Kendall Jones (00:00)
Welcome to Whitley Penn Talks, where we give you valuable insights to help you make confident, informed decisions and move your business forward. I’m Kendall Jones, and I’m really excited to be here today with Brooks Landgraf and Katherine Kirk. We’ll be talking a little bit about recent Texas legislation that’s come out specific to CPA licenses and the impact there. So Brooks and Katherine, thank you guys for being here.

Katherine Kirk (00:31)
Thank you for having us.

Brooks Landgraf (00:33)
Great to be with you. Thank you.

Kendall Jones (00:33)
Awesome.

Yeah, of course. We’ll start with some quick introductions for both of you so that the audience knows who we’re talking to. Brooks, will you kick us off and share a little bit more about your role and why we’re here having this conversation today?

Brooks Landgraf (00:48)
Sure. Well, my name is Brooks Landgraf. I’m from Odessa, Texas. I come from a long line of ranchers here in West Texas. And if I could make a living doing that, I probably ⁓ would and certainly wouldn’t be doing anything like this. ⁓ But I’m also a practicing attorney. And for the last 10 years, I’ve been serving as the state representative for my hometown of Odessa and for other counties in the Permian Basin portion of West Texas and it’s an honor to serve in the Texas House of Representatives.

Kendall Jones (01:20)
Awesome, thank you. Katherine, what about you? Will you introduce yourself?

Katherine Kirk (01:23)
Yeah, my name is Katherine Kirk. I’m a tax partner with Whitley Penn here in our Odessa office. I’ve been ⁓ helping take care of clients in the Permian Basin for almost 20 years now. Native Odessan grew up in this area and excited to see how the profession’s continuing to grow and change.

Kendall Jones (01:43)
Both native Odessians, is that the word? Odessians? Well, maybe we’ll want to edit that out later, Sidney’s call. Well, let’s get into talking a bit more about Senate Bill 262 and the details surrounding that. So Katherine, we’ll start with you on our questions and conversations for this episode, but tell us a little bit more about what Senate Bill 262 is and what inspired its creation.

Katherine Kirk (02:15)
So Senate Bill 262 is about an additional pathway to getting your CPA license. Currently, and this has been the case for longer than my 20-year career, to be licensed in Texas, you had to have 150 college credit hours. Many people would get their master’s degree. I did that when I was going through college in the early 2000s, but you can get it with just the hours. It doesn’t have to be a Master’s.

Then you certainly have to pass the exam, which is nationwide and have one year of experience under another CPA as a supervised work As higher education costs continue to climb, as we’ve had a massive wave of long-time CPAs retiring, there’s a continuing need for our services. Our clients are growing. The financial and tax code world is getting more and more complex.

So there’s been a lot of discussion nationwide about additional ways to get more CPAs without sacrificing the technical quality. So this legislation, there’s still the 150 and one year pass. So anybody who was working towards that or wants to get that master’s, that’s still there. The alternate is now you could do a four year bachelor’s and two years of work experience or you can do the 150 kind of five-year college and one year of work experience. It’s still a six-year package. You still have to pass the same exam either way, but grad school is expensive and getting that extra 150 hours has been a really heavy financial burden. So I like this change. I like that they’re giving more options, but we still have that kind of six-year technical training package and the same standard exam nationwide to make sure we’re still getting good CPAs in the end.

Kendall Jones (04:18)
Yeah, definitely. Do you think that that will impact the number of ⁓ people pursuing a master’s program in general or what’s your expectation there?

Katherine Kirk (04:28)
I think it certainly could. I know some of the universities we’ve talked to with our recruiting team are, you know, they’re talking to students about the benefits or the value of those additional hours because that’s now changed where it was required. Now it’s more optional. I know that several of them are also looking at their curriculum and are their courses they’ve had in that fifth year that they need or want to pull back into a fourth year. So the students are still getting all of the technical. So I know the effective date is delayed, I think a year, year and a half to kind of give the universities time to absorb that into their curriculum. That was one of the things I know they had lobbied for that I think makes sense in this conversion.

Kendall Jones (05:00)
Right, some sort of transition period for sure. Thank you. And Brooks, you had a bit of a different perspective. So as the bill was moving through the Texas House, ⁓ what did you kind of see through that process and what would you like to share there?

Brooks Landgraf (05:23)
Well, I think Katherine framed the issue very, very well. And this is something that we did discuss very extensively throughout the halls of the Texas Capitol. And it really comes down to the fact that we are experiencing explosive population growth throughout the state of Texas. And that’s been a trend that has been carrying on for quite some time.

And there are a few of us who are fond of saying that there are 1200 people a day, every day moving to the state of Texas. And they are not in every case bringing their own CPAs with them when they’re moving to the Lone Star State. And so if there is a need to adjust our policy so that we can foster an environment that allows more accountants to practice their craft in the state of Texas, while to Katherine’s point, not sacrificing the high standards that we have for CPAs, then that’s the approach that we decided to take.

Kendall Jones (06:05)
Wow.

Brooks Landgraf (06:33)
And this was an idea that was brought to us at the Capitol by very qualified CPAs from all over the state like Catherine. I mean, this is ⁓ if we want to continue to produce the Texas miracle, which we’re very proud of here, we do have to have good CPAs in order to do that. And this was a in I credit the CPAs for bringing this idea to state policymakers. This is an outside the box way of thinking because, as Katherine mentioned, we do have kind of a perfect storm that’s converged here in this decade, which is that we have a lot of legacy CPAs from the baby boomer generation who are simply retiring from the profession while also experiencing this population growth.

The other thing from my perspective as a West Texas legislator or a lawmaker from rural areas, it’s not limited just to West Texas, but we’re not all fortunate like we are here in Odessa to have a homegrown accountant, a CPA doing great work like Katherine and in communities where that’s not the case, we need to find ways to bring in more talented professionals.

Kendall Jones (07:45)
Awesome. Well, Whitley Penn’s expanding in ⁓ other communities, so we’ll be there soon. No, thank you for sharing a little bit more there. I’m curious, and I’m going off script just a little bit here, but what was the timeline of the initial idea coming to the Capitol versus it actually coming to fruition? What was that process like?

Brooks Landgraf (08:07)
Well, I will say this, the CPA community in Texas does have a secret weapon that, I’m sure that your audience, Kendall knows all about this, but there is a CPA practicing accountant named Charles Perry, who’s a state Senator from Lubbock. And as you know, he actually filed the legislation that we’re talking about on this particular podcast. And so he’s bringing that experience as an accountant. And he’s been able to see some of these issues coming from a mile away, much sooner than some of us, you know, lay people have been able to see. And so I do credit Senator Perry for really ⁓ galvanizing support for this issue and being able to identify the challenges that we would be facing as a state if we didn’t make some of these policy modifications.

Kendall Jones (08:55)
Yeah, definitely. Thank you and Katherine. So we’ve talked obviously a little bit about how this is going to impact the CPA shortage that currently exists and I asked a second ago about the Masters programs and how your thoughts there around quantity of students pursuing a Masters and things. But how do you really see this legislation impacting the shortage of CPAs in Texas? And ⁓ is there anything else you want to add there?

Katherine Kirk (09:25)
So one thing that we’ve actually already been talking with our HR team internally is we’re thinking there are very high odds we’re going to have a double applicant class within the next year. That we will have students finishing the 150 hour path they have been on, but also students who are completing their bachelor’s and with this new option deciding not to pursue their master’s.

So will there be a larger class as an employer? We always wanna make sure we’re picking the best candidates. So how many internship positions do we wanna offer? So you cast a wide enough net. I actually had lunch earlier this week with another CPA who’s in a smaller local firm. They’ve got one office, maybe a dozen or so employees, and they have been turning away all requests for new clients because they don’t have enough staff.

So they would love to see a double class trickle down to even the smaller practitioner firms that are local that do good work that get asked, can you help me? And they’ve had to say no because they don’t have enough accountants, staff, entry level positions. So really hopeful this will be a surge in a positive way, get a lot more people into the profession. A lot of accountants start in public, they get that CPA supervised experience, get exposed to a lot of different industries, a lot of different software on the client side, and then they’ll move to industry. They’ll go be controllers or future CFOs who spent some time in public and our clients need good in-house accountants so that we’re receiving good data to service them with, whether it’s tax or audit. So really hoping this creates a surge in the short term and then a more sustainable wave into the future.

Kendall Jones (11:19)
For sure. And we’ll talk more about that in a second when we dive into Senate Bill 522, because I think the two will be very symbiotic in that way as well. ⁓ So Brooks, even though you weren’t one of the direct sponsors for the bill, did you have any involvement or conversations around the bill during the session that you’d like to share more about today?

Brooks Landgraf (11:43)
Well, so I did try to do the best that I could to represent the views of the CPA community and the district that I serve. And you’re right, I was not an author of the bill and I wasn’t on the committee that the bill went through to get to the floor for a vote. I was very proud to vote for the bill. But that’s one thing about this lawmaking process is that it’s important that we do rely on our colleagues who do have expertise.

You know, that’s one reason why we had so much faith in Senator Perry with his background in public accounting that he was able to identify not only the problem, but also to form a very good and workable solution. Another thing that was very important to me, and I think this is a message that I want to leave with with your listeners, is that when I was doing my research on the legislation, I did look at the list of witnesses from the committee hearing in both the House and ⁓ the Senate on this legislation and in reviewing that witness list, I did see how many accountants from across the state were advocating for the bill or for organizations that ⁓ seek to be the voice for accountants on industry related issues within the halls of the Capitol. And to see that there was overwhelming support and actually no opposition. There were a few concerns raised about both bills, but not enough that anybody publicly opposed the legislation. But that’s the type of environment that makes it easy to make laws, to have faith in the bill author and then to see very vigorous advocacy from the industry, from the professionals ⁓ who would be most impacted. so taking all of that into consideration, it made it a very easy yes vote for me.

Kendall Jones (13:34)
Yeah, for sure. No clearer sign. Yeah, yes, definitely. Definitely. No clearer sign than the experts in that field ⁓ sharing their support, for sure. So, Katherine, what do you see as next steps now that the bill has passed? And we talked about the surge and the potential there, but is there anything else that you’re expecting?

Katherine Kirk (13:36)
So that’s what we’re really looking for in the short term. I’m really curious to see how the university curriculums change around. I’m a Red Raider. I went to Texas Tech, got my master’s 150 hour program there. And there were several courses in my grad school year that were really good. There was an excellent tax research class that really came over well to my career. Marketing capstone, not so much.

So I’m curious to see how the curriculum rearranges. It may get more efficient where potentially students are getting a more efficient value for the costs they’re spending on education. But I also know as someone with my master’s, looking later in my life, once I don’t want to work taxis and hours anymore, I’ve got the path to go teach Intro to Tax at a community college or UTVB here in Odessa because I have that master’s degree. So there are still value and career options and other paths that that master’s degree will open for people. So I’m real curious to see what the curriculum changes to and what students see as most efficient use of their time and dollars in the years to come.

Kendall Jones (15:01)
Mm-hmm.

Yeah, for sure. You would be a great professor for what it’s worth. I think you would crush that. So ⁓ I think I could see that for you. ⁓ Long, long time down the road, obviously, but ⁓ Professor Kirk, for sure. Awesome. Well, thank you guys for, I mean, you never know. ⁓

Thank you guys for sharing a little bit more about Senate Bill 262. I know we want to spend a few minutes to wrap up this episode and dive in further to Senate Bill 522, which focuses on the mobility and access of your CPA license from another state to Texas. So the two are pretty closely aligned, but accomplish different goals when we’re thinking about solving for that shortage of CPAs and the influx of people moving to the state of Texas. So, Katherine, we’ll start with you again on this one for Senate Bill 522. What inspired its creation and what’s the overall impact that you can see coming from this bill?

Katherine Kirk (16:17)
So, you know, as Brooks mentioned, Texas has been growing very steadily for many, many years. Certainly out here in the Permian Basin, we’ve seen tremendous population growth. And a lot of that can be driven by oil field or energy related industries, but they frequently have a spouse that is also employed. And here at Whitley Penn, we have picked up accountants because their spouse was in the oil field.

We have had challenges within Whitley Penn where someone is a little CPA, they are experienced, they are good, they are fully authorized to do all the things they need to do, whether it’s financials, tax work, but they were licensed in another state that had different requirements than Texas. We have a lot of overlap with New Mexico, which is very close here in the Permian Basin. It’s 30 minutes to an hour and a half drive from most of the Permian Basin. And New Mexico CPAs moving to Texas were having to take an extra set of courses to get their Texas license, even if they had 15 years of working as a licensed CPA, which is inefficient. It doesn’t feel logical. We’re accountants. We should be able to do this better. So opening the door for people moving to our area to continue practicing their craft they’ve already been doing and bringing that experienced CPA mind to the state, I think is something that we certainly need.

Kendall Jones (17:53)
Especially as the population continues to grow and in some of the conversations we’ve already had through this recording, definitely. ⁓ So, Brooks, kind of going back to you for our next little discussion here, but can you tell us a little bit more about how this bill was created? And again, I’m going off script, so bear with me, but did this one come from Senator Perry as well, or was he one of the primary sponsors? Just tell us more about how the bill originated.

Brooks Landgraf (18:21)
Sure, so to no one’s surprise, under the pink dome at the Texas Capitol, Senator Charles Perry from Lubbock was the author of this Senate bill as well. And given his background as a CPA, it made absolutely perfect sense for him to bring this legislation forward. for those of us who aren’t ⁓ in the industry, one concern that we always have is whenever we’re looking at making modifications to the professional requirements for ⁓ trades like being a certified public accountant, you want to make sure that anybody who becomes a client of a CPA in Texas can have the confidence that the person who is licensed to be a CPA is going to be able to perform the ⁓ tasks very competently. And that’s what we have. That’s the goal for any professional requirements.

And so we want to make sure that we don’t do anything to reduce that standard. And thankfully, I don’t believe and I don’t think anybody ⁓ would argue that any of those high standards have changed as a result of this legislation. there is ⁓ another important goal, and that is that we eliminate unnecessary red tape. And I think that’s one thing that this bill really did, especially when we’re talking about other CPAs who are licensed already in another jurisdiction who are already doing a fantastic job. It makes a lot of sense to reduce that red tape that exists really for the sake of there being red tape. It has nothing to do with professional competency or being able to meet professional requirements. It’s really historically been in some ways a revenue generator for the state to force somebody to go through a new licensure process.

And unfortunately, this is a phenomenon that’s not limited just to the realm of CPAs, but there was an opportunity for us to cut some of that red tape while also allowing there to be ⁓ more professional CPAs who can serve more and a larger number of clients here in the state of Texas. And so that was, again, a no-brainer from a policy perspective. And I think that’s one reason why you saw it pass with overwhelming bipartisan support in the legislature.

Kendall Jones (20:15)

Yeah. Well, you said, was it 1,200 people a day or a week? A day. Goodness. Yeah, that’s the movement to Texas. So for every 1,200 people, yes, every 1,200 people you need one CPA.

Brooks Landgraf (20:43)
A day. Yes. Yeah.

That’s right.

Katherine Kirk (20:49)
That’s a lot of 1040s.

Brooks Landgraf (20:54)
Now, you know, I mean, joke about it, but I mean, it’s there. There is an imbalance there. ⁓ You know, when you experience that population growth and at times it’s difficult to produce homegrown CPAs or state grown CPAs at a rate to meet that, especially when we have so many great experienced CPAs who are, you know, moving on to the next chapter of their lives at this particular time.

Kendall Jones (20:59)
There is.

Mm-hmm.

For sure, yeah. Thanks for sharing a little bit more on that. And Katherine, how do you, so we talked about a spousal relationship and someone moving to the state of Texas because their significant other spouse is ⁓ wanting to move here or needing to move here for a job specific to energy or other industries, but how do you think in general this could attract more experienced professionals in accounting and tax in other scenarios?

Katherine Kirk (21:44)
So I think there’s lots of reasons Texas is seeing the growth that it is. We’re generally a very business friendly state. Other things were passed in the legislature made Texas franchise less burdensome for many businesses. We don’t have a state income tax. So there are many reasons if someone is in a state that is. I’m trying not to get too political here, Brooks, but a state that is a higher cost of living than some areas in Texas or has a lot more legislation that’s making it hard for their business to grow the way that they would like to. Those are some of the reasons people are moving here already.

And if we can add, it’s easy to bring your profession here or in today’s technology, if they’ve got clients in Oklahoma, North Dakota, wherever it is, and they can move to Texas, still service those out of state clients using technology, but then grow with the new people needing those services in Texas, there’s tremendous opportunity for experienced CPAs. As a tax partner, I know it from that side, but also for consulting, bookkeeping, industry, audits. Part of the reason I got into accounting is everybody needs a nerd. So I don’t see that changing or those opportunities decreasing anytime soon.

Kendall Jones (23:06)
All right, and then to wrap us up, Brooks, because we’ve got just a few more minutes left on this episode. I am curious, are there other professional licensing or education reforms that you’re currently focused on in the house? That be healthcare or any of the above?

Brooks Landgraf (23:27)
It’s actually an all of the above approach that we’re taking in the state of Texas right now. We do need to have we we are in a very critical moment in the state of Texas and we need to do everything that we can to meet that moment. And, you know, we’ve talked quite a bit about the explosive population growth that we’re seeing in Texas. But make no mistake, this is all a very deliberate part. Now, we have a lot of tremendous natural resources. We have a lot of things that are naturally drawing people from all over the country, all over the world, to do business in our state, but we are actively recruiting in not just for individual industries or individual companies, but we are trying to create an environment.

Like, for example, I worked on some business courts legislation during this past session that we’re designing a court system here in the state of Texas to directly compete with Delaware, which that’s kind of their thing. we are doing that to foster an environment here in Texas that would allow some big multinational corporations that are maybe based in New York or based other places to see that there’s really no reason for us to not move to Texas at this point. Maybe the court situation has held us back ⁓ in years past, but since that’s no longer the barrier ⁓ with our very friendly tax laws, ⁓ with a very friendly business environment, we’re going to continue to attract that. if, since we know that’s the case, we do need to make sure that we have a professional class here in the state of Texas to be able to accommodate all of that growth. And so that’s why we’re going to have to continue. You know, I’m very proud of the reforms that we’ve made during this 2025 legislative session, but we have to continue to be very deliberate as we move forward in future legislative sessions to make sure that we can do everything that we can to accommodate that growth, again, while maintaining the high standards that we have for our professionals here in Texas.

Kendall Jones (25:30)
Right, thank you, thank you for sharing. And when’s the next session?

Brooks Landgraf (25:34)
Well, so the next regular session of the legislature won’t be until 2027. We only meet every other year. Now, Governor Abbott has called a special session that’s going to begin ⁓ later in July ⁓ to address some very specific issues. ⁓ But the next big legislative session will be in January of 2027.

Kendall Jones (25:39)
Right.

Awesome, well, lots of time between now and then, but very exciting. And Brooks, we appreciate you joining us today in the conversation that we had. Catherine, thank you so much as well for joining. ⁓ Our native Odessa, ⁓ I don’t know where I was going with that. Let’s be honest. ⁓ Our native Odessians, that’s the word. Well, what was it, Katherine? It was Odessans? Odessans, our native Odessans. 

Brooks Landgraf (26:00)
That’s right, Odessons.

Brooks Landgraf (26:24)
I gotta admit, and I think Katherine is with me on this, I kinda like Odessians too.

Katherine Kirk (26:28)
Well, we can have both. We can be fancy.

Kendall Jones (26:31)
Right, I’m from Fort Worth, so there’s not a fun way to say that. ⁓ But thank you both for your time and expertise in joining us today. We really appreciated it. For those listening, if you enjoyed today’s episode, be sure to subscribe on YouTube, Spotify, Apple, or listen right here on our website at WhitleyPenn.com slash podcast. If you are a professional striving for your CPA and you’re looking at a firm to begin your journey, visit our website to explore our open positions. Thank you again for your time and we’ll wrap up. Thanks guys.

Katherine Kirk (27:01)
Thanks, Kendal.

Brooks Landgraf (27:03)
Thank you very much.