Graduate Medical Education (GME), commonly referred to as residency, is the supervised training a medical school graduate receives to gain expertise in a specific field of medicine prior to becoming a licensed physician. GME programs are significant providers of indigent care, training residents in hospitals mostly, but also in clinics and other outpatient facilities. The state appropriates funds for GME through allocations to the Texas Higher Education Coordinating Board (THECB) and to health-related institutions through a formula that incorporates federal contributions via the Center for Medicare and Medicaid Services (CMS).  2014-15 general revenue appropriations going directly to health-related institutions via the GME formula equaled $66 million and for the THECB were $34 million, for a biennial total of $99 million.

Texas has far fewer GME slots than other large states. This means that because most medical students practice where they received their training, many Texas medical school graduates leave the state for their training, and end up practicing outside of the state, wiping out the Texas taxpayer investment in their education. The 84th Legislature took several steps to shore up GME capacity. 2016-17 biennial appropriations for the GME Expansion Program under the THECB were $53 million, an increase of $39 million. Also increased was GME formula funding which equaled $86 million, an increase of $20 million. Senate Bill 18 (84R) also developed and expanded state residency slots.