Texas commission recommends tying community colleges’ state funding to their performance

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A commission charged by the Texas Legislature to suggest new ways of financing the state’s community colleges unanimously approved its recommendation Tuesday that lawmakers tie state funding to how successful schools are at getting students to graduate or transfer to four-year universities.

The Commission on Community College Finance made minor changes to the draft recommendations initially released last month. That report included the suggested shift to an outcomes-based funding model, but also recommended that the state provide schools more funding for students who are considered more difficult to teach (such as low income or academically unprepared students), increase the pot of financial aid for community college students and financially help schools meet demand for certain programs as the state’s population grows.

The recommendations will now be handed to the Texas Higher Education Coordinating Board, which must submit its final report to lawmakers by Nov. 1 and start drafting detailed legislation to be introduced during next year’s legislative session.

“I’m looking forward to working with members to inform the conversations along the way. I’ve been encouraged by the kinds of questions we’ve gotten and encouragement we’ve gotten across the political spectrum,” Commissioner Harrison Keller told the committee Tuesday. “We’ve got some good early traction.”

Keller estimates that implementing all of these changes will cost an additional $600 million to $650 million in the first biennium. Higher education advocates are broadly supportive of the measures.

“By focusing on both the outcomes and needs that matter in the lives of students — especially those from low-income backgrounds and adult learners — these recommendations offer a strong blueprint for the Legislature to invest in a prosperous future for Texas,” said Jonathan Feinstein, Texas state director of The Education Trust, which advocates for historically underserved students.

For decades, Texas has funded its two-year public community colleges largely with three pots of money: local property taxes, student tuition and a complicated state funding system that has not kept pace with other resources and now accounts for less than 25% of community colleges’ funding.

During that time, Texas’ workforce needs have increased and changed, while community colleges have seen enrollment declines. Texas’ growth has not occurred evenly across all regions, which has negatively impacted small and rural colleges.

During the last legislative session, many community colleges lost tens of millions of dollars worth of state funding, largely due to enrollment declines during the pandemic.

State higher education leaders are pushing for the proposed funding changes to address the growing demand and better align academic programs with workforce needs to make sure students are leaving school with a degree or credential that gets them a well-paying job.

When it comes to the state’s contribution to funding two-year schools, Texas lawmakers allocate a set amount of money toward public community colleges each biennium that is distributed to individual schools based on a formula. That means schools are essentially competing against one another for funding.

“You can add students and improve outcomes and lose money in current funding formulas because it all depends on what you’re doing relative to every other college in the state,” Keller told The Texas Tribune last month.

The commission recommended that the state not only shift to a funding system that takes into account graduation and transfer rates, but also set a baseline dollar amount for things like instruction and day-to-day operations to ensure schools that can’t bring in a lot of money via property taxes are not disproportionately underfunded.

The report recommends that the baseline funding should be determined by factors like enrollment and the types of courses offered. It also includes some adjustments for students who cost more to educate or need extra support. In Tuesday’s final recommendations, the commission said the number of adult learners that a school serves should be considered as one of those adjustments.

Texas has around 4 million adults with some college and no degree. State leaders have prioritized in recent years encouraging adult learners to return and complete their certificates or degree programs.

The recommendations also include adding financial aid for dual-credit classes — in which high school students take college courses, often through a local community college — and setting a maximum tuition rate for these classes so all high school students have access to college coursework in high school.

“We know that students often don’t follow a linear path from high school to college to the workforce,” said Kenyatta Lovett, managing director of higher education at Educate Texas. “That is clearly recognized in the recommendations, where we see a potential for more students to access opportunities to earn academic or workforce credentials while still in high school. This will ensure that students can chart their own path to the workforce, whether that is a workforce credential or an academic degree.

In addition to funding, the commission said the state must provide more financial aid to community college students. Texas lawmakers provide financial aid to students in two-year programs through the Texas Educational Opportunity Grant Program. But the coordinating board estimates the state has enough funding to serve just 28% of eligible students. During the 2021-22 academic year, the average public community college student who received funding received $1,711 per semester. The commission said the state should set a goal to serve 70% of qualifying students, though it stopped short of recommending that the state actually meet that need.

The commission also included a note that lawmakers should add a provision in the legislation that ensures that colleges remain financially stable during the first few years of adopting the new funding system.

“The vote at today’s final Texas Commission on Community College Finance showcased a bold vision for our state’s community colleges, and the recommendations are a win for students and businesses alike,” said Libby McCabe, senior policy adviser at the Commit Partnership, a Dallas-based advocacy group working to improve economic opportunities in Dallas County. “We encourage the Texas Legislature to expeditiously act on these proposals — our students, workforce and overall economy depend on it.”

Disclosure: The Commit Partnership, Educate Texas and The Education Trust have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.