matching fund segregation and conflict checks must precede application.
  • Agency Rulemaking: The Oversight Committee is required to adopt critical rules regarding conflict of interest, grant award procedures, and IP revenue sharing in Q1/Q2 2026. This is the "regulatory gray zone" where specific royalty percentages will be defined.

Immediate Action Plan

  • Segregate Funds: Direct finance teams to identify and segregate liquid assets to meet the 50% matching certification requirement now.
  • Update Retention Policies: Modify corporate record retention policies to flag DPRIT-related documents for a 15-year hold.
  • Draft IP Addendums: Legal counsel should prepare draft IP addendums that account for state royalty sharing to expedite contract negotiations in 2026.
  • Monitor Appointments: Track Governor/Lt. Governor appointments to the Oversight Committee in Dec 2025 to update COI screening lists immediately.

Operational Changes Required

Contracts

Existing standard tech-transfer and commercialization agreements are insufficient for DPRIT funding.

  • IP & Royalties: You must execute agreements granting the State of Texas a share of royalties and income from patents/products developed with grant funds.
  • State Liens: Contracts for construction or capital equipment will attach a state lien to the asset; you cannot sell or encumber these assets without state approval and profit-sharing.
  • Vendor Flow-Down: Prime contracts require a "good faith effort" to purchase from Texas suppliers. You must flow down these requirements to subcontractors to ensure the 50% Texas-sourcing goal is met.

Hiring/Training

  • Conflict of Interest (COI) Screening: Implement a mandatory pre-screening workflow for all Principal Investigators and executives against the DPRIT Oversight Committee roster. Failure to disclose a relationship can result in immediate grant termination and barring from future funding.
  • Time & Effort Reporting: Personnel costs charged to the grant cannot be based on estimates; they must be substantiated by rigorous time-tracking systems compliant with state audit standards.

Reporting & Record-Keeping

  • 15-Year Retention: The law mandates a 15-year retention period for all grant records. You must adjust document retention schedules immediately to segregate and preserve financial reports, progress reports, and matching fund certifications for this duration.
  • Matching Fund Certification: You must certify the availability of 50% matching funds (cash or fair market value of development support) *before* receiving any state money.

Fees & Costs

  • Indirect Cost Cap: Indirect costs (overhead) are statutorily capped at 5% of the grant amount. You cannot utilize standard federal indirect cost rates.
  • Clawback Liability: The statute mandates repayment of the grant plus interest if funds are not used for intended purposes or if contract terms are breached.

Strategic Ambiguities & Considerations

The legislation leaves high-stakes financial details to future agency rulemaking. Watch the Texas Register in early 2026 for:

  • Revenue Share Calculation: The bill requires the state to share in profits but does not set the percentage. The Oversight Committee will define the "state's interest" vs. "research incentives."
  • "Texas Supplier" Definition: The requirement to use Texas suppliers is vague. The agency must define what constitutes a "Texas Supplier" (e.g., physical HQ vs. distribution center) and what constitutes a "good faith effort" to avoid penalties.
  • Valuation of Non-Cash Matches: The methodology for calculating the "fair market value" of drug development support (to meet the 50% match) is currently undefined and subject to audit risk.

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JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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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.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 20, 2025
Passed Senate
Mar 5, 2025
Passed House
Apr 24, 2025
Signed
May 24, 2025
Effective
Dec 1, 2025
TopicsEducationEducation--higherEducation--higher--health InstitutionsEducation--higher--institutions & ProgramsGovernorHealthHealth--other Diseases & Medical ConditionsMental Health & Substance AbusePurchasingPurchasing--generalState Agencies, Boards & CommissionsState Agencies, Boards & Commissions--newly ProposedState FinancesState Finances--management & ControlAudits & AuditorsLieutenant GovernorResearch & DevelopmentSpeaker of the HouseBaylor College of MedicineDementia Prevention & Research Institute of TexasRice UniversityTexas A&m University SystemTexas State University SystemTexas Tech University SystemUniversity of Houston SystemUniversity of North Texas SystemUniversity of Texas SystemComptroller of Public AccountsTreasury Safekeeping Trust Company, TexasRecords ManagementElectronic Information SystemsOpen MeetingsInternetAlzheimer's DiseaseParkinson's Disease
03

Senate Authors

Sen. Joan HuffmanRepublican · Primary Author
Coauthors (13)

House Sponsors

Rep. Tom CraddickRepublican · Primary Sponsor
Joint Sponsors
Cosponsors (120)

Bill Text(with markup)

Showing first 50k characters.

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

Explore more bills from this author and on related topics

More from Sen. Joan Huffman

View all bills by Sen. Joan Huffman

Related by Topic

View more Education legislation
Quick Reference

Frequently Asked Questions

Common questions about SB5

Q

What does Texas SB5 do?

SB5 establishes the Dementia Prevention and Research Institute of Texas (DPRIT), a state agency authorized to deploy $3 billion in funding for dementia research and facility construction, contingent on voter approval in November 2025. This creates a massive funding opportunity for life sciences, healthcare, and universities, but imposes a strict compliance regime involving state equity positions in intellectual property, aggressive clawback provisions, and mandatory 50% matching funds.

Q

Who authored SB5?

SB5 was authored by Texas Senator Joan Huffman during the Regular Session.

Q

When was SB5 signed into law?

SB5 was signed into law by Governor Greg Abbott on May 24, 2025.

Q

Which agencies enforce SB5?

SB5 is enforced by DPRIT Oversight Committee, Dementia Prevention and Research Institute of Texas (DPRIT) and Texas Comptroller of Public Accounts (Audit authority).

Q

How significant are the changes in SB5?

The regulatory priority for SB5 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB5?

The cost impact of SB5 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SB5 address?

SB5 addresses topics including education, education--higher, education--higher--health institutions, education--higher--institutions & programs and governor.

Q

What are the key dates for SB5?

Key dates for SB5: Effective date is 2025-12-01. Rulemaking: Adopt rules regarding grant award procedures, conflict-of-interest standards (based on NIH standards), and waiver processes. (Prior to initial grant cycle (Est. Q1/Q2 2026)); Adopt rules specifying grant recipient obligations, specifically regarding the certification of 50% matching funds. (Prior to fund disbursement). Consult with legal

Q

What are the penalties under SB5?

SB5 establishes the following penalties: contractual/administrative penalty of Full repayment of grant + interest for Failure to use grant money for intended purposes or failure to meet contract terms.; contractual penalty of Proportionate share of profit + repayment for Sale of capital improvements funded by the grant.; administrative penalty of Removal from grant review process for Intentional violation of conflict-of-interest disclosure requirements by committee members or employees.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by SB5?

SB5 primarily affects healthcare providers and medical facilities. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

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