Texas health officials are overhauling a program designed to steer people away from abortion following a ProPublica and CBS News investigation that found that the state had funneled tens of millions of taxpayer dollars into the effort while providing little oversight of the spending.
The money has been flowing to a network of nonprofit organizations that are part of Thriving Texas Families, a state program that supports parenting and adoption as alternatives to abortion and provides counseling, material assistance and other services. Most of the groups operate as crisis pregnancy centers, or pregnancy resource centers, which often resemble medical clinics but are frequently criticized for offering little or no actual health care and misleading women about their options.
In its 20 years of existence, the program’s funding has grown fortyfold — reaching $100 million a year starting Sept. 1 — making it the most heavily funded effort of its kind in the country.
Under new rules set to take effect then, the organizations in the program must now document all of their expenses, and they will be reimbursed only for costs tied to services approved by the state. And they cannot seek reimbursement when they redistribute donated items, an effort to prevent taxpayer money from going to organizations for goods they got for free.
Meanwhile, Texas is opening administration of the program to a competitive selection process instead of automatically renewing agreements with contractors, including one contractor that has overseen most of the program for nearly two decades.
The changes address failures uncovered a year ago by the ProPublica/CBS News investigation. As Thriving Texas Families currently operates, most providers are paid a flat rate for each service they claim to provide, regardless of the actual cost of that service. As a result, a single client visit can generate multiple stacked charges, significantly increasing the amount of public money being spent. In some cases, providers billed separately for each item or service given to a client — such as diapers, baby clothes, blankets, wipes, snacks and even educational pamphlets — according to records reviewed by ProPublica and CBS News.
That arrangement allowed organizations to bill the state for more than the services actually cost to provide — and keep the difference. One group, Sealy Pregnancy Resource Center, more than quintupled its assets in three years by banking some reimbursements. Its executive director, Patricia Penner, acknowledged the practice, saying her goal was “to make sure we have enough for this center to continue and to continue for the years to come.”
“There’s no guarantee the funds we receive is going to be sufficient to keep the center going,” Penner added, “and it’s my duty as a director to ensure we are taking whatever service funds we are receiving to ensure we can take care of these young ladies when they come in the door.”
Two others, McAllen Pregnancy Center and Pregnancy Center of the Coastal Bend in Corpus Christi, used reimbursements to finance real estate deals. The McAllen center, which receives nearly all its revenue from the state, bought a building that had previously housed an abortion clinic. The Coastal Bend center openly acknowledged using state funds to buy land for a new facility. The centers did not respond to questions.
In San Antonio, Thriving Texas Families cut off funding to a pregnancy center known as A New Life for a New Generation after a local news outlet reported it had spent taxpayer money on vacations, on a motorcycle and to fund a smoke shop business owned by its president and CEO. The center did not respond to a request for comment.
ProPublica and CBS News also found that state health officials had no visibility into what services were being delivered or whether they were reaching the people most in need. In many cases, the state reimbursed providers $14 each time they handed out donated goods or materials, regardless of their cost or how they got them.
That included distributing pamphlets on parenting, fetal development and adoption, which could trigger the same reimbursement as providing tangible aid like diapers or formula. The state could not say exactly how much it had spent on these materials because it did not track what was being distributed.
State-approved pamphlets and lessons reviewed by a reporter stated inaccuracies — such as that a fetal heartbeat starts 21 days after conception — and painted single motherhood as risky and lonely, with marriage or adoption as better options.
While flat-rate reimbursement is sometimes used in government contracting, nonprofit and accounting experts said applying it to the distribution of donated goods — without clear standards for quantity or value — was highly irregular.
Officials with the state Health and Human Services Commission, which oversees Thriving Texas Families, did not say what prompted the policy shift, only that it was following guidance from the state comptroller. That guidance recommends awarding state grants as reimbursements for actual expenses.
The state has long allowed its main contractor, Texas Pregnancy Care Network, to handle most of the program’s oversight. The network told the news organizations last year that once state funds were passed to subcontractors, “it is no longer taxpayer money” and those groups were free to spend it as they saw fit. HHSC pushed back against the network, saying it still considered the money to be taxpayer dollars and expected it to be used in line with state guidelines.
The shift to a cost-reimbursement model appears to bring the program more in line with how public money is typically distributed across state agencies in Texas.
Texas Pregnancy Care Network, which in recent years has received nearly 75% of the Thriving Texas Families funding and distributed it to dozens of crisis pregnancy centers, faith-based groups and other charities that serve as subcontractors, did not respond to questions about how it plans to approach the new contract or adapt to the stricter reimbursement rules.
State Rep. Donna Howard, a Democrat from Austin and a vocal critic of the state’s support for anti-abortion programs, said in an interview that while she opposes taxpayer support for anti-abortion programs, she sees the new rules as a step in the right direction.
But with the new reimbursement requirements in place, Howard questioned whether many of the centers would even be able to make use of the funding. Unlike the previous flat-fee system, providers must now track costs, document services and submit receipts to justify their spending. “Who knows if they can actually use the funds now that they have to show receipts,” she said.
By requiring pregnancy centers to track clients’ income, education level and employment — and to provide clients with information about public benefits available to them — the state is moving away from a system that allowed nonprofits to collect funds without regard for who was receiving help.
Pregnancy resource centers and anti-abortion activists lobbied Republican lawmakers to block the policy change during the most recent legislative session, and some publicly denounced it.
On the social media platform X, Rep. Jeff Leach, a Republican from the northern Dallas suburbs, urged the agency to “not give veto power” over the program “to biased media reporters.” Leach did not respond to requests for comment.
In an interview, Texas Right to Life President John Seago warned that the new reimbursement model would discourage participation. He said it was “not worth small providers getting into the program because of all the red tape.”
And in written testimony, Penner, from Sealy, implored legislators to preserve the current model, saying it allowed her team “to focus on serving our clients rather than staffing up in order to handle the paperwork” required for reimbursement.
Despite the pushback, lawmakers did not take action to block the new rules.
Ge Bai, a professor of accounting and health policy at Johns Hopkins University, said switching to a cost-reimbursement system could help prevent waste by making sure organizations only get paid for what they actually spend.
But she warned that this model has its own risks. Since providers know they will be reimbursed, they might not be as careful about keeping costs down — or could even inflate their expenses to get more money. She pointed to Medicare, which used a similar system in the past but abandoned it after costs spiraled out of control.
To avoid the same problem, she said, the program will need strong public oversight to make sure organizations aren’t overspending just because they know the state will cover the bill.
One reproductive health policy specialist who has closely tracked Texas’ spending on crisis pregnancy centers cautioned that the reforms do little to address the broader gaps in the state’s social safety net.
“You can’t really make up for a lack of Medicaid health insurance for the very poor in Texas by giving people educational services, pamphlets and diapers,” said Laura Dixon, a researcher with Resound Research for Reproductive Health, based in Austin.
But at the very least, she said, “understanding where money is going is a really good first step for this program.”
