Texas Community College Funding: Commission Urges Overhaul

There is now a plan to tie community college funding directly to student outcomes before Texas lawmakers.

This month the Texas Higher Education Coordinating Council published the recommendations, which, if drafted and passed into law, would overhaul the state funding model and pay at least $600 million to the 50 community college districts in Texas.

The legislature is likely to take up the issue after it convenes Jan. 10, and some stakeholders are optimistic that lawmakers will bite — particularly because of the CCs’ direct line to the workforce and the economy.

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“Developing a competitive workforce for the future should be the highest priority for Texas,” said Woody Hunt, chair of the Community College Texas Committee on Finance, which formulated the recommendations. “If we can achieve this, it will help us solve other challenges that we will face in the middle of the twenty-first century and secure our future quality of life for our children and grandchildren.”
Institution leaders say colleges have outgrown the current system, being funded by three sources: property taxes, student tuition, and state dollars.

Poll banners celebrating San Jacinto College show 60 years of service to the campus.
Poll banners celebrating San Jacinto College show 60 years of service to the campus.

Kirk Sides / Staff Photographer

State dollars used to make up the bulk of the funding for the schools, but the equity has changed. Community colleges compete for these amounts, reallocating them each year from the same flat pie. In the past two years, the schools have shared $1.8 billion, according to the commission.

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Larger metropolitan areas have benefited the most from the current system, because the formula awards the most state dollars to schools with higher student numbers. A smaller percentage of funds is allocated through measures based on success, in addition to a fixed amount for basic operations.

The model also does not account for the costs of newer educational methods such as dual credit, which means that colleges increasingly rely on taxpayers to fund programs. This could be a problem for smaller colleges in rural areas, which are generally found in counties that are losing population.
The proposed new model would dismantle competition, allowing schools to stand on their own and receive funds that reward students’ success.
The Community College Funding Commission envisioned a results-based system, in which the state would readjust the amount it gives to community colleges each year. It would measure colleges’ odd number of awarded “value credentials,” which are not limited to degrees and extend to non-credit programs such as workforce training.
In addition, it will award funds based on the number of credentials awarded in high-demand areas, transfers to four-year universities, and “dual credit” courses that allow high school students to earn college credit.

incentive-based model

Community college leaders intend the model to be incentive-based, offering more money for degree completion and transfers for economically or educationally disadvantaged students, as well as for advancement to other degrees or credentials.
It will also fit smaller schools that are starting at a disadvantage, giving them a basic level of funding. This money will not be subject to a refund if the income from tuition fees and property taxes exceeds this amount.

According to the report, smaller colleges are also expected to engage in “shared services” — outsourcing technology or educational resources from other institutions.
Another part of the proposal aims to make community colleges more accessible to low-income students, especially by increasing funding for Texas Educational Opportunity Scholarships. One recommendation would provide financial assistance for required tuition and fees to economically disadvantaged students on dual credit courses, and expand work-based learning opportunities through partnerships with businesses.
The final prong of the recommendations will increase investments in services that colleges can provide, including seed grants for new programs in high-demand areas. More funding will also go toward shared services programs, as well as non-credit programs that can be paired with, or diverted to, credit programs.

Buy in from business leaders

Officials in the largest areas of Houston agreed that the system had to change, especially to keep their smaller partners in check. The recommendations come with support from Texas business leaders, who argue that placing the burden on student success—rather than the number of students served—will motivate schools to deliver results that trickle down into local economies.
“By 2030, 62 percent of all Texas jobs will require a post-secondary credential — but companies in Texas are already struggling to find qualified workers with the requisite training and skills,” said Bob Harvey, CEO of the Greater Houston Partnership. “By enacting these proposals to support community colleges in law, we can address the skilled workforce shortage, support our businesses, and ensure that more Texans have the opportunity to earn a self-sustaining wage. We need the Texas legislature to take action and make this a session of the workforce.” .

The Texas Community College Funding Commission met for the past year after lawmakers passed Senate Bill 1230, which formed the group and tasked them with making recommendations on a funding structure.


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