Report Calls for Community College Funding Based on Student Outcomes, Affordability

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Austin, TX — Texas must develop an innovative new model to fund community colleges that rewards colleges for awarding degrees, certificates, and other “credentials of value” that will soon be required in more than 60 percent of the state’s jobs.

The Texas Commission on Community College Finance (TxCCCF) recommended these changes in a report submitted to state leaders in advance of the 88th legislative session, which commences Jan. 10. The commission – made up of 12 lawmakers, business leaders, and community college officials – was established by the Legislature last year through Senate Bill 1230 to help the state update its decades-old community college funding model to meet the changing needs of employers and the Texas economy.

TxCCCF offers three sets of recommendations for a new model that support the goals of Building a Talent Strong Texas, the state’s strategic plan for higher education:

  • Reward community colleges for positive student outcomes
  • Increase affordability and financial aid, including for low-income students
  • Increase capacity at colleges to meet changing workforce needs

“We need a funding model for our 50 community college districts that is bold, strategic, and fully aligned with our emerging workforce needs,” said Woody Hunt, a longtime business leader and public and higher education advocate, who was appointed TxCCCF chairman by Gov. Greg Abbott. “Colleges must have the resources to help more Texas students enroll and earn credentials that will create new opportunities for their families and for the entire state.”

“Texas is an economic powerhouse, creating more new jobs and attracting more new businesses every day,” Gov. Abbott said. “Community colleges are key to our great state’s competitiveness and the future of the dynamic Texas workforce, equipping thousands of Texans with the skills needed to succeed in high-demand careers. By compensating community colleges based on their positive student outcomes, we are recognizing the efforts they are making in providing educational opportunities and secure a brighter future for Texans across the state.”

The TxCCCF recommendations would position Texas as a national leader in tying funding for community colleges to measurable student-focused outcomes. These include:

  • The number of credentials of value awarded, including badges, certificates, and degrees, that position graduates for well-paying jobs.
  • Credentials of value awarded in high-demand fields where employers are looking for skilled employees.
  • Successful student transfers from community colleges to four-year universities.
  • Completion of a sequence of dual credit courses, which are offered to high school students and can set them on early pathways to success.

“The accelerating pace of change in our economy requires bold new approaches to support our community colleges,” said Texas Higher Education Commissioner Harrison Keller. “The new funding model must empower community colleges across the state — from the largest urban colleges to small, rural-serving colleges — to educate many more students from all backgrounds so they can earn credentials of value in the Texas workforce of today and tomorrow.”

In addition to the focus on rewarding community colleges for positive outcomes, the TxCCCF recommends that the state make community colleges more affordable by increasing financial aid through Texas Educational Opportunity Grants (TEOG); providing more aid for dual credit courses for economically disadvantaged students; and supporting apprenticeships, work-study, internships, and other work-based learning opportunities.

If implemented, the recommendations would also increase capacity in community colleges by providing seed grants for programs in high-demand fields; supporting shared services and partnerships for colleges to become more efficient; and helping them provide high-quality, noncredit credentials that are convertible and stackable with credit-bearing programs.

Under Texas’s current community college funding model, most revenue is generated by tuition and property taxes, which are set and collected locally. Over the past decade, local property tax collections have increased significantly. The state also contributes funding through a formula that considers how colleges perform in relation to one another.

The system was developed to meet the needs of colleges when they were established in the early 20th century. It does not fully recognize the role community colleges play today in awarding the credentials of value that are now a statewide priority under Building a Talent Strong Texas.

Members of the TxCCCF will be available throughout the legislative session to provide guidance and support to lawmakers as they consider the recommended changes to the community college finance system.

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